<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 14, 1998
REGISTRATION NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
WEATHERFORD INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 3498 04-2515019
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
<TABLE>
<S> <C>
BERNARD J. DUROC-DANNER
WEATHERFORD INTERNATIONAL, INC.
5 POST OAK PARK, SUITE 1760 5 POST OAK PARK, SUITE 1760
HOUSTON, TEXAS 77027-3415 HOUSTON, TEXAS 77027-3415
(713) 297-8400 (713) 297-8400
(Address, including zip code, and telephone number, (Name, address, including zip code, and telephone
including number,
area code, of registrant's principal executive offices) including area code, of agent for service)
</TABLE>
Copies to:
CURTIS W. HUFF
WEATHERFORD INTERNATIONAL, INC.
5 POST OAK PARK, SUITE 1760
HOUSTON, TEXAS 77027-3415
(713) 297-8400
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon
consummation of the Merger described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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<CAPTION>
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE(2) FEE(3)
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<S> <C> <C> <C> <C>
Common Stock, par value $1.00 per share........ 5,052,000 Not Applicable $85,193,623 $0
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</TABLE>
(1) Represents the maximum number of shares of Common Stock issuable upon
consummation of the Merger described herein. Pursuant to Rule 429(b) under
the Securities Act of 1933, of the 5,052,000 shares of Common Stock being
registered in connection with this Registration Statement, 3,897,462 shares
of Common Stock are being carried forward from a Registration Statement on
Form S-4, as amended (Registration No. 333-58741).
(2) Pursuant to Rule 457(f) under the Securities Act of 1933, the proposed
maximum offering price is calculated as $85,193,623 (representing 5,202,664
shares of Christiana Companies, Inc. common stock, $1.00 par value,
multiplied by $16 3/8, which is the average of the high and low sale price
for such stock on October 13, 1998).
(3) Pursuant to Rule 457(b) and Rule 429(b) under the Securities Act, the
registration fee for this Registration Statement has been previously paid by
the Registrant in the amount of $47,866, $38,240 of which is the fee
previously paid by the Registrant with the preliminary proxy materials on
Schedule 14A (which contained the Joint Proxy Statement/Prospectus included
herein) filed with the Commission on February 19, 1998, and $9,626 of which
is the fee previously paid by the Registrant with the Registration Statement
on Form S-4, as amended (Registration No. 333-58741), filed with the
Commission on July 8, 1998.
Pursuant to Rule 429 under the Securities Act of 1933, the Joint Proxy
Statement/Prospectus contained in this Registration Statement relates to a
previously filed Registration Statement on Form S-4, as amended (Registration
No. 333-58741).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
[WEATHERFORD LOGO]
WEATHERFORD INTERNATIONAL, INC.
5 POST OAK PARK, SUITE 1760
HOUSTON, TEXAS 77027
November -- , 1998
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders (the
"Special Meeting") of Weatherford International, Inc. ("Weatherford") to be held
at 9:00 a.m., Houston time, on December -- , 1998, at The Luxury Collection
Hotel of Houston, 1919 Briar Oaks, Houston, Texas.
At the Special Meeting and at a special meeting of the shareholders of
Christiana Companies, Inc. ("Christiana"), the holders of the Weatherford Common
Stock, $1.00 par value per share ("Weatherford Common Stock"), and the holders
of the Christiana Common Stock, $1.00 par value per share ("Christiana Common
Stock"), will be asked to vote on a proposal (the "Merger Proposal") to approve
the acquisition of Christiana by Weatherford. The acquisition will be effected
pursuant to the merger of a subsidiary of Weatherford with and into Christiana
(the "Merger") pursuant to an Amended and Restated Agreement and Plan of Merger
dated October 14, 1998 (the "Merger Agreement"), among Weatherford, a subsidiary
of Weatherford, Christiana and C2, Inc. ("C2"). Under the terms of the Merger,
the Christiana shareholders will be entitled to receive shares of Weatherford
Common Stock and cash in exchange for their shares of Christiana Common Stock.
The number of shares of Weatherford Common Stock that will be issued to the
Christiana shareholders will be equal to the number of shares of Weatherford
Common Stock held by Christiana at the time of the Merger divided by the number
of outstanding shares of Christiana Common Stock. The amount of cash that will
be payable to the Christiana shareholders in the Merger will be equal to the
amount of cash held by Christiana in excess of its accrued unpaid taxes, the
value of certain tax benefits and fixed liabilities at the time of the Merger
divided by the number of outstanding shares of Christiana Common Stock at the
time of the Merger. It is currently anticipated that -- of a share of
Weatherford Common Stock and between approximately $3.00 and $4.00 cash will be
issued to the Christiana shareholders in respect of each share of Christiana
Common Stock held by them. THE NUMBER OF SHARES OF WEATHERFORD COMMON STOCK
ISSUABLE IN THE MERGER IS EQUAL TO THE NUMBER OF SHARES OF WEATHERFORD COMMON
STOCK CURRENTLY HELD BY CHRISTIANA AND, THEREFORE, THE MERGER WILL RESULT IN NO
CHANGE IN THE OUTSTANDING SHARES OF WEATHERFORD COMMON STOCK AFTER THE MERGER.
PLEASE NOTE THAT THE ENCLOSED MATERIALS RELATE TO A PLAN OF MERGER THAT IS
DIFFERENT FROM THE PLAN OF MERGER THAT WAS APPROVED BY THE STOCKHOLDERS OF
CHRISTIANA AND WEATHERFORD ON AUGUST 17, 1998. THE PRIOR PLAN OF MERGER WAS
NEVER COMPLETED BECAUSE IT COULD NOT BE CLOSED ON A PARTIALLY TAX FREE BASIS.
THE NEW PLAN OF MERGER IS DESIGNED TO ALLOW FOR THE MERGER TO CLOSE ON A
PARTIALLY TAX FREE BASIS. THE STOCKHOLDERS OF WEATHERFORD SHOULD READ THESE
MATERIALS CAREFULLY TO UNDERSTAND THE REVISED TERMS OF THE MERGER.
A summary of the basic terms and conditions of the Merger, certain financial
and other information relating to Weatherford and Christiana and copies of the
Merger Agreement are set forth in the enclosed Joint Proxy Statement/Prospectus.
Please review and consider the enclosed materials carefully. In connection with
its approval of the Merger, the Board of Directors received and took into
account the opinion of Morgan Stanley & Co. Incorporated, an investment banking
firm retained by Weatherford, that the consideration to be paid by Weatherford
in the Merger was fair to Weatherford from a financial point of view. A copy of
the opinion of Morgan Stanley & Co. Incorporated is included in the accompanying
Joint Proxy Statement/Prospectus and should be read in its entirety.
The Board of Directors has approved the Merger Proposal. THE BOARD OF
DIRECTORS RECOMMENDS THAT YOU VOTE FOR ITS APPROVAL.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED AND VOTED. ACCORDINGLY, WE ASK THAT YOU MARK, DATE,
SIGN AND RETURN YOUR PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. If you have
multiple stockholder accounts and receive more than one set of these materials,
please be sure to vote each proxy and return it in the respective postage-paid
envelope provided.
Very truly yours,
/s/ BERNARD J. DUROC-DANNER
BERNARD J. DUROC-DANNER
President, Chief Executive Officer
and Chairman of the Board
<PAGE> 3
CHRISTIANA COMPANIES, INC.
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700 N. WATER ST., SUITE 1200
MILWAUKEE, WISCONSIN 53202
TELEPHONE 414/291-9000
FACSIMILE 414/291-9061
November , 1998
Dear Shareholder:
Christiana Companies, Inc. ("Christiana") and Weatherford International,
Inc. ("Weatherford") have agreed to modify their existing merger agreement to
increase the likelihood that the merger will be completed. Prior to the changes,
the merger could not be closed unless the price of Weatherford common stock was
above approximately $30.00 per share. After the changes, the merger will be able
to be completed if the Weatherford common stock price is above approximately $--
per share.
Background. At a special meeting of Christiana shareholders held on August
17, 1998, 89% of Christiana shareholders (98% of those voting) approved the
merger (the "Merger") between Christiana and a wholly-owned subsidiary of
Weatherford pursuant to an Agreement and Plan of Merger, dated December 12,
1997, as amended on May 26, 1998 (the "Prior Merger Agreement"). The Merger,
however, never closed because of the decrease in the price of Weatherford common
stock below $30.00 per share, the lowest price at which that transaction would
qualify as a partially tax free reorganization. Christiana and Weatherford
agreed to monitor the stock price to determine whether the Merger could close
before October 31, 1998, the original termination date. On October 14, 1998, the
parties agreed to amend the Prior Merger Agreement (the "Amended Merger
Agreement") to improve the terms for the Christiana shareholders and to make it
more likely that the closing will occur.
Changes. In the Prior Merger Agreement, the parties had agreed that $10.0
million of Christiana's cash would not be distributed to Christiana shareholders
at the closing and, instead, would be retained by Weatherford for five years as
security for certain contingent liabilities and indemnity obligations. The
parties have eliminated this provision. Christiana has agreed to use these funds
to purchase -- additional shares of Weatherford common stock, which
purchases were made prior to the date hereof. As a result, the transaction will
close if the Weatherford common stock price is approximately $-- or higher. If
Weatherford's common stock price is below $--, Christiana also has agreed to use
up to an additional $5.0 million of its cash to purchase additional Weatherford
common stock if such purchases will qualify the transaction as a partially tax
free reorganization which means that such purchases must be at $-- or higher. If
Christiana spends $5.0 million in this manner, the transaction will be able to
close if the Weatherford common stock price is $--.00 or higher. If the
Weatherford common stock price does not close above this level prior to January
31, 1999, the new termination date, the transaction will not close. On November
- -- , 1998, the closing price of the Weatherford common stock as reported on the
New York Stock Exchange was $ -- .
We believe that these changes are favorable to Christiana shareholders for
several reasons, including, specifically, that it increases the likelihood that
the transaction will close (because the Weatherford common stock price can be as
low as $-- per share, rather than $30.00 per share under the Prior Merger
Agreement) and because a greater portion of the consideration will be in the
form of Weatherford common stock (which is non-taxable in the Merger), rather
than cash, which is taxed upon receipt.
Merger Consideration. If no additional purchases of Weatherford common
stock are made, Christiana shareholders will receive the following:
- Approximately -- shares of Weatherford common stock for each
share of Christiana common stock.
- Cash of approximately $4.00 per share.
Special Meeting Regarding the Amended Merger Agreement. The special meeting
of Christiana shareholders to consider and vote upon the Amended Merger
Agreement will be held at 9:00 a.m. (Milwaukee
<PAGE> 4
time) on December -- , 1998, at the Galleria Conference Room, Firstar Center,
777 East Wisconsin Avenue, Milwaukee, Wisconsin.
As part of the contemplated transactions, Christiana will sell two-thirds
of its interest in Total Logistic Control, LLC to C2, Inc. for $10.67 million
(the "Logistic Sale"). The Logistic Sale is a condition to the consummation of
the Merger and, if the Merger is approved by Christiana shareholders at the
special meeting, the Logistic Sale will occur immediately prior to the Merger.
AFTER CAREFUL CONSIDERATION, A COMMITTEE CONSISTING OF TWO INDEPENDENT
CHRISTIANA DIRECTORS APPOINTED BY THE CHRISTIANA BOARD OF DIRECTORS AND THE
CHRISTIANA BOARD OF DIRECTORS HAVE UNANIMOUSLY APPROVED THE AMENDED MERGER
AGREEMENT (WHICH INCLUDES AS A PART THEREOF THE AGREEMENT PROVIDING FOR THE
LOGISTIC SALE) AS BEING IN THE BEST INTERESTS OF CHRISTIANA AND ITS SHAREHOLDERS
AND RECOMMENDS THAT YOU VOTE FOR THE MERGER.
A summary of the basic terms and conditions of the Amended Merger
Agreement, certain financial and other information relating to Weatherford and
Christiana and copies of the Amended Merger Agreement are set forth in the
enclosed Joint Proxy Statement/Prospectus. Please review and consider the
enclosed materials carefully. In connection with its approval of the Merger, the
Independent Committee and the Board of Directors received and took into account
the opinion of Prudential Securities Incorporated, an investment banking firm
retained by Christiana, that the transactions described herein are fair to the
shareholders of Christiana from a financial point of view. A copy of the opinion
of Prudential Securities Incorporated is included in the accompanying Joint
Proxy Statement/Prospectus.
Shareholders are urged to review carefully the attached Joint Proxy
Statement/Prospectus which contains a detailed description of the Amended Merger
Agreement and the respective terms and conditions thereof.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU HOLD. EVEN IF YOU PLAN
TO ATTEND THE SPECIAL MEETING, WE URGE YOU TO MARK, SIGN AND DATE THE ENCLOSED
PROXY AND ELECTION FORM AND RETURN IT PROMPTLY. IF YOU HAVE MULTIPLE SHAREHOLDER
ACCOUNTS AND RECEIVE MORE THAN ONE SET OF THESE MATERIALS, PLEASE BE SURE TO
VOTE EACH PROXY AND RETURN IT IN THE RESPECTIVE POSTAGE-PAID ENVELOPE PROVIDED.
C2 Prospectus Regarding Purchase of C2 Stock. Christiana shareholders were
previously offered the opportunity to purchase C2 stock. In that offering, Lubar
Family members subscribed for 3,472,982 shares, while other Christiana
shareholders subscribed for 1,729,682 shares. However, because of the execution
of the Amended Merger Agreement, new subscriptions are required. Pursuant to a
separate prospectus (the "C2 Prospectus") being provided to Christiana
shareholders simultaneously herewith, C2 is again offering each Christiana
shareholder the ability to purchase one share of C2 stock (at $4.00 per share)
for each share of Christiana common stock held immediately prior to the Merger,
with the objective of raising $20.8 million, $10.67 million of which will be
utilized to fund the acquisition of the two-thirds ownership interest in
Logistic. Each Christiana shareholder may purchase more shares of C2 stock if
they are available. The C2 Prospectus replaces the prospectus mailed to you
earlier, so you will need to make a new decision whether to invest in C2 stock.
C2 is a newly-formed entity which I currently control. Certain members of
my family (including my son, David J. Lubar, a director of Christiana and the
President and a director of C2) and I have committed to purchase enough shares
of C2 to raise at least $10.67 million. This will ensure that C2 has sufficient
funds to complete the Logistic purchase.
You are encouraged to read carefully the C2 Prospectus enclosed herein in
connection with your decision to purchase C2 stock. Your election to purchase C2
stock may be made pursuant to the "Letter of Transmittal" enclosed herewith and
discussed in the next section.
<PAGE> 5
Letter of Transmittal. The enclosed Letter of Transmittal serves two
purposes. First, it enables Christiana shareholders to receive Weatherford
common stock and cash in connection with the Merger. As described in more detail
in the Letter of Transmittal, Christiana shareholders should complete the form
even if the prior Letter of Transmittal was completed in connection with the
August meeting, attach their Christiana certificates to it (unless already
submitted), then return it to Firstar Trust Company at the address indicated.
Second, the Letter of Transmittal is the form to be used to elect to purchase C2
stock. As indicated in the Letter of Transmittal, Christiana shareholders may
use the cash received from Weatherford in the Merger to purchase C2 stock. If
Christiana uses a portion of the $5.0 million to buy additional Weatherford
common stock, as discussed above, Christiana shareholders will receive less than
$4.00 per share. The purchase price for C2 stock, however, remains fixed at
$4.00 per share. If this situation were to occur, as described in the Joint
Proxy Statement/Prospectus, we will notify you of the additional cash that you
will need to send in order to purchase the same number of shares of C2 stock.
On behalf of the Board of Directors and the management of Christiana, we
look forward to your participation, either in person or by proxy, at the special
meeting. In any event, we look forward to receiving your Letter of Transmittal.
Sincerely,
/s/ SHELDON B. LUBAR
Sheldon B. Lubar
Chairman
<PAGE> 6
WEATHERFORD INTERNATIONAL, INC.
5 POST OAK PARK, SUITE 1760
HOUSTON, TEXAS 77027
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER -- , 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
Weatherford International, Inc. ("Weatherford") will be held at The Luxury
Collection Hotel of Houston, Texas, 1919 Briar Oaks, Houston, Texas, on December
- -- , 1998, at 9:00 a.m., Houston time, for the following purposes:
1. To consider and vote upon a proposal to acquire Christiana
Companies, Inc. ("Christiana") pursuant to an Amended and Restated
Agreement and Plan of Merger dated October 14, 1998 (the "Merger
Agreement"), among Weatherford, Christiana, C2, Inc. ("C2") and Christiana
Acquisition, Inc., for shares of Weatherford common stock and cash as more
specifically described in the attached Joint Proxy Statement/Prospectus.
After the merger, Christiana will be a wholly owned subsidiary of
Weatherford.
2. To approve a postponement or adjournment of the meeting to solicit
additional votes in the event that there are not sufficient votes to
approve the foregoing proposal.
3. To transact such other business as may properly come before the
Special Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on November -- ,
1998, as the record date for the determination of stockholders entitled to
receive notice of and to vote at the Special Meeting or any adjournment or
postponement thereof. Only stockholders of record at the close of business on
such record date are entitled to notice of and to vote at such meeting. A
complete list of such stockholders will be available for examination at the
Special Meeting and at Weatherford's offices at 5 Post Oak Park, Suite 1760,
Houston, Texas, during ordinary business hours, after November -- , 1998, for
the examination of any such stockholder for any purpose germane to the Special
Meeting.
By order of the Board of Directors,
/s/ CURTIS W. HUFF
CURTIS W. HUFF,
Corporate Secretary
November -- , 1998
------------------------
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. EVEN IF
YOU PLAN TO BE PRESENT, YOU ARE URGED TO MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY.
<PAGE> 7
CHRISTIANA COMPANIES, INC.
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700 N. WATER ST., SUITE 1200
MILWAUKEE, WISCONSIN 53202
TELEPHONE 414/291-9000
FACSIMILE 414/291-9061
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER -- , 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Christiana
Companies, Inc., a Wisconsin corporation ("Christiana"), will be held on
December -- , 1998, at 9:00 a.m. (Milwaukee time), at the Galleria Conference
Room, Firstar Center, 777 East Wisconsin Avenue, Milwaukee, Wisconsin for the
following purposes:
(1) To consider and vote upon a proposal to approve the Amended and
Restated Agreement and Plan of Merger, dated October 14, 1998 (the "Merger
Agreement"), by and among Christiana, Weatherford International, Inc., a
Delaware corporation ("Weatherford"), Christiana Acquisition, Inc., a
Wisconsin corporation and wholly owned subsidiary of Weatherford ("Sub"),
and C2, Inc., a Wisconsin corporation ("C2"), the terms and conditions of
which include an agreement by and among Christiana, C2, Total Logistic
Control, LLC, a Delaware limited liability company and wholly owned
subsidiary of Christiana ("Logistic"), and Weatherford, pursuant to which
Christiana will sell two-thirds of its interest in Logistic for $10.67
million. The transactions contemplated by the Merger Agreement are more
fully described in the attached Joint Proxy Statement/Prospectus.
(2) To approve an adjournment of the Special Meeting to solicit
additional proxies in the event that there are not sufficient votes to
approve the foregoing proposal.
(3) To consider and act upon such other business as may properly come
before the meeting or any adjournment thereof.
The close of business on November -- , 1998 has been fixed as a record date
for the determination of shareholders entitled to notice of, and to vote at, the
Special Meeting and any adjournment or postponement thereof.
Under Wisconsin law, approval and adoption of the transactions contemplated
by the Merger Agreement requires the approval of two-thirds of the votes
entitled to be cast at the Special Meeting excluding the 2,718,000 shares (52.8%
of the issued and outstanding Christiana Common Stock) that may be deemed under
Wisconsin law to be beneficially owned by Sheldon B. Lubar.
If the transactions contemplated by the Merger Agreement are consummated,
holders of Christiana Common Stock who have complied with the requirements of
the Wisconsin Business Corporation Law will have certain dissenters' rights
under Wisconsin law, if they wish to assert such rights, as described in more
detail in the accompanying Joint Proxy Statement/Prospectus, which includes, as
Appendix H, a copy of the dissenters' rights provisions of the Wisconsin
Business Corporation Law. Christiana will provide a copy of Appendix H to any
shareholder entitled to vote at the Special Meeting upon request of that
shareholder.
By Order of the Board of Directors,
/s/ DAVID E. BECKWITH
David E. Beckwith
Secretary
-- , 1998
YOUR VOTE IS IMPORTANT NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE DATE THE ENCLOSED PROXY AND
ELECTION FORM WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF CHRISTIANA, SIGN
EXACTLY AS YOUR NAME APPEARS THEREON AND RETURN IMMEDIATELY.
<PAGE> 8
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
WEATHERFORD INTERNATIONAL, INC. CHRISTIANA COMPANIES, INC.
JOINT PROXY STATEMENT/PROSPECTUS
SPECIAL MEETINGS OF STOCKHOLDERS TO BE HELD DECEMBER -- , 1998
---------------------
WEATHERFORD INTERNATIONAL, INC.
(COMMON STOCK, $1.00 PAR VALUE PER SHARE)
This Joint Proxy Statement/Prospectus is being provided to the stockholders
of Weatherford International, Inc. in connection with a solicitation of proxies
by the Boards of Directors of Weatherford International, Inc. and Christiana
Companies, Inc. for approval of a proposed acquisition by Weatherford of
Christiana. The proposed acquisition will be voted by the Weatherford and
Christiana stockholders at Special Meetings to be held on December --, 1998. The
Weatherford Special Meeting will be held at 9:00 a.m., Houston time, at the
Luxury Collection Hotel of Houston, 1919 Briar Oaks, Houston, Texas. The
Christiana Special Meeting will be held at 9:00 a.m., Milwaukee time, at the
Galleria Conference Room, Firstar Center, 777 East Wisconsin Avenue, Milwaukee,
Wisconsin.
The proposed acquisition will be effected pursuant to a merger of a
Weatherford subsidiary with and into Christiana. Under the terms of the Merger,
the Christiana shareholders will receive a combination of shares of Weatherford
Common Stock and cash. The number of shares of Weatherford Common Stock that
will be issued to the Christiana shareholders for each share of Christiana Stock
held by them will equal the number of shares of Weatherford Common Stock held by
Christiana at the time of the Merger divided by the number of outstanding shares
of Christiana Common Stock. The amount of cash that will be paid the Christiana
shareholders for each share of Christiana Common Stock held by them will be
equal to the amount of cash held by Christiana at the time of the Merger less
its accrued unpaid taxes, the value of certain tax benefits and its fixed
liabilities divided by the number of outstanding shares of Christiana at the
time of the Merger. It is currently anticipated that -- of a share of
Weatherford Common Stock will be issued and between approximately $3.00 and
$4.00 will be paid to the Christiana shareholders for each share of Christiana
Common Stock held by them.
PLEASE NOTE THAT THE ENCLOSED MATERIALS RELATE TO A PLAN OF MERGER THAT IS
DIFFERENT FROM THE PLAN THAT WAS APPROVED BY THE STOCKHOLDERS OF CHRISTIANA AND
WEATHERFORD ON AUGUST 17, 1998. THE PRIOR PLAN OF MERGER WAS NEVER COMPLETED
BECAUSE IT COULD NOT BE CLOSED ON A PARTIALLY TAX FREE BASIS. THE NEW PLAN OF
MERGER IS DESIGNED TO ALLOW FOR THE MERGER TO CLOSE ON A PARTIALLY TAX FREE
BASIS. THE STOCKHOLDERS OF WEATHERFORD AND CHRISTIANA SHOULD READ THESE
MATERIALS CAREFULLY TO UNDERSTAND THE REVISED TERMS OF THE MERGER.
WISCONSIN LAW REQUIRES A SUPERMAJORITY VOTE FOR APPROVAL OF THE MERGER. THE
VOTE THAT IS REQUIRED IS THE AFFIRMATIVE VOTE OF TWO-THIRDS OF THE SHARES
ENTITLED TO VOTE AT THE SPECIAL MEETING EXCLUDING 2,718,000 SHARES (52.8%)
DEEMED TO BE BENEFICIALLY OWNED BY SHELDON B. LUBAR, CHAIRMAN OF CHRISTIANA.
This Joint Proxy Statement/Prospectus and the related materials are first
being mailed to the stockholders of Weatherford and Christiana on or about
November --, 1998. On November --, 1998, the closing sale price of the
Weatherford Common Stock and the Christiana Common Stock as reported by the New
York Stock Exchange, Inc. was $ -- and $ -- , respectively.
Contemporaneous with the solicitation of proxies relating to the proposed
Merger, C2, Inc., an entity that was formed to acquire a two-thirds interest in
Christiana's Total Logistic Control, LLC subsidiary, is offering to the
Christiana shareholders the right to purchase shares in C2. This Joint Proxy
Statement/Prospectus is not being provided in connection with that offering.
---------------------
AN INVESTMENT IN WEATHERFORD COMMON STOCK AFTER THE MERGER INVOLVES CERTAIN
RISKS.
SEE "RISK FACTORS" ON PAGE -- .
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THIS TRANSACTION OR THE SHARES OF
WEATHERFORD COMMON STOCK TO BE ISSUED IN CONNECTION WITH THIS TRANSACTION OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NOVEMBER -- , 1998.
<PAGE> 9
TABLE OF CONTENTS
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WHERE YOU CAN FIND MORE INFORMATION.............. 4
FORWARD-LOOKING STATEMENTS....................... 6
CERTAIN DEFINED TERMS USED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS........................... 8
QUESTIONS AND ANSWERS ABOUT THE MERGER........... 10
SUMMARY.......................................... 16
The Companies.................................. 16
Special Meetings and Record Dates.............. 17
Required Vote.................................. 17
Organization of Weatherford, Christiana and
Logistic Before and After the Transaction...... 18
The Merger..................................... 18
Ancillary Transactions......................... 20
Price Range of Common Stock.................... 24
Weatherford Unaudited Pro Forma Condensed
Consolidated Financial Data.................. 25
Weatherford Summary Historical Financial
Data......................................... 26
Christiana Summary Historical Financial Data... 27
Comparative Per Share Information.............. 28
GENERAL INFORMATION ABOUT THE MEETINGS........... 29
Date, Time and Place of Special Meetings....... 29
Record Date and Outstanding Shares............. 29
Purposes of the Special Meetings............... 29
Weatherford.................................. 29
Christiana................................... 29
Vote Required.................................. 29
Weatherford.................................. 29
Christiana................................... 29
Voting and Revocation of Proxies............... 30
Solicitation of Proxies........................ 30
Dissenters' Rights............................. 30
Other Matters.................................. 31
BACKGROUND OF THE TRANSACTION.................... 32
WEATHERFORD'S REASONS FOR THE TRANSACTION........ 43
CHRISTIANA'S REASONS FOR THE TRANSACTION......... 44
OPINIONS OF FINANCIAL ADVISORS................... 50
Morgan Stanley Opinion......................... 50
Prudential Securities Opinion.................. 53
American Appraisal Opinion..................... 57
RISK FACTORS..................................... 59
General........................................ 59
Uncertainty of Forward-Looking Statements.... 59
Risks of Adverse Federal Income Tax Treatment
of the Merger.............................. 60
Weatherford.................................... 60
Effect of Market Trends in the Oil and
Natural Gas Markets........................ 60
Risks and Uncertainties Involving Foreign
Operations................................. 60
Risks of Oil and Natural Gas Operations and
Liabilities that Exceed Insurance
Coverage................................... 61
Risks of Environmental Costs and
Liabilities................................ 61
Risks of Substantial Competition in
Weatherford's Business Segments............ 61
Volatility of Common Stock Price............. 61
C2............................................. 61
ORGANIZATION OF WEATHERFORD, CHRISTIANA AND
LOGISTIC BEFORE AND AFTER THE TRANSACTION...... 62
ANCILLARY TRANSACTIONS........................... 63
The Logistic Sale and Operating Agreement...... 63
Terms of the Logistic Sale..................... 63
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General...................................... 63
Indemnification.............................. 63
Certain Definitions.......................... 65
Terms of the Operating Agreement............... 66
General...................................... 66
Capital Contributions........................ 66
Allocations.................................. 66
Distributions................................ 66
Management................................... 66
Assignment, Transfer and Repurchase of a
Member's Units............................. 67
Dissolution and Winding Up................... 67
THE MERGER....................................... 68
Terms of the Merger............................ 68
General Description of the Merger............ 68
Effective Time of the Merger................. 69
Manner and Basis of Converting Shares........ 69
Conditions to the Merger..................... 70
Representations and Warranties of the Parties
to the Merger Agreement.................... 72
Conduct of Business of Christiana and
Weatherford Prior to Merger................ 72
Expenses..................................... 74
Management Following the Merger.............. 74
Termination or Amendment of Merger
Agreement.................................. 74
Governmental and Regulatory Approvals.......... 75
Accounting Treatment........................... 75
NYSE Listing of Weatherford Common Stock....... 75
Federal Securities Law Consequences............ 75
Dissenters' Rights............................. 76
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS....... 77
Federal Income Tax Consequences of the
Merger....................................... 78
Backup Withholding............................. 78
INTERESTS OF CERTAIN PERSONS IN THE
TRANSACTION.................................... 79
Christiana Ownership........................... 79
Indemnity...................................... 80
WEATHERFORD SELECTED CONDENSED CONSOLIDATED
FINANCIAL DATA................................. 81
CHRISTIANA SELECTED CONSOLIDATED FINANCIAL
DATA........................................... 82
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS..................................... 83
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS........................... 87
General........................................ 87
Pro Forma Adjustments.......................... 87
DESCRIPTION OF WEATHERFORD....................... 89
Management Stockholdings....................... 90
DESCRIPTION OF CHRISTIANA........................ 92
Business....................................... 92
General...................................... 92
Logistic..................................... 92
Weatherford.................................. 94
Properties..................................... 94
Description of Properties...................... 95
Illinois Properties.......................... 95
Indiana Properties........................... 96
Michigan Properties.......................... 96
New Jersey Properties........................ 97
Wisconsin Properties......................... 97
Other Assets................................... 97
Legal Proceedings.............................. 97
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................... 98
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Financial Condition, Liquidity and Capital
Resources.................................... 100
Directors and Executive Officers............... 102
Executive Compensation......................... 103
Certain Relationships and Related
Transactions................................. 104
DESCRIPTION OF C2................................ 105
General........................................ 105
Management..................................... 105
Description of Logistic Credit Agreement....... 106
DESCRIPTION OF WEATHERFORD AND CHRISTIANA CAPITAL
STOCK.......................................... 109
Weatherford.................................... 109
Christiana..................................... 110
COMPARATIVE RIGHTS OF STOCKHOLDERS OF WEATHERFORD
AND CHRISTIANA................................. 112
Special Vote Required for Certain
Combinations................................. 112
Vote Required for Corporate Transactions and
Other Matters................................ 113
Disposition of Assets.......................... 113
Power to Amend By-laws......................... 113
Quorum Requirements for Directors' Meetings.... 114
Removal of Directors........................... 114
Director Elections, Qualifications and
Number....................................... 114
PRICE RANGE OF COMMON STOCK AND DIVIDEND
POLICY......................................... 115
STOCK OWNERSHIP AND CERTAIN BENEFICIAL OWNERS.... 116
Weatherford.................................... 116
Christiana..................................... 117
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RELATIONSHIPS WITH INDEPENDENT PUBLIC
ACCOUNTANTS.................................... 117
LEGAL MATTERS.................................... 118
EXPERTS.......................................... 118
STOCKHOLDERS' PROPOSALS.......................... 119
INDEX TO CHRISTIANA FINANCIAL STATEMENTS......... F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS......... F-2
CHRISTIANA CONSOLIDATED FINANCIAL STATEMENTS..... F-3
APPENDIX A: AMENDED AND RESTATED AGREEMENT AND
PLAN OF MERGER
APPENDIX B: LOGISTIC SALE AGREEMENT
APPENDIX C: FIRST AMENDED AND RESTATED OPERATING
AGREEMENT
APPENDIX D: MORGAN STANLEY OPINION
APPENDIX E: PRUDENTIAL SECURITIES OPINION
APPENDIX G: AMERICAN APPRAISAL OPINION
APPENDIX H: DISSENTERS' RIGHTS PROVISIONS OF THE
WISCONSIN BUSINESS CORPORATION LAW
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WHERE YOU CAN FIND MORE INFORMATION
Weatherford and Christiana file annual, quarterly and special reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). Those reports, proxy statements and other
information filed by Weatherford and Christiana with the Commission can be
inspected at the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
Regional Offices of the Commission at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, New York,
New York 10048. Please call the Commission at 1-800-SEC-0300 for further
information on the public reference rooms. Copies of those materials may also be
obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
The Commission maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding Weatherford and Christiana. Those reports, proxy and
information statements and other information concerning Weatherford and
Christiana also can be inspected and copied at the offices of the New York Stock
Exchange, Inc. (the "NYSE"), 20 Broad Street, New York, New York 10005, on which
the Weatherford Common Stock and Christiana Common Stock are listed.
Weatherford has filed with the Commission registration statements on Form
S-4 to register the Weatherford Common Stock to be issued in the Merger (the
"Registration Statement"). As allowed by Commission rules, this Joint Proxy
Statement/Prospectus does not contain all the information you can find in the
Registration Statement, or the exhibits thereto. This Joint Proxy
Statement/Prospectus will be a part of the Registration Statement and will
constitute a prospectus of Weatherford in addition to being a Joint Proxy
Statement of Weatherford and Christiana for the Special Meetings.
For further information on Weatherford and the Weatherford Common Stock
being offered, please review the Registration Statement, including the exhibits
that are filed with it. Statements made in this Joint Proxy Statement/Prospectus
that describe documents may not necessarily be complete. We recommend that you
review the documents that Weatherford has filed with its Registration Statements
to obtain a more complete understanding of those documents.
The Commission allows Weatherford and Christiana to "incorporate by
reference" information into this Joint Proxy Statement/Prospectus, which means
that Weatherford and Christiana can disclose important information to you by
referring you to another document filed separately with the Commission. The
information incorporated by reference is deemed to be part of this Joint Proxy
Statement/Prospectus, except for any information superseded by information in
this Joint Proxy Statement/Prospectus. This Joint Proxy Statement/Prospectus
incorporates by reference the documents set forth below that Weatherford or
Christiana previously filed with the Commission. These documents contain
important information about Weatherford or Christiana, as applicable.
The following documents filed by Weatherford with the Commission (File No.
1-13086) are incorporated by reference into this Joint Proxy
Statement/Prospectus:
(a) Weatherford's Annual Report on Form 10-K for the year ended
December 31, 1997 as amended by Amendment No. 1 and Amendment No. 2 to the
Annual Report on Form 10-K on Forms 10-K/A;
(b) Weatherford's Current Report on Form 8-K dated May 1, 1997, as
amended by Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A
dated January 14, 1998;
(c) Weatherford's Current Report on Form 8-K dated November 5, 1997,
as amended by Amendment No. 1 to the Current Report on Form 8-K on Form
8-K/A dated March 26, 1998;
(d) Weatherford's Current Report on Form 8-K dated December 2, 1997,
as amended by Amendment No. 1 to the Current Report on Form 8-K on Form
8-K/A dated February 13, 1998;
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(e) Weatherford's Current Report on Form 8-K dated January 28, 1998;
(f) Weatherford's Current Report on Form 8-K dated February 3, 1998;
(g) Weatherford's Current Report on Form 8-K dated February 19, 1998,
as amended by Amendment No. 1 to the Current Report on Form 8-K on Form
8-K/A dated April 21, 1998;
(h) Weatherford's Current Report on Form 8-K dated March 5, 1998, as
amended by Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A
dated March 9, 1998;
(i) Weatherford's Current Report on Form 8-K dated April 20, 1998;
(j) Weatherford's Current Report on Form 8-K dated April 22, 1998, as
amended by Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A
dated April 24, 1998;
(k) Weatherford's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998;
(l) Weatherford's Current Report on Form 8-K dated May 15, 1998, as
amended by Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A
dated May 22, 1998;
(m) Weatherford's Current Report on Form 8-K dated May 27, 1998;
(n) Weatherford's Current Report on Form 8-K dated June 15, 1998, as
amended by Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A
dated July 20, 1998;
(o) Weatherford's Current Report on Form 8-K dated July 16, 1998;
(p) Weatherford's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1998;
(q) Weatherford's Current Report on Form 8-K dated August 17, 1998;
and
(r) The description of Weatherford Common Stock contained in
Weatherford's Registration Statement on Form 8-A (filed May 19, 1994) and
as amended by Weatherford's Registration Statement on Form S-4, as amended
(Registration No. 333-58741), including any amendment or report filed for
the purpose of updating such description.
The following documents filed by Christiana with the Commission (File No.
1-3846) are incorporated by reference into this Joint Proxy
Statement/Prospectus:
(a) Christiana's Annual Report on Form 10-K for the fiscal year ended
June 30, 1998.
All documents filed by Weatherford and Christiana pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Joint Proxy Statement/Prospectus and prior to the date of the Special Meetings
shall be deemed to be incorporated herein by reference and shall be a part
hereof from the date of the filing of such document. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Joint Proxy
Statement/Prospectus to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes that statement. Any such statement so
modified or superseded shall not constitute a part of this Joint Proxy
Statement/Prospectus, except as so modified or superseded.
Weatherford will provide without charge to each person to whom a copy of
this Joint Proxy Statement/Prospectus has been delivered, upon the written or
oral request of any such person, a copy of any or all of the documents
incorporated by reference herein, other than the exhibits to such documents,
unless such exhibits are specifically incorporated by reference into the
information that this Joint Proxy Statement/Prospectus incorporates. Written or
oral requests for such copies should be directed to Weatherford at 5 Post Oak
Park, Suite 1760, Houston, Texas 77027-3415, Attention: Secretary (Telephone
number: (713) 297-8400). To obtain timely delivery, persons requesting copies of
such information must make a written or oral request for a copy of such
information by December -- , 1998.
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Christiana will provide without charge to each person to whom a copy of
this Joint Proxy Statement/Prospectus has been delivered, upon the written or
oral request of any such person, a copy of any or all of the documents
incorporated by reference herein, other than the exhibits to such documents,
unless such exhibits are specifically incorporated by reference into the
information that this Joint Proxy Statement/Prospectus incorporates. Written or
oral requests for such copies should be directed to Christiana at 700 North
Water Street, Suite 1200, Milwaukee, Wisconsin 53202, Attention: Secretary
(Telephone number: (414) 291-9000). To obtain timely delivery, persons
requesting copies of such information must make a written or oral request for a
copy of such information by December -- , 1998.
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE STATEMENTS REGARDING THE MATTERS
CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED
HEREIN OR IN THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN. YOU SHOULD NOT RELY
ON ANY UNAUTHORIZED STATEMENTS. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SECURITIES, NOR
DOES IT CONSTITUTE THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM
ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS JOINT PROXY STATEMENT/PROSPECTUS
NOR ANY DISTRIBUTION OF SHARES OF WEATHERFORD COMMON STOCK MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF WEATHERFORD OR CHRISTIANA SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
FORWARD-LOOKING STATEMENTS
Certain statements made herein and in public filings and releases by
Weatherford contain "forward-looking" information (as defined in the Private
Securities Litigation Reform Act of 1995) that involve risk and uncertainty.
These forward-looking statements may include, but are not limited to, future
sales, earnings, margins, production levels and costs, expected savings from
acquisitions and plant expansions, demand for products, product deliveries,
market trends in the oil and gas industry and the oilfield service sector
thereof, research and development, environmental and other expenditures,
currency fluctuations and various business trends. Forward-looking statements
may be made by management orally or in writing including, but not limited to,
the Management's Discussion and Analysis of Financial Condition and Results of
Operations section and other sections of Weatherford's filings with the
Commission under the Exchange Act and the Securities Act of 1933, as amended
(the "Securities Act").
Certain risks and uncertainties may cause actual results to be materially
different from projected results. Those risks and uncertainties include, but are
not limited to, the following:
- - Changes in the price of oil and natural gas and the effect of such changes on
the demand for and price of Weatherford's products, including its drilling and
production equipment
- - Currency fluctuations
- - Changes in the number of active drilling rigs in domestic and international
exploration markets
- - Global trade policies
- - Changes in the levels of domestic and international drilling activities
- - Effects of the economic downturn in Southeast Asia on the worldwide economies
and the associated demand for oil
- - Worldwide political stability and economic growth
- - U.S. and foreign government import and export policies
- - Technological advances regarding Weatherford's products
- - Litigation and other legal and dispute resolution proceedings
- - Year 2000 compliance issues
- - Weatherford's successful execution of internal operating plans and
manufacturing consolidations and restructurings
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- - Performance issues with key suppliers and subcontractors
- - Weatherford's ability to maintain current pricing for products and services
and maintain current market shares
- - Changes in raw materials costs
- - Disputes with labor unions
- - Changes in the regulation of oil and natural gas production and exploration
In addition, Weatherford's future results will depend upon the outcome of
risks related to its acquisition strategy. These risks include, but are not
limited to, the following:
- - Weatherford's ability to successfully combine the operations of its
predecessors, EVI, Inc. and Weatherford Enterra, Inc.
- - Weatherford's ability to continue to identify and complete successful
acquisitions at acceptable prices
- - Weatherford's ability to combine the operations of such acquisitions with its
existing operations
- - Weatherford's ability to penetrate existing and new markets through such
acquisitions
Finally, Weatherford's future results will depend upon various other risks
and uncertainties, including, but not limited to, those detailed in
Weatherford's and Christiana's filings with the Commission. For additional
information regarding risks and uncertainties relating to Weatherford and
Christiana, see "Risk Factors" and Weatherford's and Christiana's filings with
the Commission under the Exchange Act and the Securities Act referenced herein
under "Where You Can Find More Information".
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CERTAIN DEFINED TERMS USED IN THIS JOINT PROXY STATEMENT/PROSPECTUS
In this Joint Proxy Statement/Prospectus:
- We refer to Weatherford International, Inc., a Delaware corporation,
as "Weatherford". Weatherford was previously known as EVI Weatherford, Inc.
and is the surviving corporation in the merger of EVI, Inc. and Weatherford
Enterra, Inc. that was completed on May 27, 1998.
- We refer to Christiana Acquisition, Inc., a Wisconsin corporation
and wholly owned subsidiary of Weatherford, as "Sub".
- We refer to Christiana Companies, Inc., a Wisconsin corporation, as
"Christiana".
- We refer to C2, Inc., a Wisconsin corporation, as "C2".
- We refer to Total Logistic Control, LLC, a Delaware limited
liability company, as "Logistic".
- We refer to the merger of Sub into Christiana as the "Merger".
- We refer to the time that the Articles of Merger relating to the
Merger are filed with the Department of Financial Institutions of the State
of Wisconsin (or any later time specified therein) as the "Effective Time".
- We refer to the sale by Christiana to C2 of a two-thirds interest in
Logistic as the "Logistic Sale".
- We sometimes refer to the Merger and related transactions as the
"Transaction".
- We refer to Sheldon Lubar, Chairman of the Board of Directors of
Christiana, and the members of his immediate family as the "Lubar Family".
- We refer to the agreement between Weatherford, Christiana, C2 and
Sub concerning the Merger as the "Merger Agreement" and sometimes as the
"Amended Merger Agreement".
- We refer to the Merger Agreement prior to the most recent amendment
as the "Prior Merger Agreement".
- We refer to the agreement under which C2 will acquire its interest
in Logistic as the "Logistic Purchase Agreement".
- We refer to the agreement governing the future operations of
Logistic as the "Operating Agreement".
- We refer to the prospectus of C2 relating to the C2 Offering as the
"C2 Prospectus".
- We refer to the special meeting of Weatherford stockholders
described on page -- as the "Weatherford Special Meeting".
- We refer to the special meeting of Christiana shareholders described
on page -- as the "Christiana Special Meeting". We also refer to the
Christiana Special Meeting and the Weatherford Special Meeting as the
"Special Meetings".
- We refer to the proposal to approve the Merger as the "Merger
Proposal".
- We refer to the common stock, par value $1.00 per share, of
Weatherford as "Weatherford Common Stock".
- We refer to the common stock, par value $1.00 per share, of
Christiana as "Christiana Common Stock".
- We refer to the common stock, par value $.01 per share, of C2 as "C2
Common Stock".
- We refer to that fraction of a share of Weatherford Common Stock to
be issued in the Merger in exchange for each share of Christiana Common
Stock as the "Weatherford Share Consideration".
- We refer to the amount of cash to be paid in respect of each share
of Christiana Common Stock as
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the "Cash Consideration".
- We refer to the obligations and liabilities to be assumed by C2 and
Logistic pursuant to the Logistic Purchase Agreement as the "C2/Logistic
Assumed Liabilities".
- We refer to the purchases of up to $5.0 million of Weatherford
Common Stock required to be made by Christiana following the Christiana
Special Meeting, if necessary to qualify the Merger as a tax free
reorganization, as the "Additional Purchases".
- We refer to the agreement of the Lubar Family to purchase enough
shares of common stock of C2 as is necessary to raise the $10.67 million
needed to fund C2's purchase of a two-thirds interest in Logistic as the
"Lubar/C2 Agreement".
All information in this Joint Proxy Statement/Prospectus relating to
Weatherford (other than tax consequences, which has been supplied by Christiana)
has been supplied by Weatherford and all information relating to Christiana and
C2 has been supplied by Christiana and C2, respectively.
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QUESTIONS AND ANSWERS ABOUT THE MERGER
The following questions and answers highlight selected information
regarding the Merger and related transactions described in this Joint Proxy
Statement/Prospectus and may not contain all information that is important to
you as you consider the merits of the Merger. For a more complete description of
the terms of the Merger and the related transactions, please read this entire
Joint Proxy Statement/Prospectus and the documents to which we refer. See also
"Where You Can Find More Information" on page -- .
Q: PLEASE BRIEFLY DESCRIBE THE PROPOSED MERGER AND THE RELATED TRANSACTIONS.
A: The Merger is being pursued as a means for Weatherford to acquire a
one-third interest in Logistic and the shares of Weatherford Common Stock
held by Christiana in a transaction that will be partially tax free to the
Christiana shareholders. The Merger and related transactions will be
effected in three parts, all of which will occur at the same time:
First, C2 will offer shares of its stock to the Christiana
shareholders on a pro rata basis for a total consideration of up to $20.8
million. C2 will apply $10.67 million of the proceeds of that offering to
purchase a two-thirds interest in Logistic.
Second, Christiana will sell to C2 a two-thirds interest in Logistic
for $10.67 million. As part of this transaction, C2 and Logistic will
assume all historical liabilities of Christiana and indemnify Christiana
and Weatherford from them.
Third, Sub will merge into Christiana with its only assets being a
one-third interest in Logistic, the value of certain tax benefits, its
shares of Weatherford Common Stock and cash equal to the sum of
Christiana's accrued unpaid taxes and Christiana's fixed liabilities at the
time of the Merger and the cash payable to the Christiana shareholders in
the Merger.
Q: WHAT WILL A CHRISTIANA SHAREHOLDER RECEIVE IN THE MERGER IF THERE ARE NO
ADDITIONAL PURCHASES?
A: As a Christiana shareholder, you will receive shares of Weatherford Common
Stock and cash. The amount of stock and cash will be based on the number of
shares of Weatherford Common Stock and cash held by Christiana at the
closing. If there are no Additional Purchases, we currently expect that each
share of Christiana Common Stock will receive -- of a share of
Weatherford Common Stock and approximately $4.00 cash. You will receive only
whole shares of Weatherford Common Stock. Any fractional shares of
Weatherford Common Stock you would otherwise receive in the exchange will be
rounded up or down to the nearest whole share.
Q. COULD I RECEIVE LESS THAN $4.00 PER SHARE IN CASH?
A. Yes. The amount of cash to be paid in the Merger will depend upon the amount
of cash of Christiana at the time of the Merger. We currently expect the
Cash Consideration to be between approximately $3.00 and $4.00 per share of
Christiana Common Stock. However, if it is necessary for Christiana to make
Additional Purchases, each Christiana shareholder could receive
approximately $1.00 less cash per share of Christiana Common Stock but will
receive more Weatherford Common Stock. If Christiana is not required to make
Additional Purchases, each Christiana shareholder will receive approximately
$4.00 per share of Christiana Common Stock.
Q: WHAT WILL A WEATHERFORD STOCKHOLDER RECEIVE IN THE MERGER?
A: No change will occur to the Weatherford Common Stock in the Merger and each
share of Weatherford Common Stock held by a Weatherford stockholder will
remain outstanding.
Q: WHY IS CHRISTIANA GIVING WEATHERFORD A ONE-THIRD INTEREST IN LOGISTIC FOR
WHAT APPEARS TO BE NO CONSIDERATION?
A: The one-third interest in Logistic is being provided to Weatherford as
consideration for entering into the transaction with Christiana. Although
this interest has a book value in excess of $7.0 million, the
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Christiana Board believes that the benefits of the Transaction, in
particular the tax savings to be realized by the Christiana shareholders in
the Transaction, are greater than the value of the one-third interest in
Logistic.
Q: WHAT ARE THE TAX SAVINGS TO BE RECEIVED BY THE CHRISTIANA SHAREHOLDERS?
A: The tax savings depend on the value of the Weatherford Common Stock held by
Christiana and when and if those shares would have been sold. Had those
shares of Weatherford Common Stock been sold over the last year, the taxes
paid by Christiana should have ranged between $20.0 million and $106.0
million, which is between $4.00 and $21.00 per share of Christiana Common
Stock.
Q: I THOUGHT THE CHRISTIANA AND WEATHERFORD STOCKHOLDERS HAD ALREADY APPROVED
THE MERGER. WHY ARE WE VOTING AGAIN?
A: You are right. The Weatherford and Christiana stockholders had approved a
merger between Christiana and Sub pursuant to the Prior Merger Agreement.
We, however, were unable to complete that merger because the merger would
not have qualified as a partially tax free reorganization for U.S. federal
income tax purposes. As a result, we have changed the terms of the Merger
with the objective of allowing the Merger to be completed on a partially tax
free basis.
Q: COULD YOU EXPLAIN WHY THE PREVIOUSLY APPROVED MERGER WOULD NOT HAVE BEEN TAX
FREE?
A: As we describe under "Certain Federal Income Tax Consequences" on page -- ,
for the Merger to qualify as a partially tax free reorganization for U.S.
federal income tax purposes, the value of the Weatherford Common Stock at
the time of the Merger must represent at least 80% of the value of the
consideration to be paid to the Christiana shareholders. Since the time we
first entered into the Prior Merger Agreement, the market price of the
Weatherford Common Stock has declined by over 50%. This decline resulted in
the value of the Weatherford Common Stock being less than 80% of the total
consideration to be paid in the Merger. As a result, the prior merger could
not have been consummated on a partially tax free basis.
Q: HOW WERE THE TERMS OF THE PRIOR MERGER AGREEMENT CHANGED TO ADDRESS THIS TAX
ISSUE?
A: We are increasing the number of shares of Weatherford Common Stock to be
issued in the Merger and decreasing the cash component of the Merger. To
make this change, Christiana recently used $10.0 million of its cash to
purchase Weatherford Common Stock and agreed to use up to an additional $5.0
million of its cash to purchase additional shares of Weatherford Common
Stock to the extent necessary to allow the Merger to qualify as a tax free
reorganization. In exchange, Weatherford agreed to eliminate a $10.0 million
five year cash hold back so that Christiana could purchase Weatherford
Common Stock without substantially reducing the initial cash to be paid in
the Merger.
Q: WERE THERE ANY OTHER SIGNIFICANT CHANGES MADE TO THE TERMS OF THE MERGER
FROM THOSE THAT WERE APPROVED BY THE SHAREHOLDERS?
A: No.
Q: DID THE CHRISTIANA BOARD OF DIRECTORS CONSIDER THE DROP IN THE PRICE OF THE
WEATHERFORD COMMON STOCK IN APPROVING THE MERGER?
A: Yes it did. In approving the Merger, the Christiana Board noted that there
had been a significant drop in the market price of the stocks of most of the
publicly traded oil field service and equipment companies over the last nine
months and that the drop in the price of the Weatherford Common Stock had
not been materially greater than that of other oil field service companies.
The Christiana Board in fact viewed the current price of the Weatherford
Common Stock as an attractive investment for Christiana and its
shareholders.
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Q: DID THE WEATHERFORD BOARD OF DIRECTORS CONSIDER THE IMPACT OF THE RELEASE OF
THE $10.0 MILLION FIVE YEAR HOLD BACK IN APPROVING THE MERGER?
A: Yes it did. In approving the Merger, the Weatherford Board took into account
the fact that Weatherford would not have the benefit of $10.0 million for
five years on an interest-free basis and the hold back would not be
available to offset unpaid indemnity claims. The Weatherford Board, however,
considered the benefit of receiving the one-third interest in Logistic
without the payment of any consideration other than entering into the Merger
Agreement as outweighing the benefit of holding $10.0 million for five years
for purposes of offsetting indemnity claims. The Weatherford Board also
considered the ability of C2 and Logistic to pay the continuing
indemnification obligations.
Q: WHY IS THE BOARD OF DIRECTORS OF CHRISTIANA RECOMMENDING THAT I VOTE IN
FAVOR OF THE MERGER?
A: The Christiana Board of Directors is of the opinion that the Merger is in
the best interests of Christiana and its shareholders. There are five
principal reasons for this opinion:
First, the Merger allows the Christiana shareholders who are primarily
interested in Christiana's investment in Weatherford to obtain a direct
ownership in Weatherford in a partially tax free manner while receiving
cash for their interest in the rest of Christiana's businesses, primarily
Logistic.
Second, the Merger will allow for a better valuation of the businesses
of Christiana by separating Christiana's ownership of Weatherford Common
Stock from Christiana's ownership of Logistic. The Christiana Board
believes that this separation should allow for a better valuation of
Logistic as a division of C2 and will benefit the Christiana shareholders
to the extent they elect to invest in C2.
Third, the Merger will allow the Christiana shareholders to receive
the shares of Weatherford Common Stock held by Christiana without (i)
Christiana incurring tax on a disposition of the Weatherford shares held by
it and (ii) the Christiana shareholders incurring tax on their receipt of
the Weatherford shares.
Fourth, the use by Christiana of up to $15.0 million of its cash to
acquire Weatherford Common Stock comes at a time when the Weatherford
Common Stock is considered by the Christiana Board of Directors to be an
attractive investment and allows the Christiana shareholders to essentially
reinvest in a tax free manner the money that might otherwise have been
distributed to them in the Merger.
Fifth, Christiana shareholders who will become Weatherford
stockholders should be able to more easily sell their Weatherford Common
Stock than they were able to sell their Christiana Common Stock, because
Weatherford Common Stock has more liquidity in the public market than does
Christiana Common Stock.
A more detailed description of the background of and Christiana's reasons for
the Merger appears on pages -- and -- , respectively.
Q: WHY IS THE BOARD OF DIRECTORS OF WEATHERFORD RECOMMENDING THAT I VOTE IN
FAVOR OF THE MERGER?
A: The Weatherford Board of Directors is of the opinion that the Merger is in
the best interests of Weatherford and its stockholders. There are three
principal reasons for this opinion:
First, the Merger will allow Weatherford to acquire a one-third
interest in Logistic for no consideration other than agreeing to be a party
to the transaction. Weatherford believes that the business of Logistic is
an attractive business for growth and that its investment in Logistic
should increase in value with minimal investment of time and money by
Weatherford. In addition, at any time after the fifth anniversary of the
Effective Time Weatherford has the right to sell to C2 or Logistic its
one-third interest in Logistic for $7.0 million.
Second, the Merger will result in no dilution to Weatherford because
the number of shares issuable in the Merger will be equal to the number of
shares of Weatherford Common Stock held by Christiana. Any income
attributable to Logistic also will be accretive to Weatherford.
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<PAGE> 20
Third, the Merger will result in a better distribution of the
Weatherford Common Stock because the Christiana shareholders will hold
shares of Weatherford Common Stock directly rather than through Christiana.
A more detailed description of the background of and Weatherford's reasons
for the Merger appears on pages -- and -- , respectively.
Q: WHY IS WEATHERFORD ACQUIRING A COMPANY ENGAGED IN THE LOGISTICS BUSINESS?
WHAT SYNERGIES ARE THERE FOR WEATHERFORD IN THIS TRANSACTION?
A: The acquisition of Christiana and the one-third interest in Logistic is
being made by Weatherford because it believes it to be a good passive
investment for Weatherford. Although Weatherford will have two
representatives on the Board of Managers of Logistic, it does not intend to
take an active management role in the day-to-day operations of Logistic and
expects the value of the Logistic business to increase. Any increase in
value would further benefit the Weatherford stockholders.
Q: WILL THE OUTSTANDING SHARES OF WEATHERFORD CHANGE AS A RESULT OF THE MERGER?
A: No. As noted above, the number of shares of Weatherford Common Stock to be
issued in the Merger will be equal to the number of shares of Weatherford
Common Stock held by Christiana.
Q: WHERE WILL THE WEATHERFORD SHARES BE LISTED?
A: The shares of Weatherford Common Stock to be delivered in the Merger will be
listed on the NYSE just like the Christiana Common Stock is now listed.
Q: WHAT ARE THE TAX CONSEQUENCES TO CHRISTIANA SHAREHOLDERS OF THE MERGER?
A: Based on the advice of Arthur Andersen LLP, Christiana believes the Merger
will be a partially tax free reorganization for U.S. federal income tax
purposes. As a result, Christiana believes the shareholders of Christiana
will not recognize any gain or loss on their receipt of shares of
Weatherford Common Stock. Christiana shareholders will recognize gain with
respect to the cash to be received by them in respect of their shares. This
opinion is based on the assumption that the value of the Weatherford Common
Stock to be received in the Merger will be at least 80% of the total
consideration to be received in the Merger. You should note that the
Internal Revenue Service is not bound by Arthur Andersen's opinion and it
could take a contrary position.
A more detailed description of the U.S. federal income tax consequences of
the Merger appears on page -- .
Q: AT WHAT PRICE LEVEL WILL THE WEATHERFORD COMMON STOCK CEASE TO REPRESENT AT
LEAST 80% OF THE MERGER CONSIDERATION?
A: Christiana expects that the Weatherford Common Stock to be received in the
Merger will represent at least 80% of the total consideration as long as the
Weatherford Common Stock trades no lower than $ -- per share on the closing
date of the Merger. This per share calculation reflects Christiana's recent
purchase of -- shares of Weatherford Common Stock for approximately $10.0
million. In addition, Christiana has committed to spend up to an additional
$5.0 million to purchase Weatherford Common Stock if necessary to qualify
the Merger as a partially tax free reorganization for U.S. federal income
tax purposes. If this additional money is spent, Christiana expects that the
price at which the Weatherford Common Stock would cease to represent at
least 80% of the total consideration would be approximately $ -- per share.
Q: WHAT IS THE RELATIONSHIP BETWEEN THE PUBLIC OFFERING BEING MADE BY C2 AND
THE MERGER?
A: The public offering by C2 is a separate transaction. It is being made to all
the shareholders of Christiana to allow them to participate in an investment
in Logistic as part of the Merger. If you as a Christiana
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<PAGE> 21
shareholder do not invest in C2, your only remaining interest in Logistic
will be through the one-third interest held by Weatherford. You will,
however, receive cash that may be utilized by you as you wish.
Q: WHAT IS C2?
A: C2 is an entity created by Sheldon Lubar, Chairman of Christiana, to
facilitate the Merger by acquiring a two-thirds interest in Logistic. A pro
rata ownership in C2 is being offered to all the Christiana shareholders.
Q: I NOTE THAT THE TWO-THIRDS INTEREST IN LOGISTIC BEING SOLD TO C2 IS AT A
PRICE LESS THAN BOOK VALUE. WHY IS IT BEING SOLD AT THAT PRICE?
A: The Christiana Board and Christiana Special Committee have authorized the
sale of a two-thirds interest in Logistic at a price less than book value
for a number of reasons. First, the two-thirds interest will be restricted
and subject to certain rights of Christiana. Second, C2 will assume
Christiana's historical and contingent liabilities as part of the
consideration for the purchase. Third, C2 will agree to give Christiana a
$7.0 million put right for its interest. Fourth, all Christiana shareholders
will be entitled to invest in Logistic through C2 on the same basis. Based
on those facts, the Christiana Board, with Mr. Lubar abstaining, decided
that the proposed price was fair to Christiana and its shareholders.
Q: HOW DO I PURCHASE C2 SHARES?
A: Christiana shareholders should carefully read the C2 Prospectus that
accompanies this Joint Proxy Statement/Prospectus. If a Christiana
shareholder decides to purchase shares of C2 Common Stock, he or she should
complete the appropriate sections of the letter of transmittal that
accompanies this Joint Proxy Statement/Prospectus and return it to Firstar
Trust Company at the address listed in the letter of transmittal by no later
than 5:00 p.m., central standard time, on -- , 1999.
Q: WHEN IS THE MERGER EXPECTED TO BE COMPLETED?
A: Weatherford and Christiana expect that the Merger will be completed promptly
after the Special Meetings.
Q: WHAT SHOULD I DO NOW?
A: After reading this document carefully, you should complete and sign your
proxy card and mail it in the enclosed return envelope as soon as possible,
so that your shares may be represented at the Special Meetings. The Board of
Directors of Christiana recommends that the Christiana shareholders vote for
adoption of the Merger Agreement and the Merger. The Board of Directors of
Weatherford recommends that the Weatherford stockholders vote for adoption
of the Merger Agreement and the Merger.
Q: SHOULD I SEND MY STOCK CERTIFICATES NOW?
A: No action needs to be taken by the Weatherford stockholders. Christiana
shareholders should complete the letter of transmittal that accompanies this
Joint Proxy Statement/Prospectus and return it, along with their Christiana
stock certificates, to Firstar Trust Company at the address listed in the
letter of transmittal by no later than 5:00 p.m., central standard time, on
-- , 1999. Christiana shareholders who submitted their Christiana
stock certificates in connection with the first special meeting of
Christiana shareholders to consider the Merger need not take any action
regarding those certificates but should still complete and return the letter
of transmittal.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares.
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<PAGE> 22
Q: MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You can change your vote by sending in a later-dated, signed proxy card
to the Secretary of your company before the Special Meetings or by attending
your Special Meeting and voting in person.
Q: WHAT OTHER MATTERS WILL BE VOTED ON AT THE SPECIAL MEETINGS?
A: You will also be asked to allow Christiana and Weatherford to adjourn the
Special Meetings to solicit additional votes if they have not received the
required votes by the time of the Special Meetings. We do not expect to ask
you to vote on any other matters at the Special Meetings.
Q: WHO SHOULD I CALL WITH QUESTIONS?
A: If you have any questions about the Merger, or if you would like copies of
any of the documents referred to or incorporated by reference in this Joint
Proxy Statement/Prospectus, please call Georgeson & Company Inc. at (800)
-- - -- . See also "Where You Can Find More Information" on page -- .
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<PAGE> 23
SUMMARY
This summary highlights selected information from this Joint Proxy
Statement/Prospectus and may not contain all of the information that is
important to you. You should also read the "Questions and Answers About the
Merger" on page --. To understand the Merger and related transactions more
fully, you should carefully read this entire document and the documents we refer
to. See "Where You Can Find More Information" on page --.
THE COMPANIES (SEE PAGE --)
Weatherford International, Inc. Weatherford is a diversified international
energy service and manufacturing company that provides a variety of services and
equipment for the exploration, production and transmission of oil and gas.
Weatherford's principal industry segments consist of drilling products,
completion oilfield products and services and artificial lift and compression
products and services. Weatherford operates in most every oil and natural gas
exploration and production region in the world.
Weatherford was incorporated in 1972 as a Massachusetts corporation and was
reincorporated in 1980 in Delaware. Weatherford's and Sub's corporate office is
located at 5 Post Oak Park, Suite 1760, Houston, Texas 77027-3415, and their
telephone number is (713) 297-8400. Sub is a wholly owned subsidiary of
Weatherford that was incorporated in Wisconsin in December 1997 for the purpose
of effecting the Merger.
Christiana Companies, Inc. Christiana, through Logistic, is engaged in
providing public refrigerated and non-refrigerated warehousing and logistic
services. Operations in the warehousing and logistic businesses were
historically conducted through two wholly owned subsidiaries of Christiana,
Wiscold, Inc. and Total Logistic Control, Inc. Christiana acquired Wiscold, Inc.
in September of 1992 and Total Logistic Control, Inc. in January of 1994. On
June 30, 1997, as part of an internal restructuring, the operations and
corporate structures of Wiscold, Inc. and Total Logistic Control, Inc. were
merged to form Logistic.
Logistic provides full service public and contract warehousing and logistic
services in all ranges of refrigerated and ambient temperatures and believes it
is the nation's seventh largest provider of public refrigerated warehouse
services. Logistic's refrigerated warehousing operations include temperature
sensitive storage services, blast freezing, individual quick freeze services,
vegetable blanching and processing, and automated poly bag and bulk packaging
services. Logistic's transportation and distribution services include full
service truckload, less-than-truckload and pooled consolidation in both
temperature controlled and dry freight equipment, dedicated fleet services and
specialized store-door delivery formats. Transportation and logistic services
are provided utilizing company-owned equipment as well as through carrier
management services utilizing third party common and contract carriers.
Integrated logistic services generally combine transportation, warehousing and
information services to manage the distribution channel for a customer's
products from the point of manufacture to the point of consumption. Logistic
also provides a full range of international freight management services, fully
computerized inventory management, kit preparation, repackaging and just-in-time
production supply services. As of June 30, 1998, the book value of Christiana
and pro forma book value of Logistic was approximately $136.2 million and $23.0
million, respectively. See "Description of Christiana".
Christiana was incorporated in 1954 as a Delaware corporation and was
reincorporated in 1992 as a Wisconsin corporation.
The principal executive offices of Christiana are located at 700 North
Water Street, Suite 1200, Milwaukee, Wisconsin 53202, and its telephone number
is (414) 291-9000.
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<PAGE> 24
SPECIAL MEETINGS AND RECORD DATES
Weatherford. The Weatherford Special Meeting will be held at 9:00 a.m.,
Houston time, on December -- , 1998, at The Luxury Collection Hotel of Houston,
1919 Briar Oaks, Houston, Texas. The purpose of the Weatherford Special Meeting
is to consider and vote on the Merger Proposal. Only stockholders of record at
the close of business on that date will be entitled to vote at the Weatherford
Special Meeting.
Christiana. The Christiana Special Meeting will be held at 9:00 a.m.,
Milwaukee time, on December -- , 1998, at the Galleria Conference Room, Firstar
Center, 777 East Wisconsin Avenue, Milwaukee, Wisconsin. The purpose of the
Christiana Special Meeting will be to consider and vote on the Merger Proposal.
Only shareholders of record at the close of business on that date will be
entitled to vote at the Christiana Special Meeting.
The record date for the Special Meetings has been fixed to be the close of
business on November -- , 1998 (the "Record Date").
REQUIRED VOTE
Weatherford. The affirmative vote of the holders of a majority of the
shares of Weatherford Common Stock represented at the Weatherford Special
Meeting is required for approval of the Merger Proposal by Weatherford. This
vote is established by the rules of the NYSE and Weatherford's Amended and
Restated By-laws.
Christiana. Approval of the Merger Proposal by the Christiana shareholders
will require a super-majority vote under Wisconsin law. Wisconsin law requires
an affirmative vote of the holders of at least 80% of the votes entitled to be
cast at the Christiana Special Meeting and two-thirds of the votes entitled to
be cast at the Christiana Special Meeting excluding shares that are beneficially
owned by the Lubar Family. The Lubar Family may be deemed to beneficially own
approximately 2,718,000 shares of Christiana Common Stock (the "Lubar Shares").
These shares represent approximately 52.8% of the issued and outstanding shares
of Christiana Common Stock.
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<PAGE> 25
ORGANIZATION OF WEATHERFORD, CHRISTIANA AND LOGISTIC BEFORE AND AFTER THE
TRANSACTION
The following diagrams set forth the stock ownership and organizational
structure of Weatherford, Christiana and Logistic, before and after the
transaction:
[BEFORE AND AFTER TRANSACTION CHARTS]
* Percentage may change if Additional Purchases are made.
THE MERGER (SEE PAGE -- )
In the Merger, Sub will be merged into Christiana, with Christiana being
the surviving corporation and becoming a wholly owned subsidiary of Weatherford.
The consideration to be paid to the Christiana shareholders will be the
Weatherford Share Consideration and the Cash Consideration. The Weatherford
Share Consideration will be determined by dividing the number of shares of
Weatherford Common Stock held
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<PAGE> 26
by Christiana at the time of the Merger by the number of outstanding shares of
Christiana Common Stock at the time of the Merger. The Cash Consideration will
be determined by dividing the amount of cash held by Christiana in excess of its
accrued unpaid taxes, the value of certain tax benefits and fixed liabilities at
the time of the Merger by the outstanding number of shares of Christiana Common
Stock at the time of the Merger. Christiana currently estimates that the
Weatherford Share Consideration will be . -- of a share of
Weatherford Common Stock for each share of Christiana Common Stock. Christiana
further estimates that the Cash Consideration will be between approximately
$3.00 and $4.00 for each share of Christiana Common Stock.
The following chart sets forth a general allocation of the consideration to
be paid by Weatherford for the assets of Christiana to be acquired by
Weatherford in the Merger:
<TABLE>
<CAPTION>
CHRISTIANA ASSETS
(AFTER THE LOGISTIC SALE AND PRIOR TO THE MERGER) CONSIDERATION ALLOCATION TO ASSETS BY WEATHERFORD
- ------------------------------------------------- -------------------------------------------------
<S> <C>
Shares of Weatherford Common Stock held by Shares of Weatherford Common Stock equal to the
Christiana at closing number of shares held by Christiana at closing(1)
Christiana cash less accrued unpaid taxes, the Cash Consideration (estimated to be between
value of certain tax benefits and fixed approximately $3.00 and $4.00 per share of
liabilities of Christiana not assumed by C2 and Christiana Common Stock)(2)
Logistic at closing
One-third interest in Logistic and certain tax Agreement to enter into Merger and bear cost of
benefits(3) transaction
</TABLE>
- ---------------
(1) Although Weatherford is issuing to the Christiana shareholders a number of
shares of Weatherford Common Stock equal to the number of shares of
Weatherford Common Stock held by Christiana, Christiana would not have
agreed to the terms of the Merger unless it would have been structured as a
tax free reorganization.
(2) The estimate of the Cash Consideration is based on the balance sheet of
Christiana as of June 30, 1998 after giving effect to the estimated expenses
of the Merger payable by Christiana and estimated cash flow through the
anticipated date of closing. The Cash Consideration is based upon the
following: (a) cash and accrued interest through closing ($5,900,000); (b)
the dividend from Logistic ($20,000,000); (c) the repayment of the Wiscold
Note (as defined in the Merger Agreement) ($3,000,000); (d) the proceeds
from the sale of two-thirds interest in Logistic ($10,667,000) (e)
$5,702,000 for anticipated taxes due, (f) $1,700,000 for contractual
payments on option agreements, (g) $1,300,000 in transactional expenses
expected to be paid prior to closing which are not reflected in cash
balances and (h) $10,000,000 for the purchase of Weatherford Common Stock.
(3) Christiana will sell two-thirds of its interest in Logistic to C2 prior to
the Merger.
Under the terms of the Merger Agreement, Christiana is required to bear
significant transaction costs, which costs and the estimates thereof are as
follows: an opinion of Prudential Securities Incorporated ("Prudential
Securities") ($450,000), legal fees and expenses ($450,000), accounting and tax
services ($250,000), fees for an opinion of American Appraisal Associates, Inc.
("American Appraisal") ($75,000), lease cancellation ($327,000), Weatherford's
filing fees with the Commission ($50,000), filing fees under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act") ($90,000),
reimbursement for certain costs incurred by Weatherford ($625,000), including
all printing and proxy solicitation costs and expenses for blue sky and state
securities law filings, and miscellaneous ($183,000). Weatherford is required to
pay its own legal and financial advisory fees. Such costs payable by Christiana
are estimated as of the date of this Joint Proxy Statement/Prospectus and may be
higher. If higher, the Cash Consideration available for distribution may be
lower. See "The Merger -- Terms of the Merger -- Expenses" on page -- and
"Ancillary Transactions" on page -- .
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ANCILLARY TRANSACTIONS (SEE PAGE -- )
Logistic Sale (See Page -- ). An important aspect of the proposed Merger
is the sale by Christiana of a two-thirds interest in Logistic to C2. This sale
will be made pursuant to the Logistic Purchase Agreement. Under the terms of the
Logistic Purchase Agreement, both C2 and Logistic have agreed to assume all of
the obligations and liabilities of Christiana and its current and historical
subsidiaries and predecessors. The sale by Christiana of a two-thirds interest
in Logistic is being made to allow Christiana to maintain at least a one-third
interest ownership interest in Logistic while allowing for the management of
Logistic to be transferred to C2. The transfer is being effected because
Weatherford did not wish to acquire a controlling interest in Logistic. The
transfer also is being effected to allow the Christiana shareholders to continue
to have a direct ownership interest in the Logistic business through an
investment in C2. The purchase price for the two-thirds interest in Logistic to
be sold to C2 is $10.67 million and was fixed by Christiana at the
recommendation of Mr. Lubar. The cash to be paid by C2 to Christiana for the
interest in Logistic will be considered in determining the amount of cash that
will be paid by Weatherford to the Christiana shareholders in the Merger.
Indemnification (See Page -- ). Weatherford was not willing to pursue the
Merger with Christiana unless Logistic and C2 would fully indemnify Weatherford,
Christiana and their various affiliates and representatives from the historical
liabilities and obligations of Christiana and Logistic and their predecessors.
Weatherford also required Logistic and C2 to fully indemnify Weatherford and
Christiana for matters relating to the Transaction. Christiana shareholders
should be aware that C2 and Logistic will be obligated to indemnify Weatherford
for:
- Any liability relating to any claim or damage by any shareholder of
Christiana or Weatherford that relates to the Merger, the sale of
Logistic to C2 or any transaction relating to those transactions; and
- Any taxes that may arise as a result of the Merger being determined not
to be tax free.
Logistic Operating Agreement (See Page -- ). The operations of Logistic
following the Merger will be governed under the Operating Agreement. Under the
terms of the Operating Agreement, the business and operations of Logistic will
be restricted. In addition, various actions of Logistic will require the
approval of both C2 and Christiana. Christiana also will have the right to sell
its interest in Logistic to C2 and Logistic for $7.0 million in cash five years
after the closing as well as the right to participate in various dispositions by
C2 of its interest in Logistic. See "Ancillary Transactions -- Terms of the
Logistic Sale -- General" on page -- .
C2 and Christiana will each be entitled to Board representation
proportionate to their interests in Logistic. Subject to certain exceptions,
Christiana will be prohibited from selling or transferring its interest in
Logistic without the consent of the Board of Managers of Logistic. This
restriction will survive for a period of five years. Christiana may transfer its
interest in the event of certain changes of control of C2.
C2 Offering (See Page -- ). To finance its acquisition of Logistic, C2 is
offering to the shareholders of Christiana the right to subscribe for their pro
rata share of the C2 Common Stock. The public offering is intended to allow the
Christiana shareholders to continue to participate and have an ownership
interest in Logistic. The Lubar Family has committed to purchase at least $10.67
million worth of shares of C2 Common Stock. This commitment will provide C2 the
ability to purchase the two-thirds interest in Logistic required under the
Merger Agreement. This Joint Proxy Statement/Prospectus is not being provided by
Weatherford or C2 as part of the C2 Offering.
The Merger Agreement, the Logistic Purchase Agreement and the Operating
Agreement are attached as Annexes A, B and C to this Joint Proxy
Statement/Prospectus. We encourage you to read these documents carefully.
Recommendation to Christiana Shareholders (See Page -- ).
The Board of Directors of Christiana believes the Merger is in the best
interests of Christiana and its shareholders and recommends that they vote "FOR"
the Merger Proposal. In reaching its recommendation in favor of the Merger, the
Christiana Board of Directors considered (i) the cost to Christiana in providing
Weatherford a one-third interest in Logistic without any consideration other
than agreeing to be a party to the
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<PAGE> 28
transaction, (ii) the terms of the Logistic Purchase Agreement, (iii) Mr.
Lubar's interest in C2 and position at Weatherford, (iv) the tax impact to
Christiana and its shareholders, (v) the recommendation of a special committee
of the Board of Directors of Christiana and (vi) other factors, as discussed in
"The Merger and Related Transactions -- Christiana's Reasons for the Merger"
beginning on page -- .
The Christiana Board also considered as a potential disadvantage of the
Merger that the Christiana shareholders will be more subject to volatility of
the oil and gas industry through their direct ownership of the Weatherford
Common Stock. The Christiana Board also gave consideration to the detrimental
effect that the $7.0 million put to be granted by C2 and Logistic to Christiana
with respect to its interest in Logistic could have on those Christiana
shareholders who elect to purchase shares in C2.
Recommendation to Weatherford Stockholders (See Page -- ).
The Board of Directors of Weatherford believes the Merger is in the best
interests of Weatherford and its stockholders and recommends that you vote "FOR"
the Merger Proposal. In reaching its recommendation in favor of the Merger, the
Weatherford Board of Directors considered (i) the benefits of the Merger to
Weatherford in receiving a one-third interest in Logistic without any
consideration other than agreeing to be a party to the transaction, (ii) the
potential liability risks in acquiring Christiana, (iii) Mr. Lubar's interest in
C2 and Christiana, (iv) the recommendation of the Weatherford Special Committee
and independent Board members and (v) other factors, as discussed in "The Merger
and Related Transactions -- Weatherford's Reasons for the Merger" beginning on
page -- .
Opinion of Weatherford's Financial Advisor (See Page -- ).
In deciding to approve the Merger, the Weatherford Board received and
considered the opinion dated October -- , 1998 of Morgan Stanley & Co.
Incorporated ("Morgan Stanley"), its financial advisor, as to the fairness of
the consideration to be paid by Weatherford from a financial point of view as of
such date. The opinion is attached as Annex D to this Joint Proxy
Statement/Prospectus. A summary of that opinion begins on page -- . You should
read the opinion in its entirety to understand the assumptions made, matters
considered and limits of the review undertaken by Morgan Stanley in providing
its opinion.
Opinion of Christiana's Financial Advisor (See Page -- ).
In deciding to approve the Merger, the Christiana Board received and
considered the opinion of Prudential Securities, its financial advisor, as to
the fairness of the merger consideration to the shareholders of Christiana from
a financial point of view. The opinion is attached as Annex E to this Joint
Proxy Statement/ Prospectus. A summary of that opinion begins on page -- .
Christiana encourages the Christiana shareholders to read the summary and the
opinion.
Interests of Christiana Officers and Directors in the Merger (See Page -- ).
When considering the recommendations of the Christiana Board of Directors,
the Christiana shareholders should be aware that officers and directors of
Christiana have interests and arrangements that may be different from your
interests as shareholders:
- The executive officers and directors of Christiana will be executive
officers and directors of C2.
- The Lubar Family will be committing to purchase shares of C2 in the C2
offering and will obtain control of C2 through the C2 offering. To the
extent the Christiana shareholders do not exercise a pro rata interest in
C2, the Lubar Family's interest in C2 could increase from approximately
52% to 100%.
- The officers and other holders of options in Christiana will be entitled
to receive cash for their options based on a $ -- market price
for the Christiana Common Stock. This price was fixed at the time the
Merger Agreement was initially entered into and is substantially greater
than the current market price.
21
<PAGE> 29
Conditions to the Merger and Related Transactions (See Page -- ).
The Merger and related transactions will be completed only if certain
conditions, including the following, are satisfied (or waived in certain cases):
- The approval of the Christiana and Weatherford stockholders.
- The receipt of all material governmental and other consents and approvals
required.
- Confirmations of the tax opinions described in this Joint Proxy
Statement/Prospectus relating to the Merger.
- The closing of the sale of a two-thirds interest in Logistic to C2.
- There occurring no material adverse change with respect to Christiana
since the date of the Merger Agreement.
- The receipt of legal opinions from the respective legal counsel of
Weatherford and Christiana.
The various conditions to the obligations of Weatherford and Christiana to
consummate the Merger may be waived by the party to which such conditions are
applicable, subject to such restrictions as may exist under law that would
prohibit the consummation of the Merger notwithstanding such waiver. The
conditions that could not be waived by law or without a material violation of
law are (i) the requirements of stockholder approval by Weatherford and
Christiana and (ii) the effectiveness of the Registration Statement on the
Closing Date.
In addition, neither Weatherford nor Christiana contemplates waiving any of
the conditions relating to (i) the receipt of legal or tax opinions, (ii) the
receipt of a letter from Arthur Andersen LLP to the effect that the Merger would
not adversely affect the ability of Weatherford to account for any prior or
future business combinations as a pooling of interest, (iii) the absence of any
revocation or modification in any material manner of the fairness opinions of
Morgan Stanley and Prudential Securities, or (iv) the consummation of the
Logistic Sale and the existence at Christiana of certain minimum amounts of cash
as of the Closing Date. See "The Merger -- Terms of the Merger -- Conditions to
the Merger" on page -- . If any of these conditions were to be waived, subject
to the nature and materiality of the effect of such waiver, Weatherford and
Christiana would provide their respective stockholders supplemental disclosure
of such waiver and a reasonable opportunity to change their votes in light of
the waiver.
Termination of the Merger Agreement (See Page -- ).
Weatherford and Christiana may mutually agree to terminate the Merger
Agreement without completing the Merger.
The Merger Agreement may also be terminated in certain other circumstances,
including the following:
- By either Weatherford or Christiana if the stockholders of either company
do not approve the Merger.
- If the Merger is not effected on or before January 31, 1999.
- By a non-breaching party in the event of a material breach by the other
party.
- By either party if a court or governmental authority has acted to prevent
the Merger.
- By a party's Board of Directors if that Board determines in its good
faith judgment that a termination of the Merger Agreement is appropriate
in complying with its fiduciary duties.
- By a party if the other party withdraws its recommendation with respect
to the Merger in a manner adverse to it or resolves to do the same.
Regulatory Approvals (See Page -- ).
Weatherford and Christiana have made filings and taken other actions
necessary to obtain approvals from certain regulatory authorities, including
antitrust authorities, in connection with the Merger.
22
<PAGE> 30
Accounting Treatment and Considerations (See Page -- ).
Weatherford and Christiana expect to account for the Merger as a purchase
under generally accepted accounting principles.
Certain Federal Income Tax Consequences (See Page -- ).
The Merger is conditioned on the receipt of opinions from Arthur Andersen
LLP that, among other things:
- The Merger will be treated for U.S. federal income tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code.
- No gain or loss for U.S. federal income tax purposes will be recognized
by Weatherford, Sub or Christiana as a result of the Merger.
- Weatherford and Christiana are parties to a reorganization within the
meaning of Section 368(b) of the Code.
- No gain or loss will be recognized by the shareholders of Christiana upon
their receipt of shares of Weatherford Common Stock in exchange for their
shares of Christiana Common Stock.
Arthur Andersen has rendered an opinion as to the above matters for
purposes of this Joint Proxy Statement/Prospectus. This opinion is required to
be redelivered at closing. If the opinion to be delivered by Arthur Andersen is
waived, or if there are modifications to the opinion that would state that the
Merger would be taxable in whole or in part to Weatherford, Christiana or the
stockholders of Weatherford or Christiana, we will provide additional disclosure
to our respective shareholders and provide you with additional disclosure and an
opportunity to change your vote on the Merger.
Tax matters are complicated, and the tax consequences of the proposed
transactions to you will depend on the facts of your own situation. You should
consult your own tax advisors for a full understanding of the tax consequences
to you of the Merger.
Appraisal Rights (See Page -- ).
Under Wisconsin law, Christiana shareholders may dissent from the Merger
and demand the "fair value" of their shares in cash. To exercise this right, you
may not vote your shares in favor of the Merger and you must take certain other
actions as required under Wisconsin law.
Under Delaware law, Weatherford stockholders will not have any right to an
appraisal of the value of their shares in connection with the Merger.
Comparative Rights (See Page -- ).
Weatherford is a Delaware corporation and Christiana is a Wisconsin
corporation. The laws of those jurisdictions vary in certain ways. Following the
Merger, Christiana shareholders will hold shares in Weatherford and their rights
will be governed by Delaware law instead of Wisconsin law. There also exist
various differences between Weatherford's certificate of incorporation and
bylaws and Christiana's articles of incorporation and bylaws.
Dividends (See Page -- ).
Weatherford and Christiana have historically not paid or declared dividends
to their shareholders. Weatherford currently anticipates that for the
foreseeable future any earnings that it may make will be retained for the
development of its business and not paid as dividends.
23
<PAGE> 31
Christiana Market Price Information (See Page -- ).
Christiana Common Stock is listed on the NYSE. On December 12, 1997, the
last full trading day prior to the public announcement of the proposed Merger,
Christiana Common Stock closed at $40 3/4 on the NYSE. On October 13, 1998, the
date on which the Amended Merger Agreement was executed, Christiana Common Stock
closed at $16 3/8 on the NYSE. On November --, 1998, Christiana Common Stock
closed at $-- on the NYSE.
Weatherford Market Price Information (See Page -- ).
Weatherford Common Stock is listed on the NYSE. On December 12, 1997, the
last full trading day prior to the public announcement of the proposed Merger,
Weatherford Common Stock closed at $46 3/8 on the NYSE. On October 13, 1998, the
date on which the Amended Merger Agreement was executed, Weatherford Common
Stock closed at $16 13/16 on the NYSE. On November --, 1998, Weatherford Common
Stock closed at $-- on the NYSE.
Listing of Weatherford Common Stock (See Page -- ).
Weatherford has applied to list the Weatherford Common Stock to be
delivered to Christiana shareholders pursuant to the Merger Agreement under the
ticker symbol "WFT" on the NYSE.
PRICE RANGE OF COMMON STOCK
Weatherford Common Stock is traded on the NYSE under the symbol "WFT", and
Christiana Common Stock is traded on the NYSE under the symbol "CST". The
following table sets forth the range of high and low sale prices for Weatherford
Common Stock and Christiana Common Stock for the periods indicated, as reported
on the NYSE. The prices for Weatherford Common Stock have been adjusted to
reflect a two-for-one stock split effected in May 1997.
<TABLE>
<CAPTION>
WEATHERFORD CHRISTIANA
------------------- -------------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
Twelve Months Ended December 31, 1996
Quarter ended March 31, 1996.............................. $14 7/16 $11 1/8 $24 3/4 $22 1/4
Quarter ended June 30, 1996............................... 17 1/2 12 7/8 24 1/4 20 1/8
Quarter ended September 30, 1996.......................... 20 1/4 14 22 3/4 20 5/8
Quarter ended December 31, 1996........................... 25 3/4 19 1/2 25 3/4 23 1/2
Twelve Months Ended December 31, 1997
Quarter ended March 31, 1997.............................. $31 7/8 $23 7/8 $33 3/4 $26 1/2
Quarter ended June 30, 1997............................... 45 1/2 28 39 7/8 31 1/2
Quarter ended September 30, 1997.......................... 64 42 1/16 44 3/8 37 5/8
Quarter ended December 31, 1997........................... 73 40 1/4 46 9/16 36 5/8
Twelve Months Ended December 31, 1998
Quarter ended March 31, 1998.............................. $53 7/8 $37 1/2 $41 1/2 $33 15/16
Quarter ended June 30, 1998............................... 58 7/16 34 3/4 43 5/8 29 3/16
Quarter ended September 30, 1998.......................... 39 15/16 15 31 13/16 17 3/8
Quarter ended December 31, 1998 (through October 12,
1998).................................................. 22 5/8 16 19 7/8 16 1/8
</TABLE>
Following the Merger, Weatherford Common Stock will continue to be traded
on the NYSE under the symbol "WFT", and Christiana Common Stock will cease to be
traded and there will be no further market for such stock.
24
<PAGE> 32
WEATHERFORD UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL DATA
The following tables set forth certain summary pro forma condensed
consolidated financial data of Weatherford. The Unaudited Pro Forma Condensed
Consolidated Statements of Income give effect to the proposed Merger of
Christiana as if the transaction had occurred on January 1, 1997. Because the
fiscal years of Weatherford and Christiana differ, Christiana's December 31,
1997 historical operating results are based on Christiana's last two fiscal
quarters of its fiscal year ended June 30, 1997, combined with the results for
the six months ended December 31, 1997. The Unaudited Pro Forma Condensed
Consolidated Balance Sheet gives effect to the Merger as if this transaction had
occurred on June 30, 1998.
The unaudited pro forma information set forth below is not necessarily
indicative of the results that actually would have been achieved had such
transactions been consummated as of the dates reflected, or that may be achieved
in the future. This information should be read in conjunction with Weatherford's
Management's Discussion and Analysis of Financial Condition and Results of
Operations and its financial statements and related notes thereto contained in
its Annual Report on Form 10-K for the year ended December 31, 1997, Quarterly
Report on Form 10-Q for the period ended June 30, 1998 and Current Report on
Form 8-K dated June 15, 1998, as amended by Amendment No. 1 to the Current
Report on Form 8-K on Form 8-K/A dated July 20, 1998, the Weatherford Selected
Condensed Consolidated Financial Data, the Pro Forma Condensed Consolidated
Financial Statements and related notes thereto, and Christiana's financial
statements and related notes thereto, which are included herein or incorporated
herein by reference in this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Operating Data:
Revenues.................................................. $1,104,293 $1,969,089
Income from continuing operations......................... 46,466 196,857
Earnings per share from continuing operations:
Basic.................................................. $ 0.48 $ 2.05
Diluted................................................ 0.48 2.02
Weighted average shares outstanding:
Basic.................................................. 96,766 96,052
Diluted................................................ 97,618 97,562
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1998
-------------
(IN THOUSANDS)
<S> <C>
Balance Sheet Data:
Total assets.............................................. $2,935,727
Long-term debt............................................ 246,963
5% Convertible Subordinated Preferred Equivalent
Debentures............................................. 402,500
Stockholders' equity...................................... 1,495,461
</TABLE>
25
<PAGE> 33
WEATHERFORD SUMMARY HISTORICAL FINANCIAL DATA
The following table sets forth certain summary historical condensed
consolidated financial data of Weatherford. This information should be read in
conjunction with Weatherford's Management's Discussion and Analysis of Financial
Condition and Results of Operations and its financial statements and related
notes thereto contained in its Annual Report on Form 10-K for the year ended
December 31, 1997, Quarterly Report on Form 10-Q for the period ended June 30,
1998 and the Current Report on Form 8-K dated June 15, 1998, as amended by
Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A dated July 20,
1998, the Weatherford Selected Condensed Consolidated Financial Data and
Christiana's financial statements and related notes thereto, which are included
herein or incorporated herein by reference in this Joint Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- -------- ---------- ---------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues...................... $1,104,293 $908,252 $1,969,089 $1,467,270 $1,125,803 $858,993 $671,470
Cost of sales................. 740,337 644,177 1,371,126 1,090,814 831,231 630,850 482,878
Selling, general and
administrative expenses..... 148,044 122,434 264,553 209,433 195,747 155,860 127,966
Equity in earnings of
unconsolidated affiliates... (1,565) (1,052) (2,582) (2,078) (1,477) (1,169) (2,716)
Merger costs and other
charges..................... 120,000 -- -- -- 88,182 2,500 4,000
---------- -------- ---------- ---------- ---------- -------- --------
Operating income.............. 97,477 142,693 335,992 169,101 12,120 70,952 59,342
Interest expense.............. (25,759) (21,148) (43,273) (39,368) (33,504) (22,384) (11,601)
Other income (expense), net... 3,334 7,438 12,242 2,941 8,409 615 2,231
Income tax (provision)
benefit..................... (28,800) (45,339) (108,188) (40,513) 4,707 (13,137) (14,741)
---------- -------- ---------- ---------- ---------- -------- --------
Income (loss) from continuing
operations.................. $ 46,252 $ 83,644 $ 196,773 $ 92,161 $ (8,268) $ 36,046 $ 35,231
========== ======== ========== ========== ========== ======== ========
Earnings (loss) per share from
continuing operations:
Basic....................... $ 0.48 $ 0.88 $ 2.04 $ 1.03 $ (0.10) $ 0.53 $ 0.58
Diluted..................... 0.47 0.86 2.01 1.01 (0.10) 0.53 0.58
Weighted average shares
outstanding:
Basic....................... 96,766 95,382 96,052 89,842 77,595 67,672 60,628
Diluted..................... 97,618 96,832 97,562 90,981 77,595 68,032 60,894
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........................ $2,922,306 $2,737,910 $2,243,633 $1,710,568 $1,464,804 $885,981
Long-term debt...................... 246,963 252,322 417,976 416,473 303,854 56,580
5% Convertible Subordinated
Preferred Equivalent Debentures... 402,500 402,500 -- -- -- --
Stockholders' equity................ 1,495,461 1,458,549 1,292,704 958,337 845,287 582,187
Cash dividends per share............ -- -- -- -- -- --
</TABLE>
26
<PAGE> 34
CHRISTIANA SUMMARY HISTORICAL FINANCIAL DATA
The following table sets forth certain summary historical financial data
for Christiana as of and for each of the five years ended June 30, 1998. The
historical financial data as of and for each of the five years in the period
ended June 30, 1998 was derived from the consolidated financial statements of
Christiana, which were audited by Arthur Andersen LLP, independent public
accountants. The following summary historical consolidated financial data should
be read in conjunction with Christiana's "Management's Discussion and Analysis
of Results of Operations and Financial Condition", Christiana's "Selected
Consolidated Financial Data" and Christiana's Consolidated Financial Statements
and related notes appearing elsewhere in this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues.............................. $ 90,179 $ 84,208 $ 77,170 $126,881 $ 90,153
Direct operating expense.............. 76,057 70,973 65,418 104,818 74,976
Selling, general and administrative
expenses........................... 8,364 8,656 7,531 11,739 8,755
-------- -------- -------- -------- --------
Operating income...................... 5,758 4,579 4,221 10,324 6,422
Interest expense...................... (2,691) (3,166) (3,096) (4,842) (3,710)
Equity in earnings of Weatherford..... 7,872 10,479 1,745 -- --
Other income (expense), net........... (1,012) (923) 3,141 3,658 3,195
Income tax expenses................... 3,920 4,306 2,408 3,394 2,256
Minority interest..................... -- -- -- (684) (530)
-------- -------- -------- -------- --------
Net income............................ $ 6,007 $ 6,663 $ 3,603 $ 5,062 $ 3,121
======== ======== ======== ======== ========
Earnings per share(1):
Basic.............................. $ 1.17 $ 1.30 $ 0.69 $ 0.96 $ 0.59
Diluted............................ 1.15 1.29 0.69 0.96 0.59
Weighted average shares outstanding... 5,143 5,137 5,187 5,276 5,321
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................... $239,241 $142,355 $131,018 $121,742 $147,565
Long-term debt........................ 27,122 36,149 44,013 38,256 53,458
Stockholder's equity.................. 136,229(2) 72,085 61,077 58,710 60,088
Cash dividends per share.............. -- -- -- -- --
</TABLE>
- ---------------
(1) All earnings per share amounts have been restated to reflect the adoption of
Statement of Accounting Standards No. 128, "Earnings Per Share", effective
December 15, 1997.
(2) Includes $57.8 million of unrealized holding gains on securities
available-for-sale resulting from a change in method of accounting for
Christiana's investment in Weatherford.
27
<PAGE> 35
COMPARATIVE PER SHARE INFORMATION
The following table sets forth certain historical and pro forma earnings
per share and book value per share for the Weatherford Common Stock and the
Christiana Common Stock. The table also reflects the equivalent per share
earnings and book value with respect to one share of Christiana Common Stock on
a pro forma basis for the Merger. The information presented in the table should
be read in conjunction with the unaudited Pro Forma Condensed Consolidated
Financial Statements and the separate historical consolidated financial
statements of Weatherford and Christiana and the related notes included or
incorporated by reference in this Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
---------------- -----------------
<S> <C> <C>
Basic Earnings Per Share:
Weatherford Historical Earnings Per Share from Continuing
Operations............................................. $0.48 $ 2.04
Christiana Historical Earnings Per Share(1)............... 0.71 0.82
Weatherford Pro Forma Earnings Per Share from Continuing
Operations for the Merger(2)........................... 0.48 2.05
Christiana Equivalent Pro Forma Earnings Per Share(3)..... 0.40 1.72
Diluted Earnings Per Share:
Weatherford Historical Earnings Per Share from Continuing
Operations............................................. $0.47 $ 2.01
Christiana Historical Earnings Per Share(1)............... 0.70 0.81
Weatherford Pro Forma Earnings Per Share from Continuing
Operations for the Merger(2)........................... 0.48 2.02
Christiana Equivalent Pro Forma Earnings Per Share(3)..... 0.40 1.70
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1998
-------------
<S> <C>
Book Value Per Share:
Weatherford Historical Book Value Per Share............... $15.36
Christiana Historical Book Value Per Share................ 26.46
Weatherford Pro Forma Book Value Per Share for the
Merger................................................. 15.36
Christiana Equivalent Pro Forma Book Value Per Share(3)... 12.92
</TABLE>
- ---------------
(1) Christiana's historical and pro forma earnings per share for the year ended
December 31, 1997 are based on Christiana's earnings for the six months
ended December 31, 1997, combined with Christiana's earnings for the last
two fiscal quarters of Christiana's fiscal year ended June 30, 1997.
(2) Gives pro forma effect to the Merger.
(3) Represents the pro forma earnings per share and pro forma book value per
share of .8413 of one share of Weatherford Common Stock issuable in the
Merger. The pro forma ratio of .8413 of one share of Weatherford Common
Stock gives effect to the shares of Weatherford Common Stock currently held
by Christiana and to the pro forma $10.0 million purchase of 434,783 shares
of Weatherford Common Stock based on Weatherford's market price of $23.00
per share on September 22, 1998. In addition, the Christiana shareholders
will be entitled to receive in the Merger cash estimated to be in an amount
per share of Christiana Common Stock of between $3.00 and $4.00.
28
<PAGE> 36
GENERAL INFORMATION ABOUT THE MEETINGS
DATE, TIME AND PLACE OF SPECIAL MEETINGS
The Weatherford Special Meeting will be held at 9:00 a.m., Houston time, on
December -- , 1998, at The Luxury Collection Hotel of Houston, 1919 Briar Oaks,
Houston, Texas. The Christiana Special Meeting will be held at 9:00 a.m.,
Milwaukee time, on December -- , 1998, at the Galleria Conference Room, Firstar
Center, 777 East Wisconsin Avenue, Milwaukee, Wisconsin.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of Weatherford Common Stock and holders of record of
Christiana Common Stock at the close of business on November -- , 1998, are
entitled to notice of, and to vote at, the Special Meetings.
At the close of business on the Record Date, there were
-- holders of record of Weatherford Common Stock
with -- shares issued and outstanding and -- holders of
record of Christiana Common Stock with 5,149,330 shares issued and outstanding.
Each share of Weatherford Common Stock and Christiana Common Stock entitles the
holder thereof to one vote on each matter submitted for stockholder approval.
PURPOSES OF THE SPECIAL MEETINGS
Weatherford. At the Weatherford Special Meeting, the holders of Weatherford
Common Stock will be asked to consider and vote upon the Merger Proposal and to
transact such other business as may properly come before the Weatherford Special
Meeting.
Christiana. At the Christiana Special Meeting, Christiana's shareholders
will be asked to consider and vote upon the Merger Proposal and to transact such
other business as may properly come before the Christiana Special Meeting.
If the Merger Proposal is approved by the stockholders of both Weatherford
and Christiana, and the other conditions to the consummation of the Merger are
satisfied or waived, Logistic and C2 will assume the C2/Logistic Assumed
Liabilities, which generally include all the debts, liabilities and other
obligations of Christiana, Logistic and their current and historical
subsidiaries and predecessors other than liabilities arising out of the
Christiana Retained Assets after the closing of the Merger. See "Ancillary
Transactions".
VOTE REQUIRED
Weatherford. Weatherford's Amended and Restated By-laws provide that the
presence at the
Weatherford Special Meeting, in person or by proxy, of the holders of a majority
of the outstanding shares of Weatherford Common Stock entitled to vote at the
meeting will constitute a quorum for the transaction of business. Under
Weatherford's listing agreement with the NYSE, approval of the Merger Proposal
requires the affirmative vote of the holders of a majority of the shares of
Weatherford Common Stock present, in person or by proxy, and entitled to vote at
the Weatherford Special Meeting.
At the close of business on the Record Date, there
were -- shares of Weatherford Common Stock outstanding and entitled
to vote at the Weatherford Special Meeting. As of the close of business on the
Record Date, Christiana held -- shares of Weatherford Common Stock,
representing an aggregate of approximately --% of the outstanding shares. In
addition, directors and officers of Weatherford and their affiliates, excluding
Christiana, held -- shares of Weatherford Common Stock, representing
an aggregate of approximately -- % of the outstanding shares. Such persons have
indicated that they intend to vote their shares in favor of the approval and
adoption of the Merger Proposal. In addition, Christiana intends to vote
its -- shares of Weatherford Common Stock in favor of the Merger.
Christiana. Under Wisconsin law, approval and adoption of the Merger
Proposal requires the affirmative vote of the holders of at least 80% of the
votes entitled to be cast at the Christiana Special Meeting and two-
29
<PAGE> 37
thirds of the votes entitled to be cast at the Christiana Special Meeting other
than the Lubar Shares, or 31.4% of the outstanding shares of Christiana Common
Stock excluding the Lubar Shares.
At the close of business on the Record Date, there were 5,149,330 shares of
Christiana Common Stock outstanding and entitled to vote at the Christiana
Special Meeting. At the close of business on the Record Date, the directors and
officers of Christiana and their affiliates held 3,445,932 shares of Christiana
Common Stock, representing an aggregate of approximately 67% of the outstanding
shares. Such persons have indicated that they intend to vote their shares in
favor of the approval and adoption of the Merger Proposal.
VOTING AND REVOCATION OF PROXIES
All properly executed proxies that are not revoked will be voted at the
Special Meetings, in accordance with the instructions contained therein. If you
execute and return a proxy and do not specify otherwise, the shares represented
by your proxy will be voted "FOR" approval and adoption of the Merger Proposal
in accordance with the recommendation of the Weatherford Board of Directors and
the Christiana Board of Directors, as applicable. If you check the abstention
box on the proxy card or fail to return the proxy card, it has the same effect
as voting against the Merger Proposal and the proposal relating to any
adjournments of the respective Special Meeting (the "Proposals"). You may revoke
your proxy at any time before it is voted at the respective Special Meeting by
executing and returning a proxy bearing a later date, by filing written notice
of such revocation with the Secretary of Weatherford or Christiana, as
appropriate, stating that the proxy is revoked or by attending the applicable
Special Meeting and voting in person.
Under NYSE rules, brokers will not be permitted to submit proxies
authorizing a vote on the Merger Proposal in the absence of specific
instructions from beneficial owners. An abstention will have the effect of a
vote against the Merger Proposal. A broker nonvote will have the effect of a
vote against the Merger Proposal. Under Delaware law and Wisconsin law, both
abstentions and broker nonvotes contained on a returned proxy card will be
considered present for purposes of determining the existence of a quorum at the
Weatherford Special Meeting or the Christiana Special Meeting, as applicable.
SOLICITATION OF PROXIES
Weatherford has retained Georgeson & Company, Inc., to assist in the
solicitation of proxies by Weatherford at a cost of $ -- plus
expenses. Christiana has retained D.F. King & Co. to assist in the solicitation
of proxies by Christiana at a cost of $ -- plus expenses. In
addition to solicitation by mail, the directors, officers and employees of each
of Weatherford and Christiana may solicit proxies from their respective
stockholders by personal interview, telephone, facsimile or otherwise.
Christiana will bear the costs of the solicitation of proxies from the
stockholders of both Weatherford and Christiana. Arrangements also will be made
with brokerage firms and other custodians, nominees and fiduciaries who hold the
voting securities of record for the forwarding of solicitation materials to the
beneficial owners thereof. Weatherford and Christiana will reimburse such
brokers, custodians, nominees and fiduciaries for the reasonable out-of-pocket
expenses incurred by them in connection therewith.
DISSENTERS' RIGHTS
Under Delaware law, the holders of Weatherford Common Stock who object to
the Merger Proposal or abstain from voting in favor of the Merger Proposal will
not have any appraisal rights or right to receive cash for their shares of
Weatherford Common Stock and Weatherford does not intend to make any such rights
available to its stockholders.
Under the provisions of Wisconsin law, any Christiana shareholder who
dissents from the Merger will have a statutory right to demand the "fair value"
of such shareholder's Christiana Common Stock in cash. To exercise this right,
such shareholder must not vote its shares in favor of the Merger and must take
certain other actions required by the provisions of Subchapter XIII of the
Wisconsin Business Corporation Law. See "The Merger -- Dissenters' Rights".
30
<PAGE> 38
OTHER MATTERS
As of the date of this Joint Proxy Statement/Prospectus, the Weatherford
Board of Directors and the Christiana Board of Directors do not know of any
business to be presented at their respective Special Meetings other than as set
forth in the notices accompanying this Joint Proxy Statement/Prospectus. If any
other matters should properly come before the respective Special Meetings,
including a proposal to adjourn such Special Meetings, it is intended that the
shares represented by proxies will be voted with respect to such matters in
accordance with the judgment of the persons voting such proxies.
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BACKGROUND OF THE TRANSACTION
On June 30, 1995, Weatherford acquired Prideco, Inc. ("Prideco") from
Christiana and other stockholders of Prideco in consideration for the issuance
of approximately 4.5 million shares of Weatherford Common Stock. As part of this
acquisition, Christiana received 3,897,462 shares of Weatherford Common Stock
and Sheldon Lubar, Chairman of the Board of Christiana, was appointed to the
Board of Directors of Weatherford. Christiana also was given the right to name a
nominee for election to the Board of Directors of Weatherford as long as
Christiana's interest in Weatherford was equal to at least 8% of the outstanding
shares of Weatherford Common Stock.
In earlier years, Christiana developed commercial and residential
properties, including projects in California, Nevada, Georgia and Texas. In
1987, the Christiana Board of Directors decided that the Company should be
involved in other businesses, because of the opportunity for more favorable
returns. Consequently, Christiana began a program of disposing of its real
estate properties and reinvesting its available cash into other businesses,
including Logistic's warehousing and logistics business. As a result of this
internal restructuring, Christiana consisted primarily of two unrelated assets:
(a) its warehousing and logistics business on the one hand and (b) its
Weatherford shareholdings on the other. Christiana's Board of Directors
considered it desirable to separate the two operations in order that Christiana
be viewed as either a warehousing and logistic business or a company involved in
the engineered oilfield tools and equipment business by virtue of its
Weatherford shareholdings. Over the past year, the value of Christiana stock in
the market reflected primarily the underlying asset value of its Weatherford
shareholdings and did not adequately reflect the value of its warehousing and
logistics business. The Christiana Board was aware that a sale of the
warehousing and logistics business would likely result in Christiana becoming a
single business holding company and subjecting Christiana to investment company
regulations, which was not an objective of the Board. Further, if the shares of
Weatherford Common Stock were sold or distributed to the Christiana
shareholders, significant taxes would be incurred at the corporate level and
further at the shareholder level. The Christiana Board considered, but rejected,
an outright sale of Christiana, because this would transfer ownership, but not
separate the two businesses. The Board considered, but rejected, a sale of
Logistic's warehousing and logistics business, because the result would leave
Christiana as a nonoperating holding company. The Christiana Board also
considered, but rejected, a sale of the Weatherford shareholdings, because of
Christiana's view as to the future potential for increase in the value of the
asset and the substantial corporate-level tax that would result from such a
sale. The Christiana Board ultimately determined that a tax free merger would
accomplish many of the objectives described above.
In early June 1997, Mr. Lubar informally advised Christiana Board members
that he intended to approach Weatherford to inquire as to Weatherford's interest
in acquiring Christiana. The Christiana Board members informally concurred that
this was appropriate and requested that Mr. Lubar keep them advised and schedule
a formal meeting at an appropriate date to discuss such matter. At this time
there was no intention on the part of Mr. Lubar or any other officer or director
of Christiana or Logistic to purchase Logistic. Christiana, however, was not
certain that Weatherford would be willing to acquire Christiana with a
controlling management interest in Logistic. In considering a possible
acquisition of Christiana by Weatherford, the Christiana Board of Directors took
into account that if Weatherford were not willing to acquire a controlling
management interest in Logistic, Christiana would be required to dispose of a
controlling interest in Logistic prior to the acquisition. In such case, the
Lubar Family and members of Christiana and Logistic management were willing to
consider purchasing such portion if that became necessary to complete a merger
with Weatherford. Mr. Lubar routinely advised Christiana directors regarding
discussions with Weatherford. Informal Christiana Board communications consisted
primarily of individual telephone calls between Mr. Sheldon Lubar and Messrs.
Nicholas F. Brady and Albert O. Nicholas, Christiana directors. Messrs. Sheldon
Lubar, David Lubar, a Christiana director, and William T. Donovan, Christiana's
President and a director, had extensive discussions on a daily basis during
these periods. Mr. Donovan had telephone conversations with the other Christiana
directors, Messrs. Brady, Raymond F. Logan, Nicholas, John R. Patterson and Gary
R. Sarner, to discuss progress and solicit input in the evaluation process and
to update the Board on negotiations with Weatherford. Specifically, on June 19,
1997, Messrs. Sheldon Lubar and Donovan sent a memorandum to Messrs. Brady,
Nicholas and David Lubar describing in more detail the restructuring
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of Christiana focusing on providing shareholders with enhanced value in a tax
efficient manner. The valuation of the components of Christiana, as well as tax
liabilities and the basis of Christiana's assets, were considered. Messrs.
Brady, Nicholas, D. Lubar, S. Lubar and Donovan conferred by telephone on June
20, 1997 and concurred that a tax free merger with Weatherford was desirable.
Messrs. S. Lubar and Donovan advised the other directors that a meeting was
scheduled with Mr. Bernard Duroc-Danner, President of Weatherford, on June 23,
1997, in Milwaukee, Wisconsin, and discussed with them the basis upon which a
merger with Weatherford would be most beneficial to Christiana shareholders.
Although members of the Christiana Board were consulted during this process,
Christiana did not hold any meetings of the Board in person or telephonic
meetings of the Board relating to the Merger at this time.
In early June 1997, Mr. Lubar approached Mr. Duroc-Danner to inquire as to
Weatherford's interest in acquiring Christiana in a tax free merger. At a
meeting held in Milwaukee on June 23, 1997, at which Messrs. Lubar, Donovan and
Duroc-Danner were present, the parties discussed the possible acquisition.
Messrs. Lubar and Donovan expressed flexibility from Christiana's standpoint as
to the structure of the transaction and the mix of the consideration between
stock and cash that would be received by the Christiana stockholders. Following
that meeting, Weatherford and Christiana directed their legal and tax advisors
to review the possibility of an acquisition of Christiana by Weatherford and any
issues relating thereto.
Following a review of issues involved in an acquisition by Weatherford of
Christiana, in July 1997, Mr. Duroc-Danner advised Mr. Lubar of Weatherford's
management's interest in Weatherford pursuing a possible acquisition of
Christiana on appropriate terms, including, specifically, an acquisition that
would not be dilutive to Weatherford's per share earnings or cash flow and that
would not involve Weatherford's full ownership and management of Christiana's
warehousing and logistics business, and that the ownership and management of
Christiana's warehousing and logistics business would be inconsistent with the
operations of Weatherford and Weatherford's focus on the oilfield manufacturing
and service business. Weatherford also advised Christiana that Weatherford would
need to receive confirmation that an acquisition of Christiana by Weatherford
would not adversely affect Weatherford's ability to consummate any future
acquisition that would be accounted for as a pooling of interests, in particular
Weatherford's then pending acquisition of XLS Holding, Inc. ("XL").
Following these discussions, Messrs. Duroc-Danner and Lubar agreed that the
most appropriate structure for an acquisition by Weatherford of Christiana would
involve a transaction in which a controlling interest in Logistic's business
would be sold to another entity for cash prior to Weatherford's acquisition and
the consideration that would be paid to the Christiana shareholders in the
acquisition would consist solely of a number of shares of Weatherford Common
Stock equal to the number of shares of Weatherford Common Stock held by
Christiana and an amount of cash not greater than the amount of cash held by
Christiana in excess of its existing obligations.
During the course of the negotiations, Weatherford imposed additional
requirements in connection with any proposed transaction, specifically, that (i)
the entity that would acquire a controlling interest in Logistic must be a
creditworthy entity acceptable to Weatherford, because such an entity must
assume significant liabilities in connection with Christiana's and Logistic's
present and prior businesses, (ii) such an entity must agree to certain
operational restraints in order to increase the likelihood that such an entity
would be able to satisfy all assumed liabilities and (iii) a substantial
holdback be available as security for such assumption of liabilities. The
imposition of each of the foregoing decreased the desirability of the
transaction to Christiana. In periodic telephone conversations with Messrs.
Nicholas and Brady and in frequent conversations with Messrs. Patterson and
Sarner, Messrs. Lubar and Donovan advised them of the increasing requirements of
Weatherford. On numerous occasions the directors were asked their opinion of
whether the conditions imposed by Weatherford were decreasing the desirability
of Christiana's completing a proposed transaction. The impact of the discussions
with the directors was that Messrs. Lubar and Donovan should continue the
negotiations, making as few concessions as possible.
During this interaction with Christiana Board members, Messrs. Lubar and
Donovan gave special attention to the views of Messrs. Nicholas and Brady,
because each owned a significant interest in Christiana, but were not employees.
While neither director was directly involved in negotiations with Weatherford,
the
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directors, including specifically Messrs. Nicholas and Brady, were advised as to
the increasing conditions required by Weatherford as the basis for a
contemplated transaction. The impact of Messrs. Nicholas and Brady on the
negotiations was important for Christiana, because, without their concurrence,
Messrs. Lubar and Donovan decided that they would not proceed with a transaction
with Weatherford.
In conversations with the other Christiana directors, Messrs. Lubar and
Donovan specifically discussed the appropriateness of a payment of $10.67
million to be paid to Christiana for a two-thirds interest in Logistic. In
particular, Messrs. Donovan, Sarner and Patterson considered the operations of
Logistic and the impact on its liabilities, including the liabilities that it
would have to assume in order to satisfy Weatherford's requirements and the
operational restrictions under which it would have to operate in order to
satisfy Weatherford. Messrs. Lubar and Donovan concluded that it was highly
unlikely that any outside party would be willing to enter into a transaction on
a basis acceptable to Weatherford. For these reasons they concluded that $10.67
million cash for a two-thirds interest in Logistic was appropriate. The
appropriateness of the $10.67 million payment by C2 for a two-thirds interest in
Logistic and the adequacy and fairness of that payment was discussed and
approved by the full Christiana Board of Directors at its meeting held on
November 21, 1997.
No alternative acquisition structures were discussed or considered in that
the above form of transaction was the only form of transaction which would meet
the objectives of Weatherford in the transaction. The specific amount of cash
that would be provided to the Christiana shareholders in such a transaction was
not agreed to at that time. Because of Mr. Lubar's interest in both Christiana
and Weatherford, as well as Christiana's ownership interest in Weatherford, Mr.
Duroc-Danner advised Mr. Lubar that he believed that the review of the
Transaction and the determination of the consideration to be received should be
approved and considered by a special committee of Weatherford.
The Christiana Board of Directors did not consider a sale of all of
Logistic to facilitate Weatherford's desire not to acquire a controlling
interest in Logistic because (i) such a sale could have impacted the ability to
effect the Merger as a partially tax free reorganization and (ii) Weatherford
required Christiana to have assets other than Weatherford Common Stock at the
time of the Merger in order to proceed with the proposed transactions. The
Christiana Board also did not consider an auction of the two-thirds interest in
Logistic that Weatherford did not wish to acquire because of the perceived
difficulty that would be involved in selling only a portion of the ownership
interest in Logistic. In particular, the Christiana Board of Directors believed
that the indemnification requirements, the distribution, operation and
management restrictions and the tag-along and change in control provisions and
Weatherford put rights would materially reduce the desire of a third party to
acquire an interest in Logistic and would affect materially the consideration
that would be received. Accordingly, the Christiana Board of Directors concluded
that a sale of a two-thirds interest in Logistic to Mr. Lubar or one or more of
his affiliates at a fair price reflecting these restrictions would be in the
best interest of Christiana in that it would allow Christiana to effect the
Merger with Weatherford and receive a fair value for the interest in Logistic
that Weatherford was not willing to acquire. Mr. Lubar, in his capacity both as
a director of Christiana and a potential interested party through his agreement
to assist in the funding of C2, took part in these discussions with the
Christiana Board.
To facilitate the consideration of a possible acquisition of Christiana by
Weatherford, Messrs. Lubar and Donovan on behalf of Christiana proposed to
Weatherford that the consideration to be paid by Weatherford in the acquisition
would consist of (i) a number of shares of Weatherford Common Stock equal to the
number of shares of Weatherford Common Stock held by Christiana and (ii) an
amount of cash equal to the amount of cash of Christiana in excess of
Christiana's fixed liabilities, including $20.0 million from a cash dividend
that would be paid by Logistic to Christiana prior to the sale of a two-thirds
interest in Logistic and approximately $10.67 million cash to be paid to
Christiana for such two-thirds interest in Logistic. This proposal also
contemplated that, following the acquisition, Christiana's only assets would
consist of the shares of Weatherford Common Stock then currently held by
Christiana, a one-third interest in Logistic following the $20.0 million
distribution and cash equal to the amount of cash payable by Weatherford to the
Christiana shareholders in the Merger. Mr. Lubar also advised Weatherford and
Christiana that to facilitate the transaction, he and his affiliates would be
willing to acquire the two-thirds interest in Logistic (and cause the acquiring
entity and Logistic to assume certain obligations of Christiana) at the $10.67
million price.
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Mr. Lubar decided that $10.67 million for a two-thirds interest in Logistic
was a fair price. This price for a two-thirds interest would correspond to a
price for 100% of the equity interest in Logistic of $16.0 million. Christiana's
management and Board determined the $16.0 million equity value principally by
employing a multiple of "operating cash flow" produced by the business of
Logistic. "Operating cash flow" was generally considered to be earnings before
interest, taxes, depreciation and amortization. In fiscal 1997, Logistic
produced $13.1 million in "operating cash flow". The multiple employed to
determine the total enterprise value was six, which was based on the assessment
of Christiana's management and Board of the various components of Logistic's
earnings, i.e., transportation, dry public warehousing, public refrigerated
warehousing and international services. No financial analysts were consulted in
determining such price. This produced an enterprise value for Logistic of $78.6
million from which the anticipated level of debt of $63.0 million was
subtracted, giving an equity value of Logistic of $15.8 million (rounded up to
$16.0 million). Two-thirds of this value is $10.67 million. The consideration as
to the appropriate cash flow multiple of six for purposes of the calculation of
the purchase price for a two-thirds interest in Logistic and the anticipated
level of debt was determined by Mr. Donovan on behalf of Christiana and C2 and
conveyed to the full Christiana Board of Directors. Afterward, the Christiana
Board of Directors took into account the advice of Mr. Donovan with respect to
such cash flow multiple when it approved the transaction at the meeting held on
November 21, 1997. The Board of Directors of Christiana concluded that a higher
price for Logistic would not be warranted for a number of reasons. First,
Logistic would be required to assume debt of approximately $63.0 million (in
part to pay a cash dividend of $20.0 million to Christiana). Second, while the
proposed sale price of the two-thirds interest in Logistic was approximately
$4.54 million less than its then book value, the Christiana Board of Directors
believed that the liability assumption obligations and restrictions imposed by
Weatherford supported a sale below book value. The Christiana Board of
Directors, however, also believed that the cost to Christiana for disposing of
such interest at that price represented a fair discount for the assumption of
obligations and restrictions imposed by Weatherford. The Christiana Board of
Directors further believed that any lower amount of consideration that would be
received by the Christiana shareholders from the proposed sale of the two-thirds
interest in Logistic in the manner contemplated was more than offset by the
benefits to be realized by the Christiana shareholders in the Merger and their
receipt of Weatherford Common Stock in a tax free manner. Third, the purchasing
entity and Logistic would be required to assume various contingent and
unquantifiable liabilities, including liabilities related to the historical
operations of Christiana, Logistic and other companies formerly owned by
Christiana. Fourth, Logistic would be required to restrict its operational
activities for the benefit of Weatherford and consequently would not have
complete freedom in connection with its business operations. Such restrictions
were expected to include prohibitions on any of the following without approval
by Weatherford: cash distributions, noncash distributions, acquisitions,
liquidation and compensation. These restrictions were eventually agreed upon in
the Operating Agreement to govern Logistic following the Transaction. See
"Ancillary Transaction -- Terms of the Operating Agreement". Fifth, no right was
available to acquire the remaining one-third interest in Logistic. Sixth, it was
contemplated that Weatherford would have the ability to put its one-third
interest to Logistic, thereby decreasing the value of Logistic.
The Christiana Board of Directors did not believe that it was necessary to
engage an independent third party to conduct an analysis as to the appropriate
valuation for a two-thirds interest in Logistic in the proposed sale of that
interest to C2 on the basis that the Board was familiar with the business of
Logistic and itself had historical expertise and knowledge as to financial
matters. In addition, the Board of Directors believed that, by providing the
Christiana shareholders with the right to invest in C2, the need and expense of
obtaining a third party independent valuation of Logistic was not in the
interest of the Christiana shareholders and would not have provided any
additional meaningful basis for determining the fairness of the transaction to
Christiana.
To assure the fairness of the proposed sale of Logistic to C2 at the price
contemplated by the Logistic Purchase Agreement, Christiana required C2 to offer
to the Christiana shareholders the right to participate and invest in C2 on the
same terms and conditions as the Lubar Family. Christiana also required
Weatherford to agree to procedural terms relating to the payment of the Cash
Consideration that would allow the Christiana shareholders to apply the Cash
Consideration payable to them directly toward the purchase of shares of stock of
C2. The Christiana Board of Directors believes that this right to participate
provides
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substantial procedural fairness to the proposed sale of Logistic and allows the
Christiana shareholders to continue to participate in the ownership of Logistic
if they so desire.
Weighing the above factors, the price of $10.67 million for a two-thirds
interest in Logistic was the highest price Mr. Lubar thought appropriate.
Furthermore, considering that the purchasing entity would have to be acceptable
to Weatherford, Mr. Lubar felt it highly unlikely that a transaction could be
concluded with any other entity paying the same or higher price for the
two-thirds interest in Logistic. Mr. Lubar reached this conclusion because, in
order to conclude a transaction on such a basis, any acquirer would have to be
(i) acceptable to Weatherford (primarily because Weatherford would want to
assure that Logistic was operated appropriately and because Weatherford would
want a creditworthy entity to be able to accept a put of the interest in
Logistic and satisfy the indemnities, if any, relating to the current and
historical operations of Logistic, Christiana and other companies formerly owned
by Christiana), (ii) willing to assume indemnity obligations to Weatherford
relating to the historical operations of Logistic, Christiana and other
companies formerly owned by Christiana, (iii) willing to acquire less than a
100% interest in Logistic (without the right to acquire the remaining minority
interest), (iv) willing to accept a put on the one-third interest retained by
Christiana and (v) willing to accept restricted operational activities. He
considered the chances of fulfilling all such conditions remote. As a result, no
consideration was given by the Christiana Board of Directors to a sale of
Logistic to a bidder other than Weatherford.
The Christiana Board of Directors also determined that a discount of $4.5
million off the then existing book value for a two-thirds interest in Logistic
was an appropriate discount for a sale of a two-thirds interest in Logistic to
C2 (and Mr. Lubar through his proposed interest in C2) due to the fact that a
two-thirds interest in Logistic would be generally illiquid and the factors
considered by Mr. Lubar described in clauses (ii) through (v) in the above
paragraph. Although the impact of these factors was not subject to precise
quantification, the Christiana Board of Directors believed that the discount,
which was in large part reflective of the six times cash flow multiple discussed
and suggested by Mr. Donovan as described above, was fair to the Christiana
shareholders.
In July 1997, Mr. Donovan commenced discussions with investment bankers
regarding potential financial advisory roles. These discussions culminated on
November 19, 1997, in discussions with Prudential Securities, which was
eventually retained to deliver the fairness opinion to Christiana shareholders.
On August 14, 1997, Mr. Lubar advised the Christiana Board of Directors of
the potential for a merger with Weatherford. The Christiana Board determined
that it was not necessary to appoint a special committee at that time, even
though Mr. Lubar was expected to own a significant interest in an entity that
would purchase Logistic in connection with the Merger. The Board noted that the
outside directors, Messrs. Nicholas and Brady, were in favor of the Prior Merger
Agreement and that the Prior Merger Agreement would not be approved without
their concurrence. The views of Messrs. Nicholas and Brady were especially
important for two reasons. First, unlike the other directors, they were not
employed by Christiana or Logistic. Second, each held significant interest in
Christiana (9.9% in the aggregate) and therefore their interests would be
aligned with other shareholders. The directors decided that it was important for
all shareholders to know how each director voted on this issue. Each director
voted in favor of continuing the negotiations. Because the two unaffiliated
directors, Messrs. Nicholas and Brady, voted in favor of continuing the
negotiations, Messrs. Lubar and Donovan had sufficient authority under
applicable Wisconsin law to proceed even though the "affiliated" directors
voted. During this period and until the November 21, 1997 Board meeting at which
the Board of Directors of Christiana approved the Merger, Messrs. Lubar and
Donovan kept the Board advised of the progress of negotiations, including
specifically the outside directors, Messrs. Nicholas and Brady.
After having been advised by Weatherford that Weatherford would be
interested in owning only a one-third interest in Logistic, Christiana and its
Board of Directors began to consider what entity would own the remaining
two-thirds interest in Logistic.
On August 21, 1997, at the recommendation of Mr. Duroc-Danner, the Board of
Directors of Weatherford appointed a special committee of the Board of Directors
of Weatherford consisting of Sheldon S. Gordon, a former director of
Weatherford, and Robert A. Rayne (the "Weatherford Special Committee") to
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review the Christiana proposal. Following that appointment, the Weatherford
Special Committee directed Fulbright & Jaworski L.L.P., Weatherford's outside
counsel ("Fulbright & Jaworski"), to begin negotiations with Christiana of an
acquisition on terms satisfactory to Weatherford.
In early September, Fulbright & Jaworski and Foley & Lardner, outside
counsel to Christiana, began negotiations for the acquisition. In late
September, Weatherford advised Christiana that in light of a number of
transactions that Weatherford was then pursuing, in particular, its proposed
acquisitions of BMW Monarch (Lloydminster) Ltd. and BMW Pump, Inc.
(collectively, "BMW") and Trico Industries, Inc. ("Trico"), Weatherford was not
in a position at that time to devote the time and resources necessary to pursue
the acquisition of Christiana and that further negotiations would need to be
delayed until a later date.
On October 1, 1997, Mr. Donovan was approached by another entity inquiring
about a potential interest in Logistic. This entity was an entity known to Mr.
Donovan to have recently acquired a majority interest of a company involved in
the public refrigerated warehouse and logistics industry. Mr. Donovan discussed
with representatives of this entity the key elements of the contemplated
transactions with Weatherford. Such potential purchaser indicated that it was
not interested in considering such a transaction, primarily because of the
indemnification provisions, the lack of a right to acquire the minority interest
to be held by Weatherford and the operating restrictions imposed on Logistic.
On October 8, 1997, following the execution of definitive agreements for
the acquisitions of Trico and BMW, Mr. Duroc-Danner met in Milwaukee with
Messrs. Lubar and Donovan to discuss the status and expected timing of
Weatherford's review of the Christiana acquisition. Mr. Duroc-Danner
subsequently contacted the members of the Weatherford Special Committee and
suggested a November 11, 1997, meeting to review and discuss the terms and
structure of the proposed transactions. Weatherford and Christiana then directed
their advisors to resume negotiations of documentation.
On November 7, 1997, Weatherford engaged Morgan Stanley to provide
Weatherford with a fairness opinion on the proposed transactions.
On November 11, 1997, the Weatherford Special Committee met in London with
Mr. Duroc-Danner, James G. Kiley, Vice President and Chief Financial Officer of
Weatherford, and representatives of Fulbright & Jaworski and Morgan Stanley to
review the status and structure of the proposed transactions. At this meeting,
the Weatherford Special Committee reviewed the outstanding issues with respect
to the proposed transactions and the financial impact to Weatherford thereof as
well as drafts of documents for the proposed transactions. The Weatherford
Special Committee also reviewed various due diligence matters relating to
Christiana and Logistic, including the historical businesses of Christiana,
various matters relating to the prior ownership of real property by Christiana
in California, the status of various lawsuits then pending against Christiana,
including a class action lawsuit involving a prior real estate development in
California that has since been settled, and other customary matters involving
the historical business and operations of Christiana and its subsidiaries.
Following the conclusion of the November 11, 1997 meeting of the
Weatherford Special Committee, the members of the Weatherford Special Committee
contacted Mr. Lubar to discuss proposed changes in the terms of the proposed
transactions. Weatherford and Christiana advisers then continued negotiation of
the terms of the proposed transactions, including the following: (i) that $10.0
million cash be retained by Christiana to be available to pay any unpaid
indemnity claims under the Logistic Purchase Agreement, (ii) that $10.0 million
of the cash consideration proposed by Christiana to be paid in the Merger be
deferred for five years without interest and be subject to reduction for any
liabilities or unpaid indemnity claims that may be paid by Weatherford or
Christiana, (iii) that Christiana pay all printing and proxy solicitation costs
as well as Weatherford's filing fees with the Commission and under the HSR Act
and all costs and expenses for blue sky and state securities law filings, (iv)
that the value of various tax benefits associated with the exercises and
termination of options by Christiana prior to the Merger be provided to
Weatherford without offset for other income by Christiana, (v) that Christiana
obtain a solvency opinion with respect to the proposed transactions, (vi) that
various protections be incorporated in the Operating Agreement to protect
Christiana's minority interest in Logistic following the Merger and (vii) that
C2 be responsible for the indemnification of the historical liabilities and
obligations of Christiana and its current and historical subsidiaries and
predeces-
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sors under the Logistic Purchase Agreement as well as be responsible to purchase
Christiana's one-third interest in Logistic if Christiana were to elect to sell
its one-third interest in Logistic five years after the closing. The Weatherford
Special Committee requested a solvency opinion because of the various loans that
were anticipated to be made to Logistic to fund a portion of the cash dividend
to be made by Logistic to Christiana as a condition to the Merger and given that
the Logistic Sale involved a transaction among affiliated parties, an
independent third-party solvency opinion would provide support that the Logistic
Sale would not constitute a fraudulent transfer. Weatherford also conducted
various additional due diligence regarding the litigation described above.
Except for the class action lawsuit, which was subsequently settled, no known
material liabilities or contingencies were identified during the due diligence
process.
Further negotiations between the representatives of Weatherford and
Christiana with respect to open points under the agreements continued through
the month of November.
On November 21, 1997, the Board of Directors of Christiana met to consider
the proposed transactions. At this meeting, representatives of Foley & Lardner
and Christiana management provided presentations to the full Board of Directors
describing the proposed transactions and the financial, legal and other effects
of the proposed transactions on Christiana. The Board considered the advantages
of (i) a separation of Christiana's two principal assets, its 3,897,462 shares
of Weatherford Common Stock and Logistic, including permitting Christiana
shareholders to make more focused investment decisions based on the specific
attributes of Weatherford and Christiana, as discussed more fully under
"Christiana's Reasons For the Transaction", (ii) the fair value Christiana
shareholders would receive in the Merger in the form of the Weatherford Share
Consideration, the Cash Consideration and the $10.0 million contingent cash
payment; (iii) the tax free nature of the Weatherford Share Consideration to
Christiana shareholders; and (iv) the right of each Christiana shareholder to
purchase his or her pro rata interest in C2 and thereby maintain an ownership
interest in Logistic. The Board also determined that a fairness opinion from
Prudential Securities, based on the terms described at the meeting, would be
necessary. The Christiana Board also considered the cost to the Christiana
shareholders in connection with the Merger, including, specifically, that the
Merger would preclude other alternatives in the future, that the $10.0 million
contingent cash payment would not bear interest, that Christiana (which
following the Merger will be a wholly-owned subsidiary of Weatherford) would
retain a one-third interest in Logistic and the cost associated with converting
the Logistic business to the business of C2. The Christiana Board further
considered that the proposed transactions will increase the exposure of
Christiana shareholders to fluctuations in the price of Weatherford Common
Stock, as described more fully in "Christiana Reasons For the Transaction". The
Christiana Board, nevertheless, considered that the advantages outweighed such
disadvantages. In considering the proposed transaction, the Christiana Board of
Directors also noted that the potential tax benefits that could be realized by
Christiana (and therefore accruing to the benefit of Christiana's shareholders
through the elimination of double taxation) through the Merger (versus other
alternatives) ranged from $57.8 million on August 14, 1997, the date of the
Christiana Board's first meeting to consider the potential for a merger with
Weatherford, to $72.0 million on November 21, 1997, the date the Christiana
Board approved the Merger, and, based on its favorable outlook on Weatherford
Common Stock, the Christiana Board expected these tax benefits to increase.
Except for the quantification of these tax benefits and its analysis of the
potential value of Logistic as described above, the Christiana Board of
Directors did not assign values or quantify further its analysis of the
transaction. Following these presentations and discussions at the November 21,
1997 Board meeting, the Board of Directors of Christiana unanimously approved
the Prior Merger Agreement and related transactions (including, specifically,
the sale of two-thirds of Logistic to C2) and determined that the Prior Merger
Agreement and related transactions were in the best interest of Christiana and
fair to the Christiana shareholders, including the unaffiliated shareholders. A
special committee of the Board was not established at that time because the
Board noted that the two outside directors, Messrs. Nicholas and Brady, who were
present and voting, approved the Prior Merger Agreement and related transactions
and concluded that the Merger pursuant to the Prior Merger Agreement and related
transactions were in the best interest of Christiana. The views of Messrs.
Nicholas and Brady were especially important to Christiana for two reasons.
First, unlike the other directors, they were not employed by Christiana or
Logistic. Second, each held significant interest in Christiana (9.9% in the
aggregate) and therefore their interests would be aligned with other
shareholders. Because the two unaffiliated directors, Messrs. Nicholas and
Brady, voted in favor of the Merger pursuant to
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the Prior Merger Agreement and related transactions, Messrs. Lubar and Donovan
had sufficient authority under applicable Wisconsin law to proceed even though
the "affiliated" directors voted. This approval was subject to the finalization
of the documentation relating to the proposed transactions, the receipt of the
opinion of Prudential Securities as to the fairness, from a financial point of
view, of the proposed transactions to the shareholders of Christiana (the
"Prudential Securities Opinion"), satisfaction of other closing conditions and
approval of the final documentation for the Merger pursuant to the Prior Merger
Agreement by the President of Christiana.
On December 1, 1997, the Weatherford Special Committee met to review the
Prior Merger Agreement. At this meeting, representatives of Fulbright & Jaworski
and Morgan Stanley provided to the Weatherford Special Committee an updated
summary of the financial, legal and other effects of the proposed transactions.
The terms of the documentation were also reviewed. Morgan Stanley further
advised the Weatherford Special Committee that it was prepared to deliver its
fairness opinion if the proposed transactions were to be effected on the terms
described at the meeting. A draft of the fairness opinion was provided and
reviewed by the Weatherford Special Committee. After discussion, the Weatherford
Special Committee determined that the proposed transactions were desirable for
Weatherford and that it would recommend to the full Board of Directors of
Weatherford that the Prior Merger Agreement be approved.
Later on December 1, 1997, the Board of Directors of Weatherford met to
consider the Prior Merger Agreement. At this meeting, representatives of
Fulbright & Jaworski and Morgan Stanley provided presentations to the full Board
of Directors describing the proposed transactions and the financial, legal and
other effects of the proposed transactions on Weatherford. The Weatherford
Special Committee also provided a report to the Weatherford Board of Directors
outlining its findings and recommendations. Morgan Stanley further advised the
Weatherford Board of Directors that it was prepared to deliver its opinion as to
the fairness, from a financial point of view, of the consideration to be paid by
Weatherford pursuant to the Prior Merger Agreement (the "Morgan Stanley
Opinion"), if the proposed transactions were to be effected on the terms
described at the meeting. A draft of that opinion was provided to the Board of
Directors. Following these presentations, the Board of Directors of Weatherford,
with Mr. Lubar abstaining from voting, unanimously approved the Merger pursuant
to the Prior Merger Agreement and determined that the Merger pursuant to the
Prior Merger Agreement was in the interest of Weatherford. This approval was
subject to the finalization of the documentation relating to the proposed
transactions, the receipt of the Morgan Stanley opinion, satisfaction of certain
other conditions and approval of the final documentation for the proposed
transactions by the Weatherford Special Committee.
From December 1, 1997, through December 12, 1997, the final terms of the
Prior Merger Agreement were negotiated between Weatherford and Christiana.
On or about December 11, 1997, C2 was formed for the purpose of acquiring
the two-thirds interest in Logistic and it was determined that each Christiana
shareholder would have a pro rata allocation preference to purchase shares in
C2.
On December 12, 1997, the Weatherford Special Committee approved the final
terms of the Prior Merger Agreement and Morgan Stanley delivered its oral
opinion to the Weatherford Special Committee with respect to the Prior Merger
Agreement, which was subsequently confirmed in writing.
On December 12, 1997, the President of Christiana approved the final terms
of the Prior Merger Agreement and Prudential Securities advised the President
that it was in a position to deliver its opinion to the effect that the
Transaction (which for the purposes of the Prudential Securities Opinion is
defined as the Merger, the Logistic Sale and the option to participate in the
offering of C2 common stock pursuant to the Lubar/C2 Agreement (the "C2 Optional
Purchase")) was fair, from a financial point of view, to the shareholders of
Christiana.
On December 15, 1997, Weatherford and Christiana executed the Prior Merger
Agreement and Logistic Purchase Agreement.
On April 9, 1998, Mr. Duroc-Danner advised Mr. Lubar that Weatherford would
be unable to consummate the Merger until mid July 1998 because of an accounting
requirement that would not allow
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Weatherford to account for the merger of EVI, Inc. (the predecessor of
Weatherford) with Weatherford Enterra, Inc. as a "pooling of interests" if the
Merger were to close prior to Weatherford's publication of 30 days of combined
results with Weatherford Enterra, Inc. This delay would have allowed both
Christiana and Weatherford to have terminated the Prior Merger Agreement after
June 30, 1998. Messrs. Duroc-Danner and Lubar agreed that it would be desirable
to amend the Prior Merger Agreement to extend the termination date. In
connection with such amendment, Christiana requested that other modifications be
made to the Prior Merger Agreement and the Logistic Purchase Agreement to
provide for the payment of the $10.0 million contingent cash payment after four
years, greater operational flexibility and certain clarifying changes.
On April 29, 1998, the Weatherford Special Committee considered the
requests by Christiana and approved an amendment to the Prior Merger Agreement
and the Logistic Purchase Agreement that (i) extended the termination date of
the Prior Merger Agreement to October 31, 1998 and (ii) allowed for the payment
of the $10.0 million contingent cash payment on the earlier of (a) the fifth
anniversary of the Effective Time and (b) the date that Christiana received
consideration of a fair market value of $20.0 million or more in connection with
a sale of its one-third interest in Logistic. The inclusion of the early $10.0
million contingent cash payment provision was agreed to in order to allow the
Christiana shareholders to receive such funds if Weatherford has received
sufficient funds in respect of Christiana's interest in Logistic that is
substantially in excess of the $10.0 million cash required to be retained by
Christiana after the Merger. The amendment also clarified certain provisions of
the Logistic Purchase Agreement, in particular Christiana's "participation
rights" in the event of a "change of control" of C2. The principal change was
that no "change in control" would be deemed to occur if the "Lubar Family", as
defined in Amendment No. 1, retains at least a 25% voting and ownership interest
in C2 or the resulting entity.
On May 12, Mr. Donovan telephoned the Christiana directors to advise them
of the proposed amendment. On May 13, Mr. Donovan substantively described in
writing the proposed amendment to the Christiana Board of Directors. Directors
approving the amendment were requested to sign and return a consent action. The
directors unanimously approved the amendment, which approval was effective on
May 15, 1998.
The amendment to the Prior Merger Agreement and the Logistic Purchase
Agreement was approved by the Weatherford Board of Directors upon the
recommendation of the Weatherford Special Committee by written consent, with Mr.
Lubar executing the consent only to comply with the requirements of Delaware
law, but effectively abstaining from voting. On May 25, 1998, the amendments to
the Prior Merger Agreement and the Logistic Sale Agreement were executed.
On or about July 17, 1998, Weatherford and Christiana mailed to their
respective stockholders proxy materials to vote upon the approval of the Prior
Merger Agreement. Subsequent to the mailing of those materials, the per share
market price of the Weatherford Common Stock declined below $30 per share. The
impact of this decline was that the Merger was no longer able to be consummated
on a partially tax free basis. During the first week of August, representatives
of Christiana and Weatherford discussed various possible amendments to the Prior
Merger Agreement that would have allowed the Merger to be consummated on a
partially tax free basis. The alternatives that were discussed included a
purchase of Weatherford Common Stock by Christiana, a purchase of Weatherford
Common Stock by Weatherford and a corresponding adjustment to the cash and stock
components of the Merger, a dividend or distribution by Christiana of some or
all of its cash to its shareholders and a combination of the foregoing. In
reviewing these alternatives, it was determined by Weatherford and Christiana
that these alternatives required a new approval from the Weatherford and
Christiana stockholders, but there was insufficient time to accomplish this
before the scheduled stockholders meetings to be held on August 17, 1998.
On August 7, 1998, the Board of Directors of Weatherford held a special
telephonic meeting to consider possible changes to the Prior Merger Agreement to
allow the Merger to be consummated on a partially tax free basis. After
discussion of these matters and at the request of Christiana, no action was
taken by the Weatherford Board. The Weatherford and Christiana Boards also
determined that it would be in the best interest of their respective companies
to proceed with a vote of their stockholders on the Prior Merger
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Agreement and to monitor the market price of the Weatherford Common Stock to see
if the Merger as initially contemplated could be consummated.
On August 17, 1998, the special meetings of the stockholders of Weatherford
and Christiana were held to consider and act upon the Prior Merger Agreement. At
those meetings, the stockholders of Weatherford and Christiana overwhelmingly
approved the Prior Merger Agreement with approximately 71% and 89% of the total
outstanding shares of Weatherford Common Stock and Christiana Common Stock
voting in favor of the proposal.
Following the approval of the Prior Merger Agreement, Weatherford and
Christiana agreed to continue to monitor the market price of the Weatherford
Common Stock and see whether or not the partially tax free closing condition to
the initial Merger proposal would be satisfied prior to the October 31, 1998
termination date under the Prior Merger Agreement.
Given the overwhelming support of the Christiana shareholders in favor of
the Merger, on or about September 11, 1998, Mr. Donovan met with Mr. Lubar to
explore modifications that would permit the transaction to close, but still on a
partially tax free basis. They agreed that any restructuring would have to have
a high degree of certainty that the transaction, as modified, would close. Mr.
Donovan and Mr. Lubar consulted with Christiana's legal counsel and accountants
concerning this matter. As a result of those conversations, Mr. Donovan
determined that the transaction would still be partially tax free if Christiana
used its cash to purchase additional shares of Weatherford Common Stock, for
which Christiana shareholders would receive newly issued Weatherford Common
Stock on a one-for-one basis. Mr. Donovan decided that, if Christiana made such
purchases, Weatherford might be willing to eliminate the $10.0 million
contingent cash component of the original Merger proposal. This would benefit
Christiana shareholders because these funds would no longer be subject to
contingent claims and because Christiana shareholders would have more control
over when they were taxed (since cash is taxed when received, but Weatherford
Common Stock is not taxed until sold, which is in a shareholder's discretion).
Christiana also determined that if a portion of its cash were to be utilized to
purchase shares of Weatherford Common Stock, the use of that cash would enhance
the likelihood that the Merger could be effected on a partially tax free basis
in that the common stock component of the consideration to be paid in the Merger
would increase and the cash component would decrease. Christiana concluded that
if it were to acquire Weatherford Common Stock with the $10.0 million cash that
was to be retained by Weatherford pursuant to the original Merger proposal, then
the Merger could be consummated even if the market price of the Weatherford
Common Stock at closing was lower. Christiana also determined that if it spent
an additional $5.0 million to purchase Weatherford Common Stock, the price of
Weatherford Common Stock could be even lower and the Merger could still be
consummated.
Mr. Donovan and Mr. Lubar also concluded that the original reasons for the
Merger as described in "Christiana's Reasons for the Merger" were still valid,
including, specifically, Christiana's interest in separating the large
Weatherford holdings from Logistic and significantly increasing the
marketability and liquidity of the holdings of the Christiana shareholders.
On September 17, 1998, Mr. Donovan presented this matter to the Christiana
Board. The Christiana Board considered three courses of action: (i) continue the
present course of monitoring Weatherford Common Stock, then close the existing
transaction if the Weatherford Common Stock price rose to approximately $30 or
higher per share, (ii) request that Weatherford and Christiana mutually
terminate the transaction or (iii) restructure the transaction in a way that
would increase the assurance that the transaction could close at a lower
Weatherford Common Stock price. Mr. Donovan described the modifications
discussed with Mr. Lubar. Considering that over 89% of the outstanding shares of
Christiana Common Stock were voted in favor of the Merger, the advantages gained
by the elimination of the contingent cash consideration, that the original
reasons for the transaction were still valid and that there was increased
assurance that the modified transaction would close, the Christiana Board agreed
that Weatherford should be contacted regarding an amendment to the existing
transaction on the terms proposed by Messrs. Donovan and Lubar.
On -- , 1998, the Christiana Board appointed an independent
committee consisting of Messrs. Nicholas and Brady (the "Christiana Independent
Committee") with the authority to: (i) review all aspects of the Merger
including any proposed amendment to the Prior Merger Agreement; (ii) approve any
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amendments to the Prior Merger Agreement and recommend such amendments to the
full Christiana Board; (iii) have a telephonic meeting with Prudential
Securities regarding the opinion of Prudential Securities as to the fairness of
the transaction as amended; (iv) negotiate or oversee the negotiation of any
amendments to the Prior Merger Agreement; and (v) take such further action as
necessary to amend the Prior Merger Agreement consistent with interests of
Christiana and its shareholders.
The Christiana Independent Committee instructed Mr. Donovan to communicate
with Weatherford and then report to the Christiana Independent Committee.
On September 18, 1998, Mr. Donovan contacted Curtis Huff, General Counsel
for Weatherford, regarding Christiana's position. Mr. Huff advised Mr. Donovan
that he would present the Christiana proposal to the Board of Directors of
Weatherford.
On September 19, 1998, members of the Board of Directors of Weatherford
were contacted by management of Weatherford to discuss the general proposal by
Christiana.
Because the composition of the Weatherford Board had changed since the
Board approval of the Prior Merger Agreement and there remained only one member
of the Weatherford Special Committee (Robert Rayne), it was the consensus of the
Weatherford Board that approval of amendments to the Prior Merger Agreement
should be approved by the full Board of Directors without the participation of
Mr. Lubar. Based on this conclusion, on September 21, 1998, Messrs. Duroc-Danner
and Huff met with Philip Burguierres and Robert Moses, two new independent
directors of Weatherford, to discuss with them in detail the historical terms
and rationale for the Merger and the general terms of the new proposal by
Christiana.
On September 22, 1998, the Weatherford Board of Directors met. At that
meeting, the Weatherford Board of Directors was provided a presentation on the
proposed amendments to the Prior Merger Agreement. After discussion and review
of the proposal, the Weatherford Board of Directors, with Mr. Lubar not
participating in the vote, approved the Amended Merger Agreement. The Amended
Merger Agreement provided for the release of the $10.0 million holdback in
consideration for Christiana's commitment to expend up to $15.0 million cash for
the acquisition of Weatherford Common Stock if necessary to allow for the Merger
to be consummated. The Weatherford Board of Directors also required Christiana
to commit to spend $10.0 million of the cash prior to the date of mailing of the
Joint Proxy Statement/Prospectus for such purchases regardless of the market
price of the Weatherford Common Stock. The Weatherford Board of Directors also
conditioned its approval on the receipt of another fairness opinion from Morgan
Stanley to the effect that the consideration to be paid pursuant to the Amended
Merger Agreement is fair to Weatherford from a financial point of view. In
approving the Amended Merger Agreement, the Weatherford Board gave particular
weight to the desire to obtain certainty for the consummation of the Merger and
agreed to the release of the $10.0 million holdback in exchange for the greater
certainty provided by the commitment by Christiana to purchase additional shares
of Weatherford Common Stock.
Following this meeting, representatives of Weatherford and Christiana
negotiated the final terms of the Amended Merger Agreement.
The Christiana Independent Committee met twice, on October 9 and 12, 1998,
to consider whether to recommend the Amended Merger Agreement to the Christiana
Board. At both meetings, Prudential Securities met telephonically with the
Christiana Independent Committee to discuss in detail the analysis of Prudential
Securities regarding the fairness of the transaction to the Christiana
shareholders from a financial point of view and their opinion in connection
therewith regarding the fairness of the transaction, were considered by the
Christiana Independent Committee along with the proposed terms of the Amended
Merger Agreement. At both meetings, the Christiana Independent Committee
concluded that the amended transaction was in the best interest of Christiana
and its shareholders and on October 12, 1998 recommended the amendment to the
full Christiana Board.
On October 12, 1998, the Christiana Board met to review the Christiana
Independent Committee's recommendations. The Board reviewed the proposed text of
the Amended Merger Agreement and considered the opinion of Prudential
Securities. The Board specifically considered that, if Christiana made the
purchases of Weatherford Common Stock, the possibility existed that the stock
price could nevertheless decrease and, if
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it decreased below approximately $ -- per share, the transaction would still
not be able to close because it would be a taxable transaction. Nevertheless,
the Board considered that the proposed amendment provided significant advantages
to Christiana shareholders, namely, the elimination of the $10.0 million
holdback, an increased certainty that the transaction would close (because,
without the amendment, the transaction would not be able to close unless the
Weatherford Common Stock price was $30.00 or higher, which was deemed unlikely
to occur before the October 31, 1998, termination date) and the advantages of
being able to defer taxes on a higher portion of the consideration. The
Christiana Board, with Mr. Lubar abstaining from voting, then approved the
transaction.
On October -- , 1998, Morgan Stanley delivered to Weatherford a new
opinion that the consideration to be paid by Weatherford pursuant to the Merger
Agreement was fair from a financial point of view to Weatherford.
Weatherford and Christiana executed the Amended Merger Agreement on October
14, 1998.
WEATHERFORD'S REASONS FOR THE TRANSACTION
The Board of Directors of Weatherford, with Mr. Lubar abstaining, has
approved the Merger Proposal and recommends that the stockholders of Weatherford
approve the Merger Proposal. The Weatherford Board of Directors believes that
the Merger is in the interest of Weatherford and its stockholders for the
following reasons. First, the Merger will provide Weatherford a one-third
interest in Logistic with a pro forma book value in excess of $7.0 million, and
certain tax benefits, all without any consideration other than transaction costs
and the exposure to certain contingent liabilities for which indemnity is being
provided by C2 and Logistic. Second, the Merger is expected to further improve
the liquidity of the Weatherford Common Stock by placing the equivalent number
of shares of Weatherford Common Stock that may be held by Christiana directly in
the hands of the Christiana shareholders. The Weatherford Board of Directors
believes that such a transaction is beneficial to Weatherford because of the
favorable financial terms provided to Weatherford for effecting the Transaction.
Except for the exposure to certain contingent liabilities for which indemnity is
being provided by C2 and Logistic, the Board of Directors of Weatherford does
not believe that there exists any material negative aspects of the Transaction
to the stockholders of Weatherford. Such a transaction would not be available to
Weatherford other than pursuant to the terms of the Merger.
In considering the approval of the Merger, the Weatherford Special
Committee and the Board of Directors of Weatherford noted that Weatherford,
through its ownership in Christiana, would be provided with an option to dispose
of Christiana's one-third interest in Logistic five years from the date of the
Merger for a cash consideration of $7.0 million. The Weatherford Special
Committee and Weatherford Board of Directors also noted that pursuant to the
Transaction, Weatherford would be entitled to various tax benefits having a
potential value of up to approximately $600,000. The Weatherford Board of
Directors also specifically took into consideration the impact of the recent
amendment to the Merger Agreement on Weatherford and its stockholders. In
particular, the Board of Directors noted that the release of the $10.0 million
cash holdback that would have been available for payment of unpaid
indemnification claims would no longer be available to Weatherford. The Board of
Directors, however, determined the potential benefits to Weatherford of
receiving a one-third interest in Logistic without providing any consideration
other than the agreement to pursue the transaction with Christiana outweighed
the detriments to Weatherford of being exposed to contingent liabilities for
which there would not be a cash holdback. The Board of Directors of Weatherford
also took into consideration the potential value of Logistic in the future and
the benefit that a one-third interest in Logistic would provide to Weatherford.
The Weatherford Special Committee and the Weatherford Board of Directors
also considered a number of other factors in approving the Merger. Principal
among these additional factors was the fact that under the terms of the Merger
Agreement and the Logistic Purchase Agreement, Logistic and C2 are required to
indemnify Weatherford and Christiana for all liabilities relating to
Christiana's, Logistic's and their respective subsidiaries' and predecessors'
prior businesses and all historical contingent liabilities relating to the
businesses of Christiana, Logistic and their respective current and historical
subsidiaries and predecessors. In addition, the Board of Directors of
Weatherford considered the fact that Christiana, C2 and Weatherford would
receive
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an opinion from American Appraisal to the effect that the Transaction would not
render Christiana, Logistic or C2 insolvent and that the value of the assets of
C2 and Logistic would be sufficient to satisfy the liabilities of Christiana, C2
and Logistic after giving effect to the Transaction. See "Opinions of Financial
Advisors -- American Appraisal Opinion". The Board of Directors of Weatherford
further considered the fact that another fairness opinion beyond the date of the
Amended Merger Agreement would not be provided in the Transaction and that the
other conditions to the closing of the Transaction provided appropriate
protection to Weatherford for changes in circumstances between the date of the
opinion and the consummation of Merger. The Weatherford Board of Directors also
placed considerable weight and reliance on the opinion of Arthur Andersen LLP to
the effect that the Merger would be tax free to Weatherford and Christiana and
on the fact that even if the Merger were subsequently found not to be tax free,
the Merger would only be considered to be a taxable purchase of stock of
Christiana from the shareholders of Christiana and therefore would not trigger
any material tax liabilities to Weatherford or Christiana. The Board of
Directors of Weatherford also noted that, under the terms of the Logistic
Purchase Agreement, Logistic and C2 will be fully responsible for, and indemnify
Christiana and Weatherford against, any and all tax liabilities that may arise
in connection with the Merger. Finally, the Weatherford Special Committee and
the Weatherford Board of Directors considered the opinion of Morgan Stanley
dated October 9, 1998 that the consideration to be paid by Weatherford pursuant
to the Amended Merger Agreement was fair from a financial point of view to
Weatherford.
In approving the Amended Merger Agreement, the Weatherford Board further
took into account the fact that the stockholders of Weatherford had approved the
Prior Merger Agreement and that a substantial portion of the benefits that were
contemplated to be realized by the Prior Merger Agreement would continue to be
realized by the Amended Merger Agreement.
Although no specific weight was given to any one of the above described
reasons or factors by the Weatherford Board in approving the Merger, the ability
of Weatherford to acquire a one-third interest in Logistic without any
significant cost to Weatherford other than transactional costs and with a
complete indemnity from Logistic and C2 for prior liabilities of Christiana,
Logistic and their respective current and historical subsidiaries and
predecessors was considered to be the most important factor by both the
Weatherford Special Committee and the Weatherford Board of Directors. The
foregoing factors were all the material factors considered by Weatherford's
Board of Directors.
CHRISTIANA'S REASONS FOR THE TRANSACTION
The Board of Directors of Christiana has approved the Merger Proposal and
recommends that the shareholders of Christiana approve the Merger Proposal. The
Christiana Board of Directors believes that the Merger is in the interest of
Christiana and its shareholders. Christiana's Board of Directors has had for
some time a strategic interest to separate the company's large Weatherford
shareholdings from its operating business, Logistic, in order to achieve a more
representative company valuation today and into the future. The Board has not
been interested in liquidating the Weatherford shareholdings given Christiana's
view as to the future potential for increase in the value of this asset and the
substantial corporate level tax that would result from such a liquidation.
Various alternative transactions were considered in order to accomplish these
objectives, as described more fully under "Background of the Transaction". In
addition, as described under "Background of the Transaction", Weatherford had
advised Christiana that Weatherford was not interested in pursuing an
acquisition of Christiana if the transaction would be dilutive to Weatherford's
per share earnings or cash flow or would involve Weatherford's full ownership
and management of Christiana's warehousing and logistics business. Accordingly,
the Christiana Board of Directors did not believe an alternative transaction was
feasible. The proposed structure allows Christiana shareholders to exchange
their shares of Christiana Common Stock for newly issued shares of Weatherford
Common Stock in a tax efficient manner. Specifically, the Christiana Board noted
that the proposed structure would avoid the substantial corporate-level tax that
would result if Christiana sold the Weatherford shareholdings. This proposed
structure will give maximum flexibility to each Christiana shareholder to
determine whether retention of Weatherford shares is desirable.
The Christiana Board of Directors also considered the advantages of a
separation of Christiana's two principal assets, its shares of Weatherford
Common Stock and Logistic. These advantages include permitting Christiana
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shareholders to make more focused investment decisions based on the specific
attributes of Weatherford and Logistic. Specifically, a Christiana shareholder
may, after the Merger, elect to (i) retain the Weatherford Share Consideration
and acquire stock in C2 (thereby owning an interest in Weatherford and a
warehousing and logistics business), (ii) sell the Weatherford holdings and
acquire an interest in C2, (iii) retain the Weatherford Share Consideration and
not acquire an interest in C2 or (iv) sell the Weatherford Share Consideration
and not acquire an interest in C2. Christiana's Board believes that the Merger
also will enable the financial markets to better understand and recognize the
merits of Logistic as a stand-alone entity. Prior to the Merger, investors
interested in Christiana's warehousing and logistics business could only
participate in such business by purchasing Christiana Common Stock, but a
significant value of the Christiana Common Stock was based upon its Weatherford
shareholdings. After the Merger, investors interested in the logistics and
warehousing business can acquire stock in C2, whose only principal asset
immediately after the Merger will be its interest in Logistic.
The Christiana Board concluded that the Transaction would permit Christiana
shareholders to receive fair value for Christiana's Weatherford shareholdings.
Specifically, each shareholder would receive a pro rata portion of the
Weatherford shareholdings represented by each share of Christiana Common Stock.
The Christiana Board also concluded that the Transaction would permit Christiana
shareholders to receive fair value for Christiana's ownership of Logistic. C2
will acquire a two-thirds interest in Logistic. Each Christiana shareholder will
have a right to acquire his or her pro rata interest in C2, so that a Christiana
shareholder, if deemed desirable, could continue to own an interest in Logistic
through C2.
In approving the Amended Merger Agreement, the Christiana Board
specifically noted the recent declines in the market price of the Weatherford
Common Stock. It noted that while there had been more than a 50% decline in the
market price of the Weatherford Common Stock since the date on which the Prior
Merger Agreement had been approved by the Christiana Board, other companies in
the industry had experienced similar declines in their stock price. The
Christiana Board also concluded that an investment in the Weatherford Common
Stock was an attractive investment for Christiana and its shareholders and that
at current prices the investment was even more attractive.
The Christiana Board also considered the substantial corporate-level tax
that would result from a sale of its Weatherford holdings. On August 14, 1997,
the date of the Christiana Board approval of the Prior Merger Agreement,
Christiana's gain on the Weatherford holdings if it had sold such holdings would
have been approximately $165.0 million. A sale of such stock would have incurred
a corporate-level general income tax of approximately $57.8 million. Using the
market price of the Weatherford Common Stock as of October 12, 1998, the date of
the Christiana Board approval of the Amended Merger Agreement, Christiana's gain
on a sale of its holdings of Weatherford Common Stock would have been
approximately $ -- million. A sale of such stock would have incurred a
corporate-level general income tax of approximately $ -- million. The
Christiana Board also noted that the Cash Consideration would be determined
based on the amount of cash of Christiana as of the effective time of the
Merger, less Christiana's accrued unpaid taxes, the value of certain tax
benefits and fixed liabilities not otherwise assumed by C2. In approving the
Amended Merger Agreement, the Christiana Board took into consideration the
beneficial and detrimental aspects of the amendment. As for the beneficial
aspects, the Christiana Board noted that the Amended Merger Agreement released
the $10.0 million contingent cash holdback that was contemplated under the Prior
Merger Agreement. The Amended Merger Agreement also increases the tax free
portion of the consideration to be paid in the Merger by increasing the number
of shares of Weatherford Common Stock to be issued in the Merger and decreasing
the cash component to be paid in the Merger. From a detrimental side, the
Christiana Board noted that the Amended Merger Agreement would expose the
Christiana shareholders to greater volatility through the receipt of Weatherford
Common Stock and that there would exist the possibility that there could be a
decline in the market price of the Weatherford Common Stock from the date on
which Christiana purchased the Weatherford Common Stock as required by Amended
Merger Agreement and the time at which the shares of Weatherford Common Stock
are issued in the Merger. Nevertheless, the Christiana Board concluded that the
benefits of the release of the $10.0 million holdback and the increased tax free
nature of the transaction more than outweighed the detriment of the increased
volatility associated with the Weatherford Common Stock. The Christiana Board
further noted that it believed that the Weatherford Common Stock represented an
attractive investment at its current prices and that at the current prices it
would present an opportunity for gain
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in the future. The Christiana Board also noted that any Christiana shareholder
who desired to receive cash in lieu of the Weatherford Common Stock would be
able to do so merely by selling the shares of Weatherford Common Stock received
in the Merger, following the Merger. Finally, the Christiana Board gave
particular weight to the recommendation and approval of the Amended Merger
Agreement by the Christiana Independent Committee.
The Christiana Board considered the costs to the shareholders in connection
with the Merger, including, specifically, that the Merger would preclude other
alternatives in the future and that Christiana (which following the Merger will
be a wholly-owned subsidiary of Weatherford) would retain a one-third interest
in Logistic. The Christiana Board also considered potential disadvantages of the
Transaction. The Transaction will result in the increased exposure of Christiana
shareholders to fluctuations in the price of Weatherford Common Stock. While an
ownership of Christiana Common Stock provided balance between Christiana's
holdings in Weatherford and Logistic, the Merger will result in Christiana
shareholders owning Weatherford Common Stock directly, thereby increasing
reliance on the performance of Weatherford and on the oil and gas industry and
the level of domestic and international drilling activities generally.
Additionally, as part of and as an inducement to Weatherford to enter into the
Merger, Weatherford through Christiana will receive a one-third ownership
interest in Logistic for no cash consideration. Christiana will have the ability
to "put" this interest to Logistic for cash consideration of $7.0 million after
five years from the date of the Merger. Christiana shareholders will benefit
from this part of the Transaction only indirectly through their ownership of
approximately 4% of outstanding Weatherford Common Stock received in connection
with the Merger. Otherwise, Christiana shareholders will receive no direct
benefit from this aspect of the Transaction. The Christiana Board nevertheless
considered that the advantages outweighed such disadvantages.
In considering the approval of the Merger pursuant to the Amended Merger
Agreement, the Christiana Board of Directors considered the opinion of
Prudential Securities that the Transaction (which for the purposes of the
Prudential Securities Opinion is defined as the Merger, the Logistic Sale and
the C2 Optional Purchase) is fair to Christiana shareholders from a financial
point of view. The Prudential Securities Opinion will not be updated beyond the
date of the Amended Merger Agreement or as of the closing of the Transaction.
The Christiana Board believed that receipt of the Prudential Securities Opinion
prior to the execution of the Amended Merger Agreement was sufficient for its
approval of the Transaction. The Christiana Board understood that a change in
circumstances between the date of the Prudential Securities Opinion and the
consummation of the Transaction could impact the fairness of the Transaction,
but the Christiana Board believed that the protections afforded in the Amended
Merger Agreement and its familiarity with Weatherford rendered an update of the
Prudential Securities Opinion unnecessary.
The Christiana Board of Directors also placed considerable weight and
reliance on the opinion of Arthur Andersen LLP to the effect that the Merger
would be tax free to Weatherford and Christiana.
The Christiana Board of Directors also considered the potential adverse
implications of continuing to be subject to the costly regulatory requirements
relating to Christiana's status as a public company. Total expenses associated
with Christiana being a public company in fiscal 1998 were approximately
$150,000. A Christiana shareholder interested in Weatherford could, after the
Merger, hold its interest in Weatherford directly without having to hold its
interest in one public entity, Christiana, which in turn held a significant
interest in another public entity, Weatherford.
Although the pro forma book value of Logistic was approximately $22.8
million at December 31, 1997 and $23.0 million at June 30, 1998, the Christiana
Board believes that the sale of a two-thirds interest in Logistic to C2 for
approximately $10.67 million is fair to Christiana shareholders, based on (i)
Christiana's view as to the value of such interest after giving effect to
restrictions and obligations applicable to Logistic and C2 after the sale and on
the opinion of Prudential Securities that the Transaction (which for purposes of
the Prudential Securities Opinion is defined as the Merger, the Logistic Sale
and the C2 Optional Purchase) was fair from a financial point of view to
Christiana shareholders, and (ii) the fact that any Christiana shareholder who
wishes to retain an interest in Logistic may do so by electing to purchase his
or her pro rata portion of C2 Common Stock at a price of $4.00 per share, the
same price offered to all Christiana shareholders including the Lubar Family and
all directors and officers of Christiana.
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The Christiana Board acknowledged that the value of Weatherford
shareholdings for Christiana was the major determinant in Christiana's share
price in the market. Hence, if Weatherford's share price increased, Christiana's
share price increased too. Accordingly, if Weatherford's share price declined,
Christiana's share price declined as well. Christiana's Board, however, did not
and does not control Weatherford and for this reason decided that it was better
to manage operations that it could control, rather than have the Christiana
stock price dependent upon an entity (Weatherford) that it did not control. The
Christiana Board did not favor selling its shares of Weatherford Common Stock,
but rather wanted to provide the investment decision directly to the Christiana
shareholders through the Merger.
As previously stated, the price to be paid by the purchasing entity,
ultimately determined to be C2, was determined unilaterally by Mr. Lubar in
connection with his negotiations with Weatherford. The Christiana Board believes
this to be procedurally fair for the following reasons. First, Mr. Lubar did not
think it appropriate to pay more than $10.67 million for the two-thirds interest
in Logistic, because Logistic, at the insistence of Weatherford, would be
assuming significant liabilities. Logistic, at Weatherford's insistence, would
also be required to restrict its operational activities, in order to assure, to
Weatherford's satisfaction, that Logistic would be able to satisfy its
obligations. Finally, the Christiana Board concluded that if a Christiana
shareholder concurred that the price was appropriate, the Christiana shareholder
could continue his indirect ownership in Logistic by acquiring stock in C2,
along with the Lubar Family. If the Christiana shareholder concluded that the
price was too low, the Christiana shareholder could vote against the Merger and
elect dissenters' rights. If the Christiana shareholder concluded that the price
for Logistic was too high, the Christiana shareholder could vote in favor of the
Merger and not elect to purchase stock in C2.
The Christiana Board believes it to be fair for C2 to pay $10.67 million
for a two-thirds interest in Logistic and C2 to pay Weatherford $7.0 million for
its one-third interest (if Weatherford elects to put its interest in Logistic at
such price), because of the difference in the time value of money. The $10.67
million for the two-thirds interest in Logistic will be paid to the Christiana
shareholders at the Effective Time of the Merger, whereas Weatherford will not
receive its $7.0 million until it exercises its put, which will not be for at
least five years. The Christiana Board determined the $7.0 million put value by
allocating $5.34 million to a one-third interest in Logistic (equivalent to a
two-thirds interest for $10.67 million), then increasing such amount by a modest
compound rate of return on such amount at approximately 5 1/2% for five years,
resulting in a put price of $7.0 million.
The Christiana Board noted that the price of the Christiana Common Stock
immediately prior to the execution of the Amended Merger Agreement was $ -- and
recognized that, depending upon the price of Weatherford Common Stock at the
Effective Time relative to the price of the Christiana Common Stock at such
time, the consideration to be received could be less than the then current
market price of the Christiana Common Stock. The Board considered whether to
recommend the Merger, even though the total consideration could be less than the
current market price of Christiana Common Stock. Christiana currently estimates
that the Weatherford Share Consideration will be -- of a share of Weatherford
Common Stock, and the Cash Consideration will be between approximately $3.00 and
$4.00, for each share of Christiana Common Stock. The Christiana Board noted the
significant appreciation in the Weatherford Common Stock at the time it approved
the Merger in August 1997 and, based upon its assessment of favorable long-term
appreciation of the Weatherford Common Stock, felt it advisable that each
Christiana shareholder have the opportunity to decide whether such stock should
be held or sold. As long as Christiana held the Weatherford Common Stock, the
Christiana shareholders could not individually make such a decision.
Consequently, even though it was possible that the total consideration to be
received by the Christiana shareholders was less than the current price of the
Christiana Common Stock, the Christiana Board determined that the Merger was in
the best interest of all of its shareholders.
Christiana recognized that costs would be incurred to establish C2. While
such costs will not be paid by Christiana, they will be paid by C2 from funds
raised in connection with C2's public offering. The costs incurred in connection
with establishing C2 are expected to be as follows: legal fees and expenses
($140,000), accounting and tax services ($75,000), filing fees with the
Commission ($6,140), printing costs, expenses for state securities laws filings
and transfer agent fees and expenses ($36,000), Nasdaq listing fee ($10,000) and
miscellaneous ($8,000).
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Christiana Common Stock traded at $ -- immediately prior to the execution
of the Amended Merger Agreement. On the day after execution and approval of the
Amended Merger Agreement, the price closed at $ -- , but as of -- ,
1998, it closed at $ -- . The Christiana Board does not consider the decline
in its stock price to be relevant for two reasons. First, the Weatherford Common
Stock held by Christiana is a significant Christiana asset, so Christiana's
stock price is substantially dependent on the Weatherford Common Stock price.
Second, the Christiana Board believes it important that each Christiana
shareholder make an independent decision to retain or sell the Weatherford
Common Stock. Such independent decision can only be made if the Weatherford
Common Stock is distributed to Christiana shareholders. Consequently, even if
the total consideration to be received by Christiana shareholders is less than
its price prior to the Merger, the Christiana Board considers the transaction
still to be in the best interest of all Christiana shareholders.
The Christiana Board (including Mr. Lubar) and the board of directors and
management of C2 believe the Transaction is fair to the unaffiliated
shareholders of Christiana. In arriving at this conclusion, these entities
considered the structure of the Transaction and how such structure rendered
immaterial traditional valuation analysis such as current and historical market
prices, net book value, going concern value, liquidation value and discounted
cash flow value. While the Christiana Board took into account its view of the
value of Logistic and Christiana in approving the Transaction, the Christiana
Board believed that the benefits to be derived from the Transaction combined
with the right of the Christiana shareholders to participate in Logistic through
Weatherford and C2 rendered in their view the need to perform traditional
valuation analyses immaterial. In this regard, the Christiana Board noted that
Christiana had two principal assets, its holdings in Weatherford Common Stock
and its ownership of Logistic. The Transaction essentially results in each
Christiana shareholder receiving his or her pro rata share of Weatherford Common
Stock held by Christiana on a tax free basis and a right to purchase such
Christiana shareholder's pro rata interest in C2, the entity which will acquire
Logistic as part of the Transaction. Finally, the cost to Christiana in allowing
Weatherford to receive a one-third interest in Logistic in the Transaction was
more than offset by the expected economic benefits to be realized by Christiana
in the Transaction.
The Christiana Board also considered the fact that each unaffiliated
shareholder of Christiana will be able to participate in the purchase of
Logistic through C2 on the same basis as Mr. Lubar and all other affiliates of
Christiana. The Christiana Board of Directors believes that treating
unaffiliated shareholders of Christiana in a similar way to Mr. Lubar supports
the fairness of the consideration to the unaffiliated shareholders in that it
provides the unaffiliated shareholders with the same rights as any affiliated
shareholder, including family members of Mr. Lubar.
In connection with the consideration of the Amended Merger Agreement, the
Christiana Board of Directors appointed a special committee consisting of
Messrs. Nicholas and Brady and authorized the Christiana Independent Committee
to have power to consider and approve the Amended Merger Agreement. The
Christiana Independent Committee reviewed the terms of the Amended Merger
Agreement and concurred with the various reasons for pursuing the Merger as
described above. The Christiana Independent Committee also concluded that the
terms of the Merger were in the best interest of Christiana and its shareholders
and recommended approval of the Amended Merger Agreement by the full Christiana
Board. The Christiana Board of Directors, with Mr. Lubar abstaining, approved
the Amended Merger Agreement on October 12, 1998.
The Merger has been structured to require approval of at least 80% of the
votes entitled to be cast at the Christiana Special Meeting and two-thirds of
the votes entitled to be cast at the Christiana Special Meeting other than the
Lubar Shares (shares beneficially owned by the Lubar Family), both as a result
of a desire by the Christiana Board to assure fairness and as required by
Wisconsin law. Because of this supermajority voting requirement, the Christiana
Board did not believe that a separate vote of a majority of the unaffiliated
shareholders of Christiana would be necessary to insure fairness.
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Although no specific weight was given to any one of the above-described
reasons or factors by the Christiana Board in approving the Merger, the
placement of the Weatherford Common Stock currently held by Christiana directly
in the hands of the Christiana shareholders, thereby giving each shareholder
maximum flexibility with regard to such shares without any significant cost, was
considered to be the most important factor by the Christiana Board of Directors.
The foregoing factors were all the material factors considered by Christiana's
Board of Directors.
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OPINIONS OF FINANCIAL ADVISORS
MORGAN STANLEY OPINION
In a letter agreement effective November 7, 1997 (the "Engagement Letter"),
Weatherford engaged Morgan Stanley to provide a financial fairness opinion in
connection with the Merger. Morgan Stanley was selected by the Weatherford Board
of Directors to provide this financial fairness opinion based on Morgan
Stanley's qualifications, expertise and reputation, as well as Morgan Stanley's
investment banking relationship and familiarity with Weatherford. On December
15, 1997, Morgan Stanley delivered to the Weatherford Board of Directors an
opinion to the effect that, on and as of the date of such opinion, and based on
assumptions made, matters considered and limits of review, as set forth in such
opinion, the consideration to be paid by Weatherford pursuant to the Prior
Merger Agreement was fair from a financial point of view to Weatherford.
Subsequent to the delivery of Morgan Stanley's opinion, however, the Prior
Merger Agreement and certain related documents were further amended.
Consequently, Morgan Stanley delivered to the Weatherford Board of Directors an
updated written opinion dated October 9, 1998 (the "Morgan Stanley Opinion") to
the effect that, on and as of the date of the Morgan Stanley Opinion, and based
upon assumptions made, matters considered and limits of review, as set forth in
such opinion, the consideration to be paid by Weatherford pursuant to the
Amended Merger Agreement was fair from a financial point of view to Weatherford.
The full text of the Morgan Stanley Opinion, dated October 9, 1998, which
sets forth, among other things, assumptions made, procedures followed, matters
considered and limitations on the review undertaken by Morgan Stanley in
rendering its opinion, is attached as Appendix D to this Joint Proxy
Statement/Prospectus and incorporated herein by reference. Weatherford
stockholders are urged to, and should, read the Morgan Stanley Opinion carefully
and in its entirety. The Morgan Stanley Opinion is directed to the Weatherford
Board of Directors, addresses only the fairness of the consideration to be paid
by Weatherford pursuant to the Amended Merger Agreement from a financial point
of view to Weatherford and does not address any other aspect of the Merger or
constitute a recommendation to any holder of Weatherford Common Stock as to how
to vote at the Weatherford Special Meeting. The following summary of the Morgan
Stanley Opinion is qualified in its entirety by reference to the full text of
the Morgan Stanley Opinion attached as Appendix D to this Joint Proxy
Statement/Prospectus. Morgan Stanley has consented to the use of the Morgan
Stanley Opinion as an appendix to this Joint Proxy Statement/Prospectus.
In rendering the Morgan Stanley Opinion, Morgan Stanley, among other
things: (i) reviewed certain publicly available financial statements and other
information of Weatherford and Christiana; (ii) reviewed certain internal
financial statements and other financial and operating data concerning
Weatherford, Christiana and Logistic prepared by the managements of Weatherford,
Christiana and Logistic, respectively; (iii) analyzed certain financial
projections concerning Weatherford, Christiana and Logistic prepared by the
managements of Weatherford, Christiana and Logistic, respectively; (iv)
discussed the past and current operations and financial condition and the
prospects of Weatherford, Christiana and Logistic with senior executives of
Weatherford, Christiana and Logistic, respectively; (v) analyzed the pro forma
impact of the Merger on Weatherford's earnings per share, (vi) reviewed the
reported prices and trading activity for the Weatherford Common Stock and
Christiana Common Stock; (vii) reviewed the Amended Merger Agreement, the
Logistic Purchase Agreement and certain related documents; (viii) reviewed a
draft letter dated as of October 7, 1998 substantially similar to the letter to
be provided to the Boards of Directors of Weatherford and Christiana by Arthur
Andersen LLP, regarding the tax treatment of the Merger; (ix) discussed and
reviewed with Weatherford and Fulbright & Jaworski L.L.P. the results of their
legal and environmental due diligence; and (x) performed such other analyses and
considered such other factors as Morgan Stanley deemed appropriate.
In rendering the Morgan Stanley Opinion, Morgan Stanley assumed and relied
upon, without independent verification, the accuracy and completeness of the
information reviewed by it for the purposes of the Morgan Stanley Opinion. With
respect to the financial projections, Morgan Stanley assumed that they were
reasonably prepared on bases reflecting the best currently available estimates
and judgments of the future financial performances of Weatherford, Christiana
and Logistic. Morgan Stanley did not make any indepen-
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dent valuation or appraisal of the assets or liabilities of Weatherford,
Christiana or Logistic, except, that Morgan Stanley received the draft letter of
Arthur Andersen LLP referred to as item (viii) above and the verbal report
concerning certain legal and environmental due diligence analyses performed by
Weatherford and Fulbright & Jaworski L.L.P. referred to as item (ix) above, and
Morgan Stanley relied, without independent verification, upon such items for
purposes of the Morgan Stanley Opinion. In addition, Morgan Stanley has assumed
the Logistic Sale will be consummated prior to or simultaneously with the Merger
in accordance with the terms set forth in the Logistic Agreement, including any
terms and conditions relating to indemnification, and that the Merger will be
consummated in accordance with the terms set forth in the Amended Merger
Agreement, including that all material conditions to closing have been satisfied
and not waived. Morgan Stanley also has assumed that the Merger shall qualify as
a reorganization within the meaning of Section 368(a) of the Code. In arriving
at the Morgan Stanley Opinion, Morgan Stanley was not authorized to consider,
and did not consider, any alternative transaction or transaction structure. The
Morgan Stanley Opinion was necessarily based on economic, market and other
conditions as in effect on, and the information made available to Morgan Stanley
as of, the date thereof.
The following is a brief summary of certain analyses performed by Morgan
Stanley in preparation of the Morgan Stanley Opinion:
Discounted Cash Flow Analysis. Morgan Stanley analyzed certain financial
projections prepared by the management of Logistic for the fiscal years 1999
through 2003 (the "Projections") and performed a discounted cash flow analysis
of Logistic based on the Projections. Morgan Stanley discounted the unlevered
free cash flows of Logistic at a range of discount rates of 10.0% to 12.0%,
representing an estimated weighted average cost of capital range for Logistic,
and terminal values based on a range of multiples of 5 to 7 times estimated 2003
earnings before interest, taxes, depreciation and amortization ("EBITDA") to
arrive at a range of present values for Logistic. Such present values were then
adjusted for Logistic's debt, net of cash, all pro forma for the Logistic Sale
as of June 30, 1998, to arrive at a net asset value. Based on this analysis,
Morgan Stanley calculated values representing one-third of Logistic's equity
value ranging from approximately $9.4 million to $18.6 million.
Morgan Stanley also performed certain sensitivity analyses on the
Projections (the "Adjusted Projections"). Specifically, Morgan Stanley assumed
that Logistic projected sales revenue from 1999 through 2003, with the exception
of sales revenue related to government contracts, remained the same as actual
1998 sales revenue. Morgan Stanley also assumed that Logistic's gross margin
from 1999 through 2003 remained the same as actual 1998 gross margin. The
Adjusted Projections assume that Logistic would have more long-term debt in 2003
than the Projections show. Morgan Stanley performed a discounted cash flow
analysis of Logistic based on the Adjusted Projections. Morgan Stanley
discounted the unlevered free cash flows of Logistic at a range of discount
rates of 10.0% to 12.0%, representing an estimated weighted average cost of
capital range for Logistic, and terminal values based on a range of multiples of
5 to 7 times estimated 2003 EBITDA to arrive at a range of present values for
Logistic. Such present values were then adjusted for Logistic's debt, net of
cash, all pro forma for the Logistic Sale as of June 30, 1998, to arrive at a
net asset value. Based on this analysis, Morgan Stanley calculated values
representing one-third of Logistic's equity value ranging from approximately
$1.2 million to $7.2 million.
Projected Credit Statistics Analysis. Based on the Projections, Morgan
Stanley calculated financial ratios including EBITDA/Interest, (EBITDA-Capital
Expenditures)/Interest and Total Debt/EBITDA (collectively, the "Ratios") for
every year from 1999 through 2003. Morgan Stanley calculated a range for EBITDA/
Interest of 3.3 times in fiscal 1999 to 7.3 times in fiscal 2003, a range for
(EBITDA-Capital Expenditures)/ Interest of 2.4 times in fiscal 1999 to 5.3 times
in fiscal 2003 and, a range for Total Debt/EBITDA of 3.4 times in fiscal 1999 to
1.4 times in fiscal 2003. Morgan Stanley also calculated the Ratios assuming
that Logistic borrows an additional $7.0 million in 2003 in order to meet its
obligation pursuant to the purchase obligation of Logistic of Christiana's
one-third interest in Logistic under the Logistic Purchase Agreement. Based on
this assumption, Morgan Stanley calculated values for EBITDA/Interest of 6.5
times, (EBITDA-Capital Expenditures)/Interest of 4.8 times and Total Debt/EBITDA
of 1.9 times, all in fiscal 2003.
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Based on the Adjusted Projections, Morgan Stanley calculated a range for
EBITDA/Interest of 2.6 times in fiscal 1999 to 3.6 times in fiscal 2003, a range
for (EBITDA-Capital Expenditures)/Interest of 1.7 times in fiscal 1999 to 2.4
times in fiscal 2003 and, a range for Total Debt/EBITDA of 4.3 times in fiscal
1999 to 3.1 times in fiscal 2003. Morgan Stanley also calculated the Ratios
assuming that Logistic borrows an additional $7.0 million in 2003 in order to
meet its obligation pursuant to the purchase obligation of Logistic of
Christiana's one-third interest in Logistic under the Logistic Purchase
Agreement. Based on this assumption, Morgan Stanley calculated values for
EBITDA/Interest of 3.3 times, (EBITDA-Capital Expenditures)/ Interest of 2.2
times and Total Debt/EBITDA of 3.8 times, all in fiscal 2003.
Selected Precedent Logistic/Warehousing Acquisitions Analysis. Using
publicly available information, Morgan Stanley reviewed recent precedent
transactions involving companies which provide services comparable to those of
Logistic such as refrigerated warehousing, logistic services and transportation.
The companies which were selected for inclusion in Morgan Stanley's analysis
provide services which Morgan Stanley believes are comparable to those provided
by Logistic.
Morgan Stanley analyzed the purchase prices and implied transaction
multiples paid in the following publicly announced logistic/warehousing
transactions: the acquisition of Heijden Logistics and France Distribution
System from Mayne Nickless Limited by Hayes plc, the acquisition of Caliber
System, Inc. by Federal Express Corporation, the acquisition of AmeriCold
Corporation and URS Logistics, Inc. by JV -- Vornado Realty Trust and Crescent
Real Estate Equities Company, and the acquisition of Intertrans Corporation by
Fritz Companies, Inc. (collectively, the "Precedent Transactions"). Morgan
Stanley reviewed publicly available financial information including the
aggregate value to latest twelve month ("LTM") EBITDA. Morgan Stanley observed
an aggregate value to LTM EBITDA range of 6.4 to 14.0 times for the Precedent
Transactions.
Pro Forma Analysis of the Merger. Morgan Stanley analyzed the pro forma
impact of the Merger on Weatherford's earnings per share for the fiscal years
1999 and 2000. Such analysis was based on earnings projections for Weatherford
prepared by the management of Weatherford and on the Projections. Morgan Stanley
noted that the Merger would be slightly accretive to Weatherford shareholders in
1999 and in 2000.
In connection with the review of the Merger by the Weatherford Board of
Directors, Morgan Stanley performed a variety of financial and comparative
analyses for purposes of the Morgan Stanley Opinion given in connection
herewith. While the foregoing summary describes the analyses and factors
reviewed by Morgan Stanley in connection with the Morgan Stanley Opinion, it
does not purport to be a complete description of all the analyses performed by
Morgan Stanley in arriving at its opinion. The preparation of a fairness opinion
is a complex process and is not necessarily susceptible to partial analysis or
summary description. In arriving at the Morgan Stanley Opinion, Morgan Stanley
considered the results of all of its analyses as a whole and did not attribute
any particular weight to any analysis or factor considered by it. Furthermore,
selecting any portion of its analyses, without considering all analyses, would
create an incomplete view of the process underlying the Morgan Stanley Opinion.
In addition, Morgan Stanley may have given various analyses and factors more or
less weight than other analyses or factors, and may have deemed various
assumptions more or less probable than other assumptions, so that the ranges of
valuations resulting from any particular analysis described above should not be
taken to be Morgan Stanley's view of the actual value of Christiana or Logistic.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Weatherford, Christiana
or Logistic. Any estimates contained herein are not necessarily indicative of
future results or actual values, which may be significantly more or less
favorable than those suggested by such estimates. The analyses performed were
prepared solely as part of Morgan Stanley's analysis of the fairness of the
consideration to be paid by Weatherford pursuant to the Amended Merger Agreement
from a financial point of view to Weatherford and were conducted in connection
with the delivery of the Morgan Stanley Opinion. The analyses do not purport to
be appraisals or to reflect the prices at which Christiana or Logistic might
actually be sold. Morgan Stanley did not recommend the consideration to be paid
by Weatherford or that any consideration to be paid by Weatherford constituted
the only appropriate consideration for the Merger.
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In addition, Morgan Stanley's opinion to the Weatherford Board of Directors
and the Weatherford Special Committee was one of the many factors taken into
consideration by the Weatherford Board of Directors and the Weatherford Special
Committee in making their determination to recommend approval of the Merger.
Consequently, the Morgan Stanley analyses described above should not be viewed
as determinative of the opinion of the Weatherford Board of Directors and the
Weatherford Special Committee with respect to the consideration to be paid in
connection with the Merger. The consideration to be paid by Weatherford pursuant
to the Amended Merger Agreement was determined through arm's-length negotiations
between Weatherford and Christiana and was approved by the Weatherford Board of
Directors.
Weatherford engaged Morgan Stanley to provide the Morgan Stanley Opinion
because of its experience and expertise. Morgan Stanley is an internationally
recognized investment banking and advisory firm. Morgan Stanley, as part of its
investment banking business, is regularly engaged in the valuation of businesses
and their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. In the course of its market-making and other trading activities,
Morgan Stanley may, from time to time, have a long or short position in, and buy
and sell, securities of Weatherford or Christiana. In the past, Morgan Stanley
and its affiliates have provided financial advisory services to Weatherford and
have received customary fees in connection with these services.
Weatherford has paid Morgan Stanley a fee of $250,000 in connection with
the delivery of the Morgan Stanley Opinion. In addition, Weatherford has agreed
to indemnify Morgan Stanley and its affiliates, their respective directors,
officers, agents and employees and each person, if any, controlling Morgan
Stanley or any of its affiliates against certain liabilities and expenses,
including liabilities under federal securities laws, in connection with Morgan
Stanley's engagement.
Morgan Stanley has provided investment banking services for Weatherford in
the past, including serving as joint lead manager in Weatherford's private
placement of its 5% Convertible Subordinated Preferred Equivalent Debentures due
2027 (the "Debentures"), and may provide such services in the future. In
addition, Prudential Securities has provided investment banking services to
Weatherford in the past, including serving as a co-manager of Weatherford's
private placement of the Debentures, and may provide such services in the
future.
PRUDENTIAL SECURITIES OPINION
On October 12, 1998, Prudential Securities delivered the Prudential
Securities Opinion to the Christiana Independent Committee and the Christiana
Board to the effect that, as of such date, the Transaction (which for purposes
of the Prudential Securities Opinion is defined as the Merger, the Logistic Sale
and the C2 Optional Purchase) was fair, from a financial point of view, to the
shareholders of Christiana. In requesting the Prudential Securities Opinion, the
Christiana Independent Committee and the Christiana Board did not give any
special instructions to Prudential Securities or impose any limitation upon the
scope of the investigation that Prudential Securities deemed necessary to enable
it to deliver its opinion.
The full text of the Prudential Securities Opinion, which sets forth the
assumptions made, the matters considered and the limitations on the review
undertaken, is set forth as Appendix E to this Joint Proxy Statement/Prospectus
and is incorporated herein by reference and should be read in its entirety in
connection with this Joint Proxy Statement/Prospectus. The Prudential Securities
Opinion is directed only to the fairness of the Transaction to the shareholders
of Christiana from a financial point of view and does not address any other
terms of the Transaction or the Christiana Board of Directors' underlying
business decision to effect the Transaction. The Prudential Securities Opinion
was delivered for the information of Christiana's Board and Christiana's
Independent Committee and does not constitute a recommendation to any
shareholder of Christiana as to how such shareholder should vote such
shareholder's shares at the Christiana Special Meeting. The summary of the
Prudential Securities Opinion set forth in this Joint Proxy Statement/Prospectus
is qualified in its entirety by reference to the full text of the Prudential
Securities Opinion attached as Appendix E. Prudential Securities has consented
to the use of the Prudential Securities Opinion as an appendix to this Joint
Proxy Statement/Prospectus.
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In conducting its analysis and arriving at its opinion dated October 12,
1998, Prudential Securities reviewed such information and considered such
financial data and other factors as Prudential Securities deemed relevant under
the circumstances, including, among others, the following: (i) The C2 Agreement,
the Acquisition Agreement, a draft dated October 10, 1998 of the Amended Merger
Agreement and a draft dated October 10, 1998 of Amendment No. 2 to the
Acquisition Agreement ("Amendment No. 2"); (ii) certain publicly available
historical financial and operating data concerning Christiana, including, but
not limited to, (a) the Annual Report to Shareholders and Annual Report on Form
10-K for the fiscal year ended June 30, 1998, and (b) the Joint Proxy Statement
for the Special Meeting of Shareholders held on August 17, 1998; and certain
pro-forma financial data prepared by Christiana management; (iii) certain
publicly-available historical financial and operating data for Weatherford
including, but not limited to, (a) the Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, (b) the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, and (c) the Current Report on Form 8-K dated March
4, 1998, and (d) the Joint Proxy Statement for the Special Meeting of
Stockholders held on August 17, 1998; (iv) certain information relating to
Logistic, including historical financial data for the fiscal years ended June
30, 1993 through June 30, 1998, provided by the management of Logistic; (v)
certain information relating to Logistic, including financial forecasts for the
fiscal years ending June 30, 1999 through June 30, 2002, prepared by the
management of Logistic; (vi) the financial terms of certain recent transactions
Prudential Securities deemed relevant to Prudential Securities' inquiry, (vii)
the historical stock prices and trading volumes of Christiana Common Stock and
Weatherford Common Stock; and (viii) such other financial studies, analyses and
investigations that Prudential Securities deemed appropriate. Prudential
Securities assumed, with Christiana's consent, that the draft of the Amended
Merger Agreement and the draft of Amendment No. 2 that Prudential Securities
reviewed (both, as referred to above) will conform in all material respects to
the definitive form of the Amended Merger Agreement and Amendment No. 2.
Prudential Securities met with the senior management of Christiana and Logistic
to discuss (i) the prospects for Christiana's business, (ii) their estimates of
the future financial performance of Christiana, (iii) the financial impact of
the Merger on Christiana and (iv) such other matters that Prudential Securities
deemed relevant. Prudential Securities also visited selected Christiana and
Logistic facilities.
In connection with its review and analysis and in arriving at its opinion,
Prudential Securities assumed and relied upon the accuracy and completeness of
the financial and other information provided to it by Christiana and Logistic
and did not undertake any independent verification of such information or any
independent valuation or appraisal of any of the assets or liabilities of
Christiana or Logistic. With respect to the financial forecasts provided to
Prudential Securities by Christiana for Christiana and by Logistic for Logistic,
Prudential Securities assumed that such forecasts (and the assumptions and bases
therefor) were reasonably prepared and represent the respective management's
best currently available estimate as to the future financial performance of
Christiana and Logistic. In addition, the Prudential Securities Opinion assumes
that: (i) the Merger will qualify as a reorganization within the meaning of
Section 368 (a) of the Code; (ii) neither Christiana nor Sub will recognize any
gain or loss for federal income tax purposes as a result of the receipt by
Weatherford of Christiana Common Stock in exchange for Weatherford Common Stock
in the Merger; and (iii) the holders of Christiana Common Stock will not
recognize any gain or loss for federal income tax purposes as a result of the
receipt of Weatherford Common Stock as partial consideration for their
Christiana Common Stock in the Merger. Prudential Securities has assumed that
such taxes are the only relevant taxes for purposes of the Prudential Securities
Opinion other than taxes that may be applicable to the Cash Consideration as set
forth in such opinion. Furthermore, for purposes of the Prudential Securities
Opinion, Prudential Securities has assumed that the stockholders of Christiana
at the Effective Time will be legally entitled to compel performance by C2 of
the C2 Agreement in accordance with its terms in a legal proceeding brought by
such stockholders and Prudential Securities further assumed that the C2
Agreement would not be amended or modified. In addition, Prudential Securities
has assumed that all Weatherford Common Stock Purchases (as defined on page --)
will be executed in open market transactions on a nationally recognized
securities exchange or in such other transactions having terms that are at least
as favorable as would have been obtained in such open market purchases at the
time of such other transactions.
Prudential Securities' engagement by Christiana was limited to reviewing
the financial terms of the Transaction, and accordingly, the Prudential
Securities Opinion does not address nor should it be construed to
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address the relative merits of the Transaction or alternative business
strategies that may be available to Christiana. In addition, the Prudential
Securities Opinion does not in any manner address the prices at which
Weatherford Common Stock or C2 Common Stock will trade following consummation of
the Merger or the liquidity of the market that may exist for the C2 Common
Stock. Further, the Prudential Securities Opinion is necessarily based on
economic, financial and market conditions as they exist and can only be
evaluated as of October 12, 1998. For purposes of rendering the Prudential
Securities Opinion, Prudential Securities assumed that Christiana will not
consummate the Transaction under circumstances where the closing price of
Weatherford Common Stock is less than $ -- per share on the closing date of the
Merger.
In addition, the Prudential Securities Opinion was one of the many factors
taken into consideration by the Christiana Board in making their determination
to recommend approval of the Transaction. Consequently, the Prudential
Securities Opinion should not be viewed as determinative of the opinion of the
Christiana Board with respect to the fairness, from a financial point of view,
of the Transaction to the shareholders of Christiana. The consideration to be
received by the shareholders of Christiana was determined through negotiations
between Christiana and Weatherford and was approved by the Christiana Board.
In arriving at the Prudential Securities Opinion, Prudential Securities
performed a variety of financial analyses, including those summarized herein.
The summary set forth below does not purport to be a complete description of the
analyses performed. The preparation of a fairness opinion is a complex process
that involves various determinations as to the most appropriate and relevant
methods of financial analyses and the application of these methods to the
particular circumstance and, therefore, such an opinion is not necessarily
susceptible to partial analysis or summary description. Prudential Securities
believes that its analyses must be considered as a whole and that selecting
portions thereof or portions of the factors considered by it, without
considering all analyses and factors, could create an incomplete view of the
evaluation process underlying the Prudential Securities Opinion. Prudential
Securities made numerous assumptions with respect to industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of Christiana and Weatherford. Estimates of
the values of businesses and securities do not purport to be appraisals or
necessarily reflect the prices at which businesses or securities may be sold. In
addition, Prudential Securities reviewed the following operating projections for
Logistic in connection with its overall analysis of the Transaction: for the
years ended 1999, 2000, 2001 and 2002, Logistic stand-alone revenues of $106.7
million, $112.6 million, $118.2 million and $124.3 million, respectively,
Logistic stand-alone EBITDA (as defined below) of $15.5 million, $17.3 million,
$18.0 million and $18.8 million, respectively, and Logistic stand-alone net
income of $2.2 million, $3.8 million, $4.8 million and $5.8 million,
respectively.
As a matter of policy, Christiana does not publicly disclose internal
management forecasts, projections or estimates of the type furnished to
Prudential Securities in connection with its analysis of the Transaction, and
such forecasts, projections and estimates were not prepared with a view towards
public disclosure. These forecasts, projections and estimates were based on
numerous variables and assumptions which are inherently uncertain and which may
not be within the control of management of Christiana, including without
limitation, general economic, regulatory and competitive conditions.
Accordingly, actual results could vary materially from those set forth in such
forecasts, projections and estimates.
Any estimates contained in Prudential Securities' analyses are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
Additionally, estimates of the values of businesses and securities do not
purport to be appraisals or necessarily reflect the prices at which businesses
or securities may be sold. Accordingly, such analyses and estimates are
inherently subject to substantial uncertainty. Subject to the foregoing, the
following is a summary of the material financial analyses conducted by
Prudential Securities in arriving at the Prudential Securities Opinion.
Comparable Transactions Analysis. Prudential Securities analyzed the
consideration paid in several recent merger and acquisition transactions deemed
by Prudential Securities to be reasonably similar to the Logistic Sale and
considered the ratios of the unlevered purchase price ("UPP") to the acquired
entities' latest twelve months ("LTM") earnings before interest and taxes
("EBIT") and LTM earnings before interest, taxes, depreciation and amortization
("EBITDA"), based upon publicly-available information. The
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transactions considered were the combinations of: (i) AmeriCold Corporation and
JV-Vornado Realty Trust, Crescent Real Estate Equities Company ("JV-Vornado"),
(ii) URS Logistics Inc. and JV-Vornado and (iii) Christian Salvensen Inc. and CS
Integrated LLC (the "Comparable Transactions"). The Comparable Transactions
analysis resulted in a range of ratios of UPP to LTM EBIT of 17.1x to 11.0x and
a range of ratios of UPP to LTM EBITDA of 9.9x to 6.8x. Applying such ratios to
Logistic's LTM revenues ($90.2 million), LTM EBIT ($7.1 million) and LTM EBITDA
($13.5 million) for the Comparable Transactions to Logistic's LTM EBIT and LTM
EBITDA resulted in a range of implied unlevered market values of $121.2 million
to $78.0 million and $133.2 million to $91.6 million, respectively, or a
combined range of implied unlevered market value based on the Comparable
Transactions of $133.2 million to $78.0 million. The assumed unlevered market
value of Logistic used by Prudential Securities was $68.8 million (based upon
estimated debt as of June 30, 1998, of $32.8 million, estimated additional debt
of $20.0 million to be incurred immediately prior to the Effective Time, and
$16.0 million, the implied aggregated equity value of Logistic, based upon a
purchase price of $10.7 million for a two-thirds interest in Logistic).
Prudential Securities then adjusted the high, low and mean implied unlevered
market values for Logistic's LTM EBIT and EBITDA by calculating the difference
between the average level of the Morgan Stanley REIT Index (the "Index") on the
effective date of the Comparable Transactions (332.78) and the current level of
the Index (271.62) and applying the percentage decrease (18.4%) to the high, low
and mean implied unlevered market values for Logistic's LTM EBIT and EBITDA (the
"Adjusted Implied Unlevered Market Value") in order to compensate for the
substantial decrease in the multiples of valuation ascribed to the sector since
the effective dates of the Comparable Transactions. The Adjusted Implied
Unlevered Market Values resulted in a range of $98.9 million to $63.7 million
and $108.7 million to $74.8 million, respectively, or a combined range of
Adjusted Implied Unlevered Market Value based on the Comparable Transactions of
$108.7 million to $63.7 million. Prudential Securities observed that the assumed
$68.8 million unlevered market value of Logistic falls within the combined range
of Adjusted Implied Unlevered Market Values based on the Comparable
Transactions, which, when considered in conjunction with the C2 Optional
Purchase, supports the Prudential Securities Opinion.
None of the acquired entities utilized in the above analysis for
comparative purposes is, of course identical to Logistic. Accordingly, a
complete analysis of the results of the foregoing calculations cannot be limited
to a quantitative review of such results and involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the acquired entities and other factors that could affect the consideration paid
for each of the acquired entities as well as that of Logistic.
Projected financial and other information concerning Christiana, Logistic
and Weatherford and the impact of the Merger upon the holders of Christiana
Common Stock are not necessarily indicative of future results. All projected
financial information is subject to numerous contingencies, many of which are
beyond the control of management of Christiana, Logistic and Weatherford.
Transaction Consideration Analysis. Prudential Securities calculated a
total value of $20.22 per share of Christiana Common Stock offered in the
Transaction, representing a premium to Christiana's closing price as of October
7, 1998 of 12.3%. Prudential Securities did not perform any analysis with
respect to premium/discount paid in comparable transactions. The value of the
total consideration offered per share of Christiana Common Stock was based on
(i) 0.76 (based on the currently owned shares of Weatherford by Christiana) of a
share of Weatherford Common Stock (the "Current Share Exchange Ratio") having a
closing price of $18.75 as of October 7, 1998, (ii) an additional $1.94 in
Weatherford Common Stock based on the purchase by Christiana of $10.0 million of
Weatherford Common Stock prior to the date the proxy statement is mailed (the
"Weatherford Common Stock Purchases"), (iii) an anticipated $4.00 per share cash
distribution (or $3.00 per share cash distribution assuming consummation of $5.0
million Additional Purchases), net of taxes and anticipated transaction-related
expenses, and (iv) an anticipated $0.97 in Weatherford Common Stock only in the
event of $5.0 million additional Weatherford Common Stock Purchases.
The Current Share Exchange Ratio of .76 of a share of Weatherford Common
Stock per share of Christiana Common Stock and the approximate $4.00 or
approximate $3.00 cash distribution number based on the Weatherford Common Stock
Purchases alone and $5.0 million additional Weatherford Common Stock
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Purchases, respectively, utilized by Prudential Securities were based on
financial calculations performed by Christiana as of September 30, 1998 and
provided to Prudential Securities. The Current Share Exchange Ratio was derived
by dividing the amount of shares of Weatherford Common Stock held by Christiana
(3,897,462) by the total outstanding shares of Christiana on a fully-diluted
basis (5,149,330). Based on material supplied by the Company as of September 30,
1998, the anticipated approximate $4.00 or approximate $3.00 cash distribution
amount (net of taxes and expenses) was derived by subtracting estimated cash
expenses to be paid on or prior to the Effective Time ("Estimated Cash
Expenses") from the anticipated amount of cash held by Christiana as of the
Effective Time ("Estimated Aggregate Cash"). The Estimated Aggregate Cash was
based on the following items: (a) cash and accrued interest ($5.9 million); (b)
the dividend from Logistic ($20.0 million); (c) the repayment of the Wiscold
Note ($3.3 million) and (d) the proceeds from the sale of two-thirds interest in
Logistic ($10.7 million), which items yielded a total amount of Estimated
Aggregate Cash of $39.8 million. Estimated Cash Expenses consisted of (i) $5.7
million for anticipated taxes due, (ii) $1.7 million for contractual payments on
option agreements, (iii) $1.3 million for anticipated transaction expenses, not
reflected in the cash balances as of September 30, 1998, and (iv) the
Weatherford Common Stock Purchases. Total anticipated cash available for
distribution equaled $21.0 million or an anticipated distribution of $4.00 (or
approximately $3.00 assuming $5.0 million additional Weatherford Common Stock
Purchases) per share of Christiana Common Stock on a fully-diluted basis.
Stock Trading History. Prudential Securities also analyzed the history of
the volume and trading prices for the Christiana Common Stock and the
Weatherford Common Stock. Prudential Securities observed that between October 8,
1997 and October 7, 1998, Christiana Common Stock had an average daily trading
volume of 3,370 shares, with trading prices in the range of $46.38 and $16.88
per share. Between October 8, 1997, and October 7, 1998, Weatherford Common
Stock had an average daily trading volume of 850,116 shares, with trading prices
in the range of $73.00 and $15.00 per share. Prudential noted that the receipt
of Weatherford stock in the Merger provides Christiana shareholders with a
security of substantially greater liquidity. Prudential Securities also noted
that, as described above under "-- Transaction Consideration Analysis", based on
the market prices of the Weatherford Common Stock and the Christiana Common
Stock and the assumed Cash Consideration, the implied "total" value to be
received by the holders of the Christiana Common Stock in the Merger as of
October 7, 1998, exceeded the closing price of the Christiana Common Stock on
that date by 12.3%. The combination of the increased liquidity and market
premium as of October 7, 1998, supports the Prudential Securities Opinion.
Christiana selected Prudential Securities to provide a fairness opinion
because it is a nationally recognized investment banking firm engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions and for other purposes and has substantial experience in
transactions similar to the merger. The engagement letter with Prudential
Securities provides that Christiana will pay Prudential Securities an advisory
fee equal to (i) a retainer of $50,000, plus (ii) $ 150,000 upon delivery of the
Prudential Securities Opinion and (iii) $250,000 upon consummation of the
Transaction. In addition, the engagement letter with Prudential Securities
provides that Christiana will reimburse Prudential Securities for its out-of-
pocket expenses and will indemnify Prudential Securities and certain related
persons against certain liabilities, including liabilities under securities
laws, arising out of the Transaction or its engagement. In the ordinary course
of business, Prudential Securities may actively trade the shares of Christiana
Common Stock and Weatherford Common Stock for its own account and for the
accounts of customers, and accordingly, may at any time hold a long or short
position in such securities.
AMERICAN APPRAISAL OPINION
In connection with the Prior Merger Agreement, which included as a part
thereof the Logistic Sale, American Appraisal delivered a written opinion (the
"American Appraisal Opinion") to the Board of Directors of each of Christiana,
Weatherford and C2, dated December 1, 1997, that given certain assumptions and
assuming further that the Merger pursuant to the Prior Merger Agreement and the
Logistic Sale are consummated as proposed, immediately after giving effect to
consummation of the Logistic Sale:
(a) the fair value of the aggregate assets of Logistic will exceed its
respective total liabilities, including, without limitation, subordinated,
unmatured, unliquidated, disputed and contingent liabilities;
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(b) the present fair saleable value of the aggregate assets of
Logistic will be greater than its respective probable liabilities on its
debts as such debts become absolute and mature;
(c) Logistic will be able to pay its debts and other liabilities,
including contingent liabilities and other commitments, as they mature; and
(d) Logistic will not have unreasonably small capital for the business
in which it is engaged, as managements of Logistic and Christiana have
indicated such business is now conducted and proposed to be conducted
following the consummation of the Merger pursuant to the Prior Merger
Agreement, the Logistic Sale and certain related transactions.
The full text of the American Appraisal Opinion, which sets forth the
assumptions made, the matters considered and the limitations on the review
undertaken, is set forth as Appendix G to this Joint Proxy Statement/Prospectus
and is incorporated herein by reference and should be read in its entirety in
connection with this Joint Proxy Statement/Prospectus. The American Appraisal
Opinion is directed only to the solvency of Logistic and does not address any
other terms of the Merger, the Logistic Sale or the underlying business decision
of Christiana's Board of Directors or Weatherford's Board of Directors to effect
the Merger. The American Appraisal Opinion does not constitute a recommendation
to any stockholder of Christiana or Weatherford as to how any such stockholder
should vote such stockholder's shares of Christiana or Weatherford, as the case
may be. The summary of the American Appraisal Opinion set forth in the Joint
Proxy Statement/Prospectus is qualified in its entirety by reference to the full
text of the American Appraisal Opinion attached as Appendix G. American
Appraisal has consented to the use of the American Appraisal Opinion as an
appendix to this Joint Proxy Statement/Prospectus.
The Amended Merger Agreement provides that, as a condition to closing the
Transaction, American Appraisal is required to deliver a similar opinion, dated
as of the closing date of the Merger, that relates to the revised terms of the
Transaction and that covers C2 and Christiana in addition to Logistic. See "The
Merger -- Terms of the Merger -- Conditions to the Merger".
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RISK FACTORS
An investment in the Weatherford Common Stock offered by this Joint Proxy
Statement/Prospectus involves a high degree of risk. The following factors
should be carefully considered, together with the information contained or
incorporated by reference in this Joint Proxy Statement/Prospectus, in
evaluating an investment in the Weatherford Common Stock offered by this Joint
Proxy Statement/Prospectus.
GENERAL
Uncertainty of Forward-Looking Statements
This Joint Proxy Statement/Prospectus contains statements relating to
future results of Weatherford and Christiana (including certain projections and
business trends) that are "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995.
Certain risks and uncertainties may cause actual results to be materially
different from projected results. Such risks and uncertainties include, but are
not limited to, the following:
- - Changes in the price of oil and natural gas and the effect of such changes on
the demand for and price of Weatherford's products, including its drilling and
production equipment
- - Changes in the number of active drilling rigs in domestic and international
exploration markets
- - Global trade policies
- - Changes in the levels of domestic and international drilling activities
- - Effects of the economic downturn in Southeast Asia on the worldwide economies
and the associated demand for oil
- - Worldwide political stability and economic growth
- - Currency fluctuations
- - U.S. and foreign government import and export policies
- - Technological advances regarding Weatherford's products
- - Litigation and other legal and dispute resolution proceedings
- - Year 2000 compliance issues
- - Weatherford's successful execution of internal operating plans and
manufacturing consolidations and restructurings
- - Performance issues with key suppliers and subcontractors
- - Weatherford's ability to maintain current pricing for products and services
and maintain current market shares
- - Changes in raw materials costs
- - Disputes with labor unions
- - Changes in the regulation of oil and natural gas production and exploration
In addition, Weatherford's future results will depend upon the outcome of
risks related to its acquisition strategy. These risks include, but are not
limited to, the following:
- - Weatherford's ability to successfully combine the operations of its
predecessors, EVI, Inc. and Weatherford Enterra, Inc.
- - Weatherford's ability to continue to identify and complete successful
acquisitions at acceptable prices
- - Weatherford's ability to combine the operations of such acquisitions with its
existing operations
- - Weatherford's ability to penetrate existing and new markets through such
acquisitions
Finally, Weatherford's future results will depend upon various other risks
and uncertainties, including, but not limited to, those detailed in
Weatherford's and Christiana's filings with the Commission. For additional
information regarding risks and uncertainties relating to Weatherford and
Christiana, see Weatherford's and Christiana's filings with the Commission under
the Exchange Act and the Securities Act referenced herein under "Where You Can
Find More Information".
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Risks of Adverse Federal Income Tax Treatment of the Merger
The Transaction is conditioned on the receipt of an opinion of Arthur
Andersen LLP that the Merger qualifies as a "reorganization" under Section
368(a)(1)(A) of the Code by reason of Section 368(a)(2)(E). The opinion of
Arthur Andersen LLP is not binding on the IRS or the courts. See "Material
Federal Income Tax Considerations". If the Merger fails to qualify as a
"reorganization", each Christiana shareholder who receives shares of Weatherford
Common Stock would, in addition to the recognition of gain with respect to the
Cash Consideration received in the Merger, recognize gain or loss equal to the
difference between the fair market value of the Weatherford Common Stock
received and such shareholder's basis in the shares of Christiana Common Stock
surrendered in exchange therefor. Under the terms of the Logistic Purchase
Agreement, Logistic and C2 will be required to indemnify Weatherford and
Christiana for adverse tax consequences to Weatherford or Christiana arising out
of the Merger. See "Ancillary Transactions -- Terms of the Logistic
Sale -- Indemnification" and "The Merger -- Terms of the Merger -- Conditions to
the Merger".
WEATHERFORD
Effect of Market Trends in the Oil and Natural Gas Markets
The price of oil and natural gas and the level of oil and natural gas
exploration activity strongly affects the demand for Weatherford's drilling
products, while oil production activity directly affects Weatherford's
production equipment and services. Among the factors that affect exploration and
production activities are the following:
- - Worldwide economic conditions
- - Supply and demand for oil and natural gas
- - Seasonal trends in the oil and natural gas markets
- - Political stability of oil-producing countries
Generally, you can expect low oil prices to adversely affect demand
throughout the oil and natural gas industry, including the demand for
Weatherford's products. In such a case, you could expect Weatherford's revenues
and income also to be adversely affected.
Risks and Uncertainties Involving Foreign Operations
Weatherford's equipment and services are used in approximately 84 countries
by U.S. customers operating abroad and by foreign customers. Operations and
sales in foreign markets are subject to substantial competition from large
multinational corporations and government-owned entities and to a variety of
local laws and regulations requiring qualifications, use of local labor, the
provision of financial assurances or other restrictions and conditions on
operations. Foreign operations also are subject to risks associated with doing
business outside the U.S., including risk of war, civil disturbances and
governmental activities that may limit or disrupt markets, restrict the movement
of funds or result in the deprivation of contract rights or the taking of
property without fair compensation. Foreign operations also may subject
Weatherford to risks relating to fluctuations in currency exchange rates.
Weatherford has drill pipe and other products manufactured for it by Oil
Country Tubular Limited ("OCTL") in India under a long-term exclusive
manufacturing arrangement with OCTL. Although Weatherford has sought to minimize
the risks of this operation through its manufacturing arrangement and insurance,
Weatherford is providing OCTL with a substantial amount of raw materials and
inventory for the products manufactured by it. Operations in India are subject
to various political and economic risks as well as financial risks with respect
to OCTL.
Weatherford's operations in Singapore, Mexico, Brazil, Venezuela, Nigeria,
Algeria and Argentina are subject to various political and economic conditions
existing in such countries which could disrupt operations. Weatherford generally
seeks to obtain, where economical, insurance against certain political risks.
Weatherford also attempts to structure its contracts and arrangements in the
foreign countries in which it operates in a manner that would minimize the
exposure of its assets to losses in those countries. Such efforts include
structuring its sales and service contracts to be in U.S. dollars where
practical and, where feasible or desirable,
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utilizing lease arrangements, manufacturing and distribution alliances and joint
ventures for foreign manufacturing facilities. Although Weatherford believes
that its exposure to foreign risks is not materially greater than that of its
competitors, there can be no assurance that disruptions will not occur in
Weatherford's foreign operations or that any losses that do occur will be
covered by insurance.
Risks of Oil and Natural Gas Operations and Liabilities that Exceed Insurance
Coverage
Weatherford's products are used for the exploration and production of oil
and natural gas. Such operations are subject to hazards inherent in the oil and
gas industry that can cause personal injury or loss of life, damage to or
destruction of property, equipment, the environment and marine life, and
suspension of operations. Such hazards include fires, explosions, craterings,
blowouts and oil spills. Litigation arising from an occurrence at a location
where Weatherford's products or services are used or provided may result in
Weatherford being named as a defendant in lawsuits asserting potentially large
claims.
Weatherford maintains insurance coverage that it believes to be customary
in the industry against these hazards and, whenever possible, obtains agreements
from customers providing for indemnification against liability to others.
However, insurance and indemnification agreements may not provide complete
protection against casualty losses. There can be no assurance that Weatherford
will be able to maintain adequate insurance in the future at rates it considers
reasonable. Further, there can be no assurance that insurance will continue to
be available on terms as favorable as those for its existing arrangements. The
occurrence of an adverse claim in excess of the coverage limits maintained by
Weatherford could have a material adverse effect on Weatherford's financial
condition and results of operations.
Risks of Environmental Costs and Liabilities
Weatherford's operations are subject to governmental laws and regulations
relating to the protection of the environment and to public health and safety.
The regulations applicable to Weatherford's operations include certain
regulations controlling the discharge of materials into the environment,
requiring removal or remediation of pollutants and imposing civil and criminal
penalties for violations. Some of the statutory and regulatory programs that
apply to Weatherford's operations also authorize private suits, the recovery of
natural resource damages by the government, injunctive relief and cease and
desist orders.
Laws and regulations protecting the environment generally have become more
stringent in recent years and could become more stringent in the future. Some
environmental statutes impose strict liability, rendering a person or entity
liable for environmental damage without regard to negligence or fault on the
part of such person or entity. As a result, under certain circumstances,
Weatherford could be liable for environmental damage caused by others or for
acts of Weatherford that were in compliance with all applicable laws at the time
such acts were performed.
Risks of Substantial Competition in Weatherford's Business Segments
Competition in the oilfield service and equipment segments of the oil and
gas industry is intense and, in certain markets, is dominated by a small number
of large competitors, many of which have greater financial and other resources
than Weatherford.
Volatility of Common Stock Price
The market price of Weatherford Common Stock has varied significantly in
the past. News announcements and changes in oil and natural gas prices, changes
in the demand for oil and natural gas exploration and changes in the supply and
demand for oil and natural gas have all been factors that affected the price of
Weatherford Common Stock. Such factors, along with all of the factors mentioned
above, will continue to affect the volatility of the price of Weatherford Common
Stock.
C2
Christiana shareholders may use their Cash Consideration to invest in C2, a
newly-formed entity which will acquire a two-thirds interest in Logistic. An
investment in C2 involves a high degree of risk as described under "Risk
Factors" in the C2 Prospectus provided to Christiana shareholders simultaneously
herewith. CHRISTIANA SHAREHOLDERS SHOULD CAREFULLY READ THE C2 PROSPECTUS BEFORE
MAKING AN INVESTMENT DECISION REGARDING C2 COMMON STOCK.
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ORGANIZATION OF WEATHERFORD, CHRISTIANA AND LOGISTIC
BEFORE AND AFTER THE TRANSACTION
The following diagrams set forth the stock ownership and organizational
structure of Weatherford, Christiana and Logistic, before and after the
Transaction:
[BEFORE AND AFTER TRANSACTIONS]
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ANCILLARY TRANSACTIONS
The detailed terms and conditions to the consummation of the Logistic Sale
are contained in the Logistic Purchase Agreement and the Operating Agreement,
which are attached as Appendix B and Appendix C, respectively, to this Joint
Proxy Statement/Prospectus and incorporated herein by reference. The following
discussion sets forth a description of the material terms and conditions of the
Logistic Purchase Agreement and the Operating Agreement. THE DESCRIPTION IN THIS
JOINT PROXY STATEMENT/PROSPECTUS OF THE TERMS AND CONDITIONS TO THE CONSUMMATION
OF THE LOGISTIC SALE IS QUALIFIED BY, AND MADE SUBJECT TO, THE MORE COMPLETE
INFORMATION SET FORTH IN THE LOGISTIC PURCHASE AGREEMENT AND THE OPERATING
AGREEMENT.
THE LOGISTIC SALE AND OPERATING AGREEMENT
Under the terms of the Merger Agreement, Christiana is required to a sell a
two-thirds interest in Logistic to C2 as a condition to Weatherford's
obligations to consummate the Merger. In addition, upon the disposition of the
two-thirds interest in Logistic to C2, Christiana and C2 are required to enter
into the Operating Agreement defining their respective rights and obligations
with respect to Logistic following the Logistic Sale. The following sets forth
the general terms of the Logistic Purchase Agreement and the Operating
Agreement.
TERMS OF THE LOGISTIC SALE
General. The Logistic Purchase Agreement provides that, immediately prior
to the Effective Time, C2 will purchase 666.667 membership units of Logistic for
an aggregate purchase price of $10.67 million. As an inducement of Sub to merge
with Christiana, C2 and Logistic agreed to assume the Assumed Liabilities (as
defined on page -- ). The Logistic Purchase Agreement also provides that at any
time after the fifth anniversary of the Effective Time, Christiana has the
option to sell to C2 or Logistic Christiana's one-third interest in Logistic for
$7.0 million. In addition, if there is a proposed merger, consolidation or share
exchange involving C2 or if the Lubar Family, as defined therein, proposes to
sell its interest in C2 and as a result the Lubar Family holds less than a 25%
interest in C2 or the resulting entity or if C2 proposes to sell its interest in
Logistic to an unrelated third party, Christiana will have the right to
participate in such sale with respect to its interest in Logistic for the same
equivalent consideration per equivalent unit in Logistic. See "-- Terms of the
Operating Agreement". The Logistic Sale will take place immediately prior to the
Effective Time.
Concurrently with the Transaction, C2 will offer 5,202,664 shares of its
common stock pursuant to a registration statement on Form S-1. Immediately prior
to the Effective Time, Christiana shareholders will have the ability to purchase
shares of C2 Common Stock in an amount up to their pro rata share of Christiana
Common Stock. The Lubar Family committed pursuant to the Lubar/C2 Agreement to
purchase such number of shares of C2 Common Stock as is necessary for the net
proceeds of the C2 Offering to C2, after deducting the expenses of the C2
Offering, to equal $10.67 million. The Lubar/C2 Agreement will insure that C2
has sufficient funds to complete the Logistic Sale. For a complete description
of C2, its management team and other related considerations, Christiana
shareholders should review the C2 Prospectus.
Indemnification. Logistic and C2 agreed under the Logistic Purchase
Agreement to indemnify, defend and hold harmless Christiana, Weatherford and
their respective officers, directors, employees, agents and assigns from and
against any and all liabilities or environmental liabilities (including, without
limitation, reasonable fees and expenses of attorneys, accountants, consultants
and experts) that such parties incur, are subject to a claim for, or are subject
to, that are based upon, arising out of, relating to or otherwise in respect of
the following matters:
- Any breach of any covenant or agreement of Logistic or C2 contained in
the Logistic Purchase Agreement or any other agreement contemplated
thereby;
- The acts or omissions of Christiana or any of its current or past
subsidiaries or affiliated companies (a "Christiana Company") on or
before the Effective Time;
- The acts or omissions of any Christiana Company, Logistic, C2 or
Logistic's or C2's affiliates or the conduct of any business by them on
or after the Effective Time;
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- The Assumed Liabilities (as defined on page -- ) and including, without
limitation, any and all liabilities and environmental liabilities other
than the Retained Liabilities (as defined on page -- ) to which
Christiana or C2's interest in Logistic may now or at any time in the
future become subject resulting from, arising out of or relating to (A)
the business, operations of Christiana or any Christiana Company on or
prior to the Effective Time, (B) the Merger, the Logistic Sale or any
other transactions contemplated thereby and (C) any taxes to which
Christiana or any Christiana Company may be obligated for periods ending
on or before the Effective Time (except for Christiana taxes expressly
retained by Christiana pursuant to the Merger Agreement);
- Any taxes as a result of the Merger subsequently being determined to be a
taxable transaction for foreign, Federal, state or local law purposes
regardless of the theory or reason for the transactions being subject to
tax;
- Any and all amounts for which Christiana or Weatherford may be liable on
account of any claims, administrative charges, self-insured retentions,
deductibles, retrospective premiums or fronting provisions in insurance
policies, including as the result of any uninsured period, insolvent
insurance carriers or exhausted policies, arising from claims by
Christiana's or any Christiana Company's affiliates, or the employees of
any of the foregoing, or claims by insurance carriers of Christiana or
any Christiana Company for indemnity arising from or out of claims by or
against Christiana or any Christiana Company for acts or omissions of
Christiana or any Christiana Company, or related to any current or past
business of Christiana or any Christiana Company or any product or
service provided by Christiana or any Christiana Company in whole or part
prior to the Effective Time;
- Any liability under the Consolidated Omnibus Budget Reconciliation Act of
1986 with respect to any employees of Christiana or any Christiana
Company who become employees of Logistic or C2 after the Logistic Sale;
- Any settlements or judgments in any litigation commenced by one or more
insurance carriers against Christiana or Weatherford on account of claims
by Logistic, C2 or any Christiana Company or employees of Logistic, C2 or
any Christiana Company;
- Any and all liabilities incurred by Christiana or Weatherford pursuant to
its obligations hereunder in seeking to obtain or obtaining any consent
or approval to assign, transfer or lease any interest in any asset or
instrument, contract, lease, permit or benefit arising thereunder or
resulting therefrom;
- The on-site or off-site handling, storage, treatment or disposal of any
Waste Materials (as defined on page -- ) generated by Christiana or any
Christiana Company on or prior to the Effective Time or any Christiana
Company at any time;
- Any and all Environmental Conditions (as defined on page -- ) on or prior
to the Effective Time, known or unknown, existing on, at or underlying
any of the properties owned, leased or operated by Christiana on or after
the Effective Time;
- Any acts or omissions on or prior to the Effective Time of Christiana or
any Christiana Company relating to the ownership or operation of the
business of Christiana or any Christiana Company or the properties
currently or previously owned or operated by Christiana or any Christiana
Company;
- Any liability relating to any claim or demand by any stockholder of
Christiana or Weatherford with respect to the Merger, the Logistic Sale
or the transactions relating thereto; and
- Any liability relating to the Christiana 401(k) Plan and the other
employee benefit or welfare plans of Christiana or any Christiana Company
arising out of circumstances occurring on or prior to the Effective Time.
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Certain Definitions. For purposes of the Logistic Purchase Agreement, the
following terms have the following meanings:
"Assumed Liabilities" means any and all liabilities and environmental
liabilities other than the Retained Liabilities and to which Christiana or C2's
interest in Logistic may now or at any time in the future become subject
(whether directly or indirectly, including by reason of Christiana or any
Christiana Company owning, controlling or operating any business or assets of
any person (including any current or past affiliate)), resulting from, arising
out of or relating to (i) any Christiana Company (other than Logistic), (ii) the
business, operations or assets of Christiana or any Christiana Company on or
prior to the Effective Time, (iii) any taxes to which Christiana or any
Christiana Company may be obligated for periods ending on or before the
Effective Time (except for Christiana taxes expressly retained by Christiana
pursuant to the Merger Agreement), (iv) any obligation, matter, fact,
circumstance or action or omission by any person in any way relating to or
arising from the business, operations or assets of Christiana or a Christiana
Company that existed on or prior to the Effective Time, (v) any product or
service provided by Christiana or any Christiana Company prior to the Effective
Time, (vi) the Merger, the Logistic Sale or any of the other transactions
contemplated thereby, (vii) previously conducted operations of Christiana or any
Christiana Company and (viii) C2's interest in Logistic.
"Environmental Conditions" means any pollution, contamination, degradation,
damage or injury caused by, related to, arising from or in connection with the
generation, handling, use, treatment, storage, transportation, disposal,
discharge, release or emission of any Waste Materials (as defined below).
"Environmental Laws" means all laws, rules, regulations, statutes,
ordinances, decrees or orders of any governmental entity now or at any time in
the future in effect relating to (i) the control of any potential pollutant or
protection of the air, water or land, (ii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation and (iii)
exposure to hazardous, toxic or other substances alleged to be harmful. The term
"Environmental Laws" includes, without limitation, (1) the terms and conditions
of any license, permit, approval or other authorization by any governmental
entity and (2) judicial, administrative or other regulatory decrees, judgments
and orders of any governmental entity. The term "Environmental Laws" includes,
but is not limited, to the following statutes and the regulations promulgated
thereunder: the Clean Air Act, 42 U.S.C. sec. 7401 et seq., the Clean Water Act,
33 U.S.C. sec. 1251 et seq., the Resource Conservation Recovery Act, 42 U.S.C.
sec. 6901 et seq., the Superfund Amendments and Reauthorization Act, 42 U.S.C.
sec. 11011 et seq., the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et
seq., the Water Pollution Control Act, 33 U.S.C. sec. 1251, et seq., the Safe
Drinking Water Act, 42 U.S.C. sec. 300f et seq., the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601 et seq., and any
state, county or local regulations similar thereto.
"Retained Liabilities" means, and are limited solely to, (i) accounts
payable relating to Christiana that are reflected on the balance sheet of
Christiana at the Effective Time, (ii) accounts payable reflected on the balance
sheet of Christiana at the Effective Time and agreed to by Weatherford prior to
the Effective Time, (iii) the obligations of Christiana that arise after the
Effective Time (other than obligations relating to matters existing or occurring
on or prior to the Effective Time and indemnification, warranty and product
liability, wrongful death or property claims associated with actions or
omissions prior to the Effective Time or any business conducted prior to the
Effective Time) and (iv) tax liability for income of Weatherford attributable to
Christiana under the equity method of accounting either before or after the
Effective Time (the "Weatherford Related Taxes").
"Waste Materials" means any (i) toxic or hazardous materials or substances,
(ii) solid wastes, including asbestos, polychlorinated biphenyls, mercury,
buried contaminants, chemicals, flammable or explosive materials, (iii)
radioactive materials, (iv) petroleum wastes and spills or releases of petroleum
products and (v) any other chemical, pollutant, contaminant, substance or waste
that is regulated by any governmental entity under any Environmental Law.
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TERMS OF THE OPERATING AGREEMENT
General. Christiana's and C2's interests in Logistic will be governed by
the Operating Agreement. Logistic was formed as a Delaware limited liability
company and its only members (collectively, the "Members" or individually, a
"Member") are C2 and Christiana. Additional members may be admitted to Logistic
only with the unanimous vote or written consent of the Members.
Capital Contributions. Christiana initially capitalized Logistic in
exchange for 1,000 membership units (the "Membership Units") of Logistic
representing 100% of the issued and outstanding Membership Units of Logistic.
Pursuant to the terms of the Logistic Purchase Agreement, C2 will acquire from
Christiana 666.667 Membership Units of Logistic representing a two-thirds
interest in Logistic. The Membership Units will have identical preferences,
limitations and other relative rights. The Members will not be required to make
additional capital contributions and the issuance of any additional Membership
Units will require the approval of both C2 and Christiana. A separate capital
account will be maintained for each Member on the books and records of Logistic
in accordance with the requirements of Section 704(b) of the Code and the
Treasury Regulations promulgated thereunder.
Allocations. All items of income, gain, loss or deduction of Logistic
determined in accordance with the Code will be allocated among the Members in
proportion to the number of Membership Units held by each Member. The allocation
of items of income, gain, loss or deduction will be interpreted so as to comply
with the Treasury Regulations promulgated under the Code.
Distributions. In order to permit the Members to make their required
estimated income tax payments on items of income, gain, loss or deduction
allocated to the Members, Logistic will make mandatory distributions to the
Members in an amount equal to Logistic's estimated federal taxable income for
each calendar quarter, multiplied by the sum of (i) the highest corporate
federal and Wisconsin income tax rates minus (ii) the product of such tax rates.
The mandatory distributions will be made to the Members in proportion to the
number of Membership Units held by each Member. Logistic may make additional
distributions to the Members in proportion to the number of Membership Units
held by each Member at such times as C2 and Christiania determine by vote or
written consent.
Management. The management of Logistic is vested in a Board of Managers.
The initial Board of Managers consists of six managers (each a "Manager")
consisting of William T. Donovan, Bernard J. Duroc-Danner, Curtis W. Huff,
Sheldon B. Lubar, John R. Patterson and Gary R. Sarner. Each Manager is elected
by the vote or written consent of the Members holding at least a majority of the
Membership Units in Logistic; provided, however, that Christiana and C2 will at
all times each be entitled to elect, without the consent of any other Member, a
number of Managers that is proportionate to the number of Membership Units held
by Christiana and C2, respectively. The Operating Agreement provides that the
Board of Managers may not cause Logistic to take certain specified actions
without the prior approval of the Members by unanimous vote or written consent.
Such matters include:
- The authorization or issuance of additional Membership Units
- The authorization or payment of any distribution with respect to
Membership Units, except for the payment of any distribution that is
necessary for C2 to fulfill its purchase obligation with respect to
Christiana's interest in Logistic
- Any direct or indirect purchase or acquisition by Logistic or any
subsidiary of Logistic of Membership Units
- Approval of any merger, consolidation or similar transaction or sale of
all or substantially all of the operating assets of Logistic in one or
more transactions
- The creation of any new direct or indirect subsidiary of Logistic
- The making of any tax election
- The liquidation or dissolution of Logistic or any subsidiary of Logistic
- Any transaction between Logistic or subsidiary of Logistic and any
affiliate of a Member (other than a transaction between Logistic and a
subsidiary of Logistic)
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- The payment of any compensation to any Member or any affiliate of a
Member or entering into any employee benefit plan or compensatory
arrangement with or for the benefit of any Member or any affiliate of a
Member
- Any amendment to the Operating Agreement or the Certificate of
Organization and
- Any other matter for which approval of Members is required under the
Delaware Limited Liability Company Act.
Logistic will generally indemnify the Managers to the fullest extent
permitted under the Delaware Limited Liability Company Act against any losses
incurred by reason of any act or omission in connection with the business of
Logistic. The Board of Managers may appoint officers of Logistic to perform such
duties as are set forth in the Operating Agreement or as specified by the Board
of Managers. The Board of Managers may authorize Logistic to pay the officers
any reasonable fees for their services. Neither the Members nor the Managers are
required to devote their full time and efforts to Logistic. Logistic will pay C2
an annual management fee of $250,000.
Assignment, Transfer and Repurchase of a Member's Units. Except as
specifically set forth in the Operating Agreement, a Member may not voluntarily
sell, give, assign, bequeath or pledge (each a "Transfer") any Membership Unit
without the prior written consent of the Board of Managers; provided, however,
that C2 may pledge and assign its Membership Units to Christiana. Christiana may
effect a Transfer of C2's Membership Units pursuant to any action taken with
respect to any security interest granted to Christiana by C2. Christiana may
also Transfer its Membership Units if the transferee is an affiliate of
Christiana or C2 and the transferee agrees to be bound by the provisions of the
Operating Agreement. At any time after the fifth anniversary of the date of the
Operating Agreement, Christiana may Transfer any or all of its Membership Units
to any person; provided, however, that C2 shall have a right of first refusal to
purchase such Membership Units for the same price and at the same terms as such
Membership Units were offered to the transferee. In the event of any attempted
involuntary Transfer of a Membership Unit, Logistic will have the option to
purchase the Membership Unit subject to the involuntary Transfer at an amount
equal to the book value of such Membership Unit. An involuntary transferee
receiving Membership Units will not be considered a Member of Logistic unless
all of the Members consent in writing to treat the involuntary transferee as a
Member. In addition, if there is a proposed merger, consolidation or share
exchange involving C2 or if the Lubar Family proposes to sell their interest in
C2 or if C2 proposes to sell its interest in Logistic to an unrelated third
party, Christiana will have the right to participate in such sale with respect
to its interest in Logistic for the same equivalent consideration per equivalent
Membership Unit in Logistic.
Dissolution and Winding Up. Logistic will be dissolved upon (i) the
unanimous vote or written consent of the Members to dissolve Logistic; (ii)
Logistic being adjudicated insolvent or bankrupt; or (iii) an entry of a decree
of judicial dissolution relating to Logistic. Upon a dissolution of Logistic,
the Members will select a liquidator to liquidate Logistic, pay and discharge
all of Logistic's debts and liabilities, and distribute all remaining assets of
Logistic to the Members in accordance with their respective capital accounts.
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THE MERGER
The following is a summary description of the Merger Agreement, a copy of
which is attached as Appendix A to this Joint Proxy Statement/Prospectus and is
incorporated herein by reference. The detailed terms and conditions to the
consummation of the Merger are contained in the Merger Agreement. The
description in this Joint Proxy Statement/Prospectus of the terms and conditions
to the consummation of the Merger is qualified by, and made subject to, the more
complete information set forth in the Merger Agreement.
TERMS OF THE MERGER
General Description of the Merger. The Merger Agreement provides that, at
the Effective Time, Sub will merge with and into Christiana and Christiana will
be the surviving corporation. Pursuant to the Merger, each outstanding share of
Christiana Common Stock will be converted into the right to receive the
Weatherford Share Consideration and the Cash Consideration. Each holder of a
share of Christiana Common Stock as of the Effective Time will be entitled to
receive from Weatherford with respect to each share of Christiana Common Stock
the Weatherford Share Consideration and the Cash Consideration. Based on the
current capitalization of Christiana and the assets and liabilities of
Christiana as of June 30, 1998, and after giving effect to the estimated
expenses of the Merger payable by Christiana, Christiana currently expects that,
if no Additional Purchases are made, the Weatherford Share Consideration and the
Cash Consideration will be -- of a share of Weatherford Common Stock and between
approximately $3.00 and $4.00 in cash, respectively. The specific number of
shares of Weatherford Common Stock and the exact amount of Cash Consideration
per share of Christiana Common Stock payable in the Merger will be determined as
of the Effective Time and could vary from that which would be payable had the
Merger been effective on June 30, 1998. If Christiana uses $5.0 million to make
the Additional Purchases, the Cash Consideration would drop by approximately
$1.00 per share. In addition, the Cash Consideration will not be determined
until following the Effective Time based on a 30-day post closing review by
Weatherford of the assets and liabilities of Christiana as of the Effective
Time. Weatherford will distribute the Cash Consideration to the Christiana
shareholders promptly following the calculation of such amount.
The Amended Merger Agreement provides that Christiana will be obligated to
spend up to $15 million to purchase additional shares of Weatherford Common
Stock in order for the Merger to qualify as a "tax free" reorganization under
the Code. Of this money, Christiana committed to spend $10.0 million to purchase
additional shares of Weatherford Common Stock prior to the mailing of this Joint
Proxy Statement/ Prospectus. Those shares were purchased during the two weeks
prior to such mailing. The total number of shares purchased were
-- at an average price per share of $ -- . The Amended Merger
Agreement also requires Christiana to spend up to an additional $5.0 million
cash to purchase additional shares of Weatherford Common Stock within one week
following the vote at the Christiana Special Meeting if necessary to allow the
stock component of the consideration to be paid in the Merger to equal at least
80% of the total consideration to be paid in the Merger. In addition, the
Amended Merger Agreement provides that Christiana may, but is not obligated to,
make Additional Purchases in excess of $5.0 million. It is expected that the
Additional Purchases will be necessary if the market price of the Weatherford
Common Stock is less than $ -- per share following the Christiana Special
Meeting.
For each $1.00 drop in the per share price of the Weatherford Common Stock
below $ -- per share, Christiana will have to effect approximately $ -- million
in Additional Purchases for the Merger to qualify as a partially tax free
reorganization. Because Christiana has committed to a maximum of $5 million of
Additional Purchases, the lowest price for Weatherford Common Stock at which the
Merger will be partially tax free is approximately $ -- per share. If the
price of Weatherford Common Stock declines below approximately $ -- and does
not increase above that level prior to January 31, 1999, the condition that the
Merger be a partially tax free reorganization under the Code would not be
satisfied and the Merger would not be completed unless Christiana purchased
additional shares of Weatherford Common Stock to qualify the Merger as a
partially tax free reorganization. The following table shows to what extent
Additional Purchases will be necessary and the effect of such Additional
Purchases on Weatherford Share Consideration and Cash Consideration.
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ADDITIONAL PURCHASES
<TABLE>
<CAPTION>
AMOUNT OF
ADDITIONAL WEATHERFORD
PRICE PER SHARE OF PURCHASES SHARE APPROXIMATE CASH
WEATHERFORD NECESSARY TO CONSIDERATION PER CONSIDERATION PER
COMMON STOCK AS QUALIFY MERGER AS SHARE OF SHARE OF
OF THE CHRISTIANA PARTIALLY TAX FREE CHRISTIANA CHRISTIANA
SPECIAL MEETING REORGANIZATION COMMON STOCK COMMON STOCK
- --------------------- ------------------ ----------------- -----------------
<S> <C> <C> <C>
$17.00 $4.00
$15.00
$13.00
$11.00
</TABLE>
As of the Record Date, there were -- shares of Weatherford Common
Stock outstanding, including the -- shares of Weatherford Common Stock
held by Christiana. Based upon the number of shares of Christiana Common Stock
outstanding as of the Record Date, and after giving effect to the conversion of
the -- shares of Weatherford Common Stock held by Christiana into
treasury shares, the number of shares of Weatherford Common Stock outstanding
after the Merger will be the same -- as prior to the Merger.
Effective Time of the Merger. Under the terms of the Merger Agreement, the
Merger will become effective when the Articles of Merger are duly filed with the
Department of Financial Institutions of the State of Wisconsin or at such later
time (not to exceed 90 days from the date the Articles of Merger are filed) as
is specified in the Articles of Merger pursuant to mutual agreement of
Weatherford and Christiana. It is anticipated that, if the Merger Proposal is
approved at the Special Meetings and all other conditions to the Merger have
been satisfied or waived, the Effective Time will occur as soon as practicable
thereafter.
Manner and Basis of Converting Shares. The Merger Agreement provides that,
at the Effective Time, each share of Christiana Common Stock issued and
outstanding immediately prior to the Effective Time not owned directly or
indirectly by Christiana shall be converted into a right to receive the
Weatherford Share Consideration and the Cash Consideration.
A letter of transmittal is provided to Christiana shareholders with this
Joint Proxy Statement/Prospectus. Christiana shareholders should complete the
letter of transmittal in accordance with its instructions and return it to
Firstar Trust Company on or before 5:00 p.m. Central Standard Time on
-- , 1998.
Christiana Common Stock certificates should be submitted with the letter of
transmittal. If such certificates were submitted in connection with the prior
special meeting, no further action need be taken with respect to such
certificates. Christiana shareholders may receive their certificates back at any
time upon request.
As soon as possible after the Effective Time, but no later than 30 days
thereafter (the "Payment Date"), the parties to the Merger Agreement shall
calculate and agree upon the Cash Consideration (anticipated to be between
approximately $3.00 and $4.00 per share of Christiana Common Stock, based upon
the terms of the Merger Agreement as described more fully in this Joint Proxy
Statement/Prospectus). On the Payment Date, Weatherford will pay the Cash
Consideration due each Christiana shareholder to Firstar Trust Company,
Milwaukee, Wisconsin (the "Escrow Agent"), which shall promptly distribute such
cash to each Christiana shareholder; provided, however that if the Escrow Agent
advises American Stock Transfer and Trust Company (the "Exchange Agent") that
the Escrow Agent has authorization from the Christiana shareholders to apply all
or a portion of the Cash Consideration to the purchase of shares of C2 Common
Stock as described in the C2 Prospectus, such cash shall be so applied. The
Escrow Agent shall, following instructions from the Christiana shareholders,
either transmit such funds to C2 to purchase shares of C2 Common Stock or
transmit such funds to the Christiana shareholders.
Contemporaneously with this Joint Proxy Statement/Prospectus, C2 will
deliver to each Christiana shareholder the C2 Prospectus regarding the proposed
issuance of C2 Common Stock. If the Merger is approved, each Christiana
shareholder is entitled to purchase shares of C2 Common Stock and may use the
Cash Consideration for such purpose by following the procedures described in the
C2 Prospectus. The letter of
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transmittal provided to Christiana shareholders with this Joint Proxy
Statement/Prospectus is the means by which Christiana shareholders may elect to
purchase shares of C2 Common Stock.
The rights of the Christiana shareholders regarding the purchase of C2
Common Stock and the terms upon which the Cash Consideration may be used to
purchase such shares are governed by the C2 Prospectus. Christiana shareholders
shall rely solely upon such document with regard to the purchase of such shares.
Until such time as a holder of Christiana Common Stock surrenders such
shareholder's outstanding stock certificate to the Exchange Agent, together with
an appropriately completed and executed letter of transmittal, such shareholder
will have no rights as a stockholder of Weatherford. Such certificate shall
represent only the right to receive upon surrender thereof the number of shares
of Weatherford Common Stock and the Cash Consideration into which the shares of
Christiana Common Stock theretofore represented by such certificate shall be
converted pursuant to the Merger Agreement. Unless and until such outstanding
certificates are surrendered, no dividends or other distributions payable to the
holders of Weatherford Common Stock, as of any time on or after the Effective
Time, will be paid to the holders of such outstanding certificates. Upon
surrender of the certificate previously representing Christiana Common Stock,
the holder thereof will receive certificates representing the number of shares
of Weatherford Common Stock to which such shareholder is entitled, the Cash
Consideration to which such shareholder is entitled and the amount of any
dividends or other distributions, if any, payable to holders of Weatherford
Common Stock on or after the Effective Time with respect to such shares, without
interest thereon. Christiana shareholders who submitted their Christiana Common
Stock certificates in connection with the prior Christiana special meeting need
not take further action with respect to their stock certificates. A Christiana
shareholder may upon request, receive their certificates back at any time.
Conditions to the Merger. Weatherford's and Christiana's obligations to
effect the Merger are subject to the fulfillment of, at or prior to the closing
date of the Merger (the "Closing Date"), the following conditions:
- The Merger Proposal shall have been approved and adopted by the requisite
vote of the stockholders of Christiana and Weatherford.
- No order shall have been entered and remain in effect in any action or
proceeding before any foreign, federal or state court or governmental
agency that would prevent or make illegal the consummation of the
Logistic Sale and the Merger.
- The registration statement of which this Joint Proxy Statement/Prospectus
forms a part and the registration statement under the Securities Act to
be filed by C2 in connection with the C2 Offering shall be effective on
the Closing Date, and all post-effective amendments filed shall have been
declared effective or shall have been withdrawn and no stop order
suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the
knowledge of the parties, threatened by the Commission.
- There shall have been obtained any and all material permits, approvals
and consents of any governmental body or agency, that reasonably may be
deemed necessary so that the consummation of the Merger and the
transactions contemplated thereby will be in compliance with applicable
laws, the failure to comply with which would have (a) a material adverse
effect on the financial condition of Christiana after giving effect to
the Logistic Sale or prevent or adversely affect the ability of
Christiana, Logistic or C2 to perform and comply with their respective
obligations under the Merger Agreement, the Logistic Purchase Agreement
or any other agreement to be executed and delivered in connection with
the transactions contemplated thereby (collectively, a "Christiana MAE")
or (b) a material adverse effect on the financial condition of
Weatherford and its subsidiaries, taken as a whole (a "Weatherford MAE").
- The shares of Weatherford Common Stock issuable upon consummation of the
Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
- Weatherford and Christiana shall have received a solvency opinion from
American Appraisal, in form and substance satisfactory to them.
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- Weatherford and Christiana shall have received all material third party
consents.
Weatherford's obligation to effect the Merger is, at the option of
Weatherford, also subject to the fulfillment at or prior to the Closing Date of
the following conditions:
- The representations and warranties of Christiana contained in the Merger
Agreement shall be accurate as of the date of the Merger Agreement and
(except to the extent such representations and warranties speak
specifically as of an earlier date) as of the Closing Date as though such
representations and warranties had been made at and as of that time, and
all of the terms, covenants and conditions of the Merger Agreement to be
complied with and performed by Christiana on or before the Closing Date
shall have been duly complied with and performed in all material
respects.
- There shall not have occurred or exist any fact or condition that would
reasonably result in a Christiana MAE or would constitute a material
fixed or contingent liability to Christiana.
- The Morgan Stanley Opinion shall not have been withdrawn.
- All stock options of Christiana under its various stock option plans
shall have been terminated or such options shall have been exercised.
- Christiana shall have received, and furnished written copies to
Weatherford of, the Christiana affiliates' agreements required by the
Merger Agreement.
- Weatherford shall have received from Foley & Lardner, counsel to
Christiana, an opinion dated the Closing Date covering customary matters
relating to the Merger Agreement, the Merger and other corporate and
securities law matters related to Christiana.
- Weatherford shall have received a written opinion from Arthur Andersen
LLP, in form and substance satisfactory to Weatherford, covering the
matters described under "Material Federal Income Tax
Considerations -- Federal Income Tax Consequences of the Merger".
- C2 shall have executed and delivered to Christiana and Weatherford the
Logistic Purchase Agreement and agreement among members, in form and
substance, including schedules, acceptable to Weatherford.
- The Logistic Sale shall have been consummated.
- Weatherford shall have received from Arthur Anderson LLP an opinion, in
form and substance satisfactory to Weatherford, dated as of the Closing
Date, to the effect that the Merger would not adversely affect the
ability of Weatherford to account for any prior or future business
combination as a pooling of interest.
- Christiana shall have delivered to Weatherford a pro forma balance sheet
after giving effect to the Logistic Sale, including a full accrual for
taxes thereon without regard to any tax credits or tax deductions that
Christiana may have in connection with the exercise of any stock options,
reflecting Christiana Net Cash (as defined in the Merger Agreement) in an
amount not less than $13.0 million.
- Except for certain liabilities agreed to by Weatherford, all outstanding
indebtedness (including guarantees thereof) of Christiana and its
subsidiaries (other than Logistic) shall have been paid in full or
Christiana shall have been released therefrom.
- The assets of Christiana shall consist only of cash of at least $13.0
million, at least 3,897,462 shares of Weatherford Common Stock and
333.333 units of Logistic representing one-third of the outstanding
interests of Logistic.
- There shall not be any pending litigation involving Christiana or any of
its subsidiaries that Weatherford, in its sole discretion, considers to
be a material liability for which adequate security has not been provided
Weatherford. See "Description of Christiana -- Legal Proceedings".
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Christiana's obligation to effect the Merger is, at the option of
Christiana, also subject to the fulfillment at or prior to the Closing Date of
the following conditions:
- The representations and warranties of Weatherford and Sub contained in
the Merger Agreement shall be accurate as of the date of the Merger
Agreement and (except to the extent such representations and warranties
speak specifically as of an earlier date) as of the Closing Date as
though such representations and warranties had been made at and as of
that time, and all the terms, covenants and conditions of the Merger
Agreement to be complied with and performed by Weatherford on or before
the Closing Date shall have been duly complied with and performed in all
material respects.
- The Prudential Securities Opinion shall not have been withdrawn.
- Christiana and C2 shall have received from Fulbright & Jaworski L.L.P.,
counsel to Weatherford, an opinion dated the Closing Date covering
customary matters relating to the Merger Agreement and the Merger.
- Christiana and C2 shall have received, a written opinion from Arthur
Andersen LLP, in form and substance satisfactory to Christiana, covering
the matters described under "Material Federal Income Tax Consequences of
the Merger -- Federal Income Tax Consequences of the Merger".
- The Logistic Sale shall have occurred.
Representations and Warranties of the Parties to the Merger Agreement.
Weatherford, Sub, Christiana and C2 have made various representations and
warranties in the Merger Agreement relating to, among other things, their
respective businesses and financial conditions, the accuracy of their various
filings with the Commission and their financial statements contained therein,
the status of various employee benefit plans and environmental matters, the
satisfaction of certain legal requirements for the Merger and the existence of
certain litigation. The representations and warranties of each of the parties to
the Merger Agreement other than C2 will expire upon consummation of the Merger.
The representations and warranties of C2 will survive the Merger Agreement
without limitation.
Conduct of Business of Christiana and Weatherford Prior to Merger. Under
the Merger Agreement, Christiana is prohibited from taking various actions prior
to the Merger without the prior consent of Weatherford. In this regard,
Christiana has agreed that, unless otherwise expressly contemplated by the
Merger Agreement or the Logistic Purchase Agreement:
- Its business and its subsidiaries' business would be conducted only in,
and it and its subsidiaries would not take any action except in, the
ordinary course of business and consistent with past practice.
- It would not directly or indirectly do any of the following: (a) issue,
sell, pledge, dispose of or encumber any capital stock of Christiana
except upon the exercise of Christiana stock options; (b) split, combine
or reclassify any outstanding capital stock, or declare, set aside or pay
any dividend payable in cash, stock, property or otherwise with respect
to its capital stock outstanding at any time; (c) redeem, purchase or
acquire or offer to acquire any of its capital stock; (d) acquire, agree
to acquire or make any offer to acquire for cash or other consideration
any equity interest in or assets of any corporation, partnership, joint
venture or other entity in an amount greater than $500,000; or (e) enter
into any contract, agreement, commitment or arrangement with respect to
any of the matters set forth in this clause.
- It would not transfer, dispose or otherwise convey any of the shares of
Weatherford Common Stock held by it or grant or permit there to exist any
lien or other encumbrance on such shares.
- Subject to certain procedures relating to approvals of new contracts, it
would not enter into any contract regarding its business having a term
greater than 120 days or involving an amount in excess of $50,000 or
commit to do the same.
- It would not become bound by any agreement or obligation in an amount in
excess of $500,000 in the aggregate for all such agreements and
obligations.
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- It would not pledge or encumber any of the assets to be held by it
following the Logistic Sale.
- Neither it nor its subsidiaries would enter into any employment or
consulting contracts.
- Neither it nor its subsidiaries would enter into any contract or
agreement that if effective on the date of the Merger Agreement would be
required to be identified to Weatherford under the terms of the Merger
Agreement.
- It would not sell, lease, mortgage, pledge, grant a lien or other
encumbrance on or otherwise encumber or otherwise dispose of any of its
subsidiaries' properties or assets, except sales of inventory in the
ordinary course of business consistent with past practice, provided that
Christiana may liquidate (in a manner acceptable to Weatherford) CST
Financial, Inc., Martinique Holdings, Inc. and Christiana Community
Builders, Inc.
- Subject to certain exceptions, neither it nor its subsidiaries would
directly or indirectly incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue or sell any debt
securities or warrants or other rights to acquire any debt securities of
Christiana or its subsidiaries or guarantee any debt securities of
another person.
- Neither it nor any of its subsidiaries would make any election relating
to taxes except for those elections to be made in connection with its
1997 tax returns that are consistent with the 1996 tax returns.
- Neither it nor any of its subsidiaries would change any accounting
principle used by it.
- It would use its reasonable efforts to preserve intact the business
organization and goodwill of Christiana and Logistic.
- It would cause there to exist, immediately prior to the Effective Time,
Christiana Net Cash (as defined in the Merger Agreement) of not less than
$13.0 million (including $10.67 million to be paid by C2 under the
Logistic Purchase Agreement).
- Subject to certain exceptions, neither it nor any of its subsidiaries
would settle or compromise any litigation.
- It would cause the Logistic Sale to be effected prior to the Merger.
- It would not authorize any of, or commit or agree to take any of, or
permit any of its subsidiaries to take any of the foregoing actions to
the extent prohibited by the foregoing.
- It shall cause Logistic to pay to Christiana a distribution in the amount
of $20.0 million cash prior to the Effective Time.
- It shall cause Logistic to pay in full the entire principal amount of the
Wiscold Note (as defined in the Merger Agreement) dated September 1, 1992
in the principal amount of $3.0 million together with all accrued
interest thereon.
- Except as set forth in the disclosure schedule to the Merger Agreement,
or agreed to in writing by Weatherford prior to the Closing, Christiana
shall cause all of its obligations (a) relating to Logistic or any other
historical business of Christiana or its subsidiaries and (b) under any
and all agreements relating to the borrowing of funds, including all
guarantees and other similar arrangements relating thereto, to be fully
released or otherwise satisfied in a manner acceptable to Weatherford.
Pursuant to the Merger Agreement, Weatherford agreed that, from the date of
the Merger Agreement until the Effective Time, unless Christiana otherwise
agrees in writing or as otherwise expressly contemplated by the Merger
Agreement, it would not take any action that would, or that reasonably could be
expected to, result in any of the representations and warranties set forth in
the Merger Agreement becoming untrue or any of the conditions to the Merger set
forth above not being satisfied.
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Expenses. Under the terms of the Merger Agreement, Christiana is required
to bear significant transaction costs, which costs and the estimates thereof are
as follows: Prudential Securities Opinion ($450,000), legal fees and expenses
($450,000), accounting and tax services ($250,000), fees for the American
Appraisal Opinion ($75,000), lease cancellation ($327,000), Weatherford's filing
fees with the Commission ($50,000), filing fees under the HSR Act ($90,000),
reimbursement for certain costs incurred by Weatherford ($625,000), including
all printing and proxy solicitation costs and expenses for blue sky and state
securities law filings, and miscellaneous ($183,000). Weatherford is required to
pay its own legal and financial advisory fees. Such costs are estimated as of
the date of this Joint Proxy Statement/Prospectus and may be higher. If higher,
the Cash Consideration available for distribution may be lower. See "Ancillary
Transactions".
Management Following the Merger. No changes in the directors or officers of
Weatherford will be effected as a result of the Merger. As of the Effective
Time, the directors and officers of Sub will become the directors and officers
of Christiana.
Termination or Amendment of Merger Agreement. The Merger Agreement provides
that it may be terminated and the Merger and the other transactions contemplated
therein may be abandoned at any time prior to the Effective Time, whether prior
to or after approval by the stockholders of Weatherford or the shareholders of
Christiana, by mutual written consent of Weatherford and Christiana.
Weatherford or Christiana may also terminate the Merger Agreement if:
- The Merger has not been consummated on or before January 31, 1999
(provided that the right to terminate the Merger Agreement under this
provision is not available to any party whose breach of any
representation or warranty or failure to fulfill any covenant or
agreement under the Merger Agreement is the cause of or resulted in the
failure of the Merger to occur on or before such date).
- Any court of competent jurisdiction, or some other governmental body or
regulatory authority, shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting
the Merger.
- The shareholders of Christiana do not approve the Merger Proposal at the
Christiana Special Meeting or at any adjournment thereof.
- The stockholders of Weatherford do not approve the Merger Proposal at the
Weatherford Special Meeting or any adjournment thereof.
- In the exercise of its good faith judgment as to its fiduciary duties to
its stockholders imposed by law, as advised by outside counsel, the Board
of Directors of Christiana or Weatherford determines that such
termination is appropriate in complying with its fiduciary obligations.
Christiana may terminate the Merger Agreement if:
- Weatherford fails to comply in any material respect with any of the
covenants or agreements contained in the Merger Agreement to be complied
with or performed by Weatherford or Sub at or prior to such date of
termination (provided such breach is not cured within 30 days following
receipt by Weatherford of written notice from Christiana of such breach
and is existing at the time of termination of the Merger Agreement).
- Any representation or warranty of Weatherford contained in the Merger
Agreement shall not have been true in all respects when made (provided
such breach has not been cured within 30 days following receipt by
Weatherford of written notice from Christiana of such breach and is
existing at the time of termination of the Merger Agreement) or on and as
of the Effective Time as if made on and as of the Effective Time (except
to the extent it relates to a particular date), except for such failures
to be so true and correct which would not, individually or in the
aggregate, reasonably be expected to have a Weatherford MAE, assuming the
effectiveness of the Merger.
- The Board of Directors of Weatherford withdraws, modifies or changes its
recommendation of the Merger Proposal in a manner adverse to Christiana
or shall have resolved to do any of the foregoing.
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Weatherford may terminate the Merger Agreement if:
- Christiana fails to comply in any material respect with any of the
covenants or agreements contained in the Merger Agreement to be complied
with or performed by it at or prior to such date of termination (provided
such breach is not cured within 30 days following receipt by Christiana
of written notice from Weatherford of such breach and is existing at the
time of termination of the Merger Agreement).
- Any representation or warranty of Christiana contained in the Merger
Agreement shall not have been true in all respects when made (provided
such breach has not been cured within 30 days following receipt by
Christiana of written notice from Weatherford of such breach and is
existing at the time of termination of the Merger Agreement) or on and as
of the Effective Time as if made on and as of the Effective Time (except
to the extent it relates to a particular date), except for such failures
to be so true and correct which would not, individually or in the
aggregate, reasonably be expected to have a Christiana MAE, assuming the
effectiveness of the Merger.
- The Board of Directors of Christiana withdraws, modifies or changes its
recommendation of the Merger Proposal in a manner adverse to Weatherford
or shall have resolved to do any of the foregoing.
GOVERNMENTAL AND REGULATORY APPROVALS
Under the provisions of the HSR Act, the Merger may not be consummated
until such time as the specified waiting period requirements of the HSR Act have
been satisfied. Weatherford and Christiana have filed notification reports,
together with requests for early termination of the waiting period, with the
Department of Justice and the Federal Trade Commission ("FTC") and the
applicable waiting period has expired. At any time before or after the Effective
Time, the Department of Justice, the FTC or a private person or entity could
seek under the antitrust laws, among other things, to enjoin the Merger or to
cause Weatherford to divest itself, in whole or in part, of Christiana or of
other businesses conducted by Weatherford. Although neither Weatherford nor
Christiana knows of any reason that a challenge to the Merger would be made
under the antitrust laws, there can be no assurance that a challenge to the
Merger will not be made.
Weatherford and Christiana are aware of no other governmental or regulatory
approvals required for consummation of the Merger, other than compliance with
applicable securities laws of the various states.
ACCOUNTING TREATMENT
The Merger will be accounted for as a purchase under generally accepted
accounting principles.
NYSE LISTING OF WEATHERFORD COMMON STOCK
Pursuant to the Merger Agreement, Weatherford is required to use reasonable
efforts to obtain listing on the NYSE of the shares of Weatherford Common Stock
to be issued in connection with the Merger. An application for a listing of such
shares on the NYSE, subject to the approval of the Merger by the stockholders of
Weatherford, is expected to be filed and approved prior to the closing of the
Merger. Approval of the listing on the NYSE of the shares of Weatherford Common
Stock to be issued in the Merger is a condition to the respective obligations of
Weatherford, Christiana and Sub to consummate the Merger.
FEDERAL SECURITIES LAW CONSEQUENCES
All shares of Weatherford Common Stock issued in connection with the Merger
will be freely transferable, except that any shares of Weatherford Common Stock
received by persons who are deemed to be "affiliates" (as that term is defined
under the Securities Act) of Christiana prior to the Merger may be resold by
them only in transactions registered under the Securities Act, permitted by the
resale provisions of Rule 145 promulgated under the Securities Act (or Rule 144
if such persons are or become affiliates of Weatherford) or otherwise permitted
under the Securities Act. Persons who may be deemed to be affiliates of
Weatherford generally include individuals or entities that control, are
controlled by or are in common control
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with such party, and may include certain officers and directors of such party,
as well as principal stockholders of such party.
DISSENTERS' RIGHTS
Under Delaware law, the holders of Weatherford Common Stock who object to
the Merger Proposal or abstain from voting in favor of the Merger Proposal will
not have any appraisal rights or right to receive cash for their shares of
Weatherford Common Stock, and Weatherford does not intend to make any such
rights available to its stockholders.
The following discussion of dissenters' rights under the Wisconsin Business
Corporation Law (the "WBCL") does not purport to be complete and is qualified in
its entirety by reference to the provisions of Section 180.1301 to 180.1331 (the
"Dissenters' Rights Provisions") of the WBCL. Christiana hereby undertakes to
supply a complete copy of the Dissenters' Rights Provisions upon written request
of its respective shareholders to Christiana Companies, Inc., William T.
Donovan, President and Chief Financial Officer, 700 North Water Street, Suite
1200, Milwaukee, Wisconsin 53202.
Any holder of Christiana Common Stock who is entitled to vote at the
Christiana Special Meeting and who objects to the Merger may demand payment of
his or her shares of Christiana Common Stock. Any such shareholder who elects to
exercise such rights ("Dissenters' Rights") and wishes to do so must (i) before
the vote is taken at the Christiana Special Meeting regarding approval of the
Merger, deliver to Christiana written notice that complies with Section 180.0141
of the WBCL of such shareholder's intent to demand payment for such
shareholder's shares and (ii) not vote such shares in favor of approval of the
Merger. A shareholder may assert Dissenters' Rights as to fewer than all the
shares registered in such shareholder's name only if such shareholder dissents
with respect to all shares beneficially owned by any one person and notifies
Christiana in writing of the name and address of each person on whose behalf
such record shareholder asserts Dissenters' Rights. The rights of a shareholder
asserting Dissenters' Rights as to fewer than all shares registered in such
shareholder's name are determined as if the shares as to which such shareholder
dissents and such shareholder's other shares were registered in the names of
different shareholders. Similarly, a beneficial owner of Christiana Common Stock
may assert Dissenters' Rights as to shares held on the beneficial owner's behalf
only if the beneficial owner submits to Christiana the record shareholder's
written consent to the dissent not later than the time the beneficial
shareholder asserts Dissenters' Rights and the beneficial owner does so with
respect to all shares of which it is the beneficial owner or over which it has
power to direct the vote. All notices to Christiana should be sent or delivered
to its address at the end of the immediately preceding paragraph.
Not more than ten days after approval of the Merger by Christiana
shareholders, Christiana must send to each person who has satisfied the
foregoing requirements for asserting Dissenters' Rights a notice that complies
with Section 180.0141 of the WBCL (the "Dissenters' Notice") which must, among
other things:
- State where the Payment Demand (described below) must be sent.
- State where and when share certificates must be deposited.
- State the extent to which the transfer of the shares will be restricted
after the Payment Demand is received.
- Supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the
proposed Merger (which date was December 15, 1997) and requires that the
shareholder or beneficial shareholder asserting Dissenters' Rights
certify whether such shareholder acquired beneficial ownership of its
shares before that date.
- Set a date (which must be at least 30 but not more than 60 days after the
date the Dissenters' Notice is delivered) by which Christiana must
receive the Payment Demand.
- Be accompanied by a copy of the Dissenters' Rights Provisions of the
WBCL.
A shareholder or beneficial shareholder who receives a Dissenters' Notice
and wishes to exercise Dissenters' Rights must submit a written demand for
payment (a "Payment Demand"), must certify whether
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beneficial ownership was acquired prior to December 15, 1997, and must deposit
the applicable share certificates in accordance with the terms of the
Dissenters' Notice. A shareholder or beneficial shareholder who does not demand
payment in the foregoing manner will not be entitled to payment for his or her
shares under Sections 180.1301 to 180.1331 of the WBCL. Upon receipt of an
appropriate Payment Demand and the share certificates from a dissenting
shareholder who certified that beneficial ownership was acquired before December
15, 1997, Christiana will pay the dissenting shareholder (provided such
shareholder has complied with Section 180.1323 of the WBCL) Christiana's
estimate of the fair value of the dissenting shareholder's shares plus interest,
if any, from the date the Merger is consummated. Upon receipt of such Payment
Demand and the share certificates from a dissenting shareholder who did not
certify that beneficial ownership was acquired prior to December 15, 1997,
Christiana may choose to withhold payment required by Section 180.1325 of the
WBCL from such dissenting shareholder. If Christiana elects to withhold payment
in the foregoing manner, it must offer to purchase the dissenting shareholder's
shares at a price based upon Christiana's estimate of the fair value of the
dissenting shareholder's shares plus accrued interest, if any.
The payment must be accompanied by all of the following:
- Christiana's latest available financial statements, audited and including
footnote disclosure, if available, including a balance sheet as of the
end of a fiscal year ended not more than 16 months before the date of
payment, an income statement for that year, a statement of changes in
shareholders' equity for that year and the latest available interim
financial statements, if any.
- Christiana's estimate of the fair value of shares.
- An explanation of how interest was calculated.
- A statement of the dissenting shareholder's right to demand payment under
Section 180.1328 of the WBCL if dissatisfied with the payment.
- A copy of Sections 180.1301 to 180.1331 of the WBCL.
Within 30 days after receipt of such payment or offer, the dissenting
shareholder either: (i) must accept the payment or offer or (ii) must notify
Christiana in writing of the shareholder's estimate of the fair value of the
shares (and accrued interest) and demand payment of the shareholder's estimate
(less any payment previously received). In the event Christiana fails to make
payment to a person within 60 days after the date set for demanding payment,
such person may notify Christiana in writing of his or her own estimate of the
fair value of his or her shares (and accrued interest) and demand payment of
such shareholder's estimate. If a dissenting shareholder and Christiana cannot
agree as to the fair value of such dissenter's shares, Christiana must, within
60 days after receiving the Payment Demand, commence a special proceeding in the
Circuit Court of Milwaukee County, Wisconsin to determine the fair value of such
shares and accrued interest. If Christiana fails to commence such a proceeding
within such 60-day time period, Christiana must pay to each dissenting
shareholder whose demand remains unsettled the amount each such dissenting
shareholder demands as fair value.
Shareholders contemplating exercising Dissenters' Rights under Wisconsin
law are urged to read carefully the Dissenters' Rights Provisions of the WBCL.
MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of the material United States Federal income tax
consequences of the Merger is based in part on an opinion of Arthur Andersen LLP
dated -- , 1998, and on the Code, Treasury regulations promulgated thereunder,
and judicial and administrative interpretations thereof, all as in effect on the
date hereof. No rulings have been requested from the Internal Revenue Service
(the "IRS") with respect to these matters. Additionally, the opinion of Arthur
Andersen LLP is based on various representations and assumptions described
therein, including representations by Weatherford and Christiana regarding the
reasons for the Transaction described in "Weatherford's Reasons for the
Transaction" and "Christiana's Reasons for the Transaction", and is not binding
on the IRS or the courts. The conclusions set forth in the discussion may
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change as a result of changes in applicable laws or interpretations thereof
occurring after the date hereof. The discussion does not address the effects of
any state, local or foreign tax laws on the Merger.
THE OPINION OF ARTHUR ANDERSEN LLP ALSO IS REQUIRED TO BE DELIVERED TO
WEATHERFORD AND CHRISTIANA AS A CONDITION TO THE CLOSING OF THE MERGER. THIS
CONDITION MAY BE WAIVED BY WEATHERFORD AND CHRISTIANA AS TO THE OPINION TO BE
RECEIVED BY IT. EXCEPT FOR MODIFICATIONS TO THE OPINIONS WHICH WOULD NOT CHANGE
THE CONCLUSIONS OF THE OPINIONS DESCRIBED BELOW OR WHICH WEATHERFORD AND
CHRISTIANA DO NOT BELIEVE WILL MATERIALLY CHANGE THE SUBSTANCE OF SUCH OPINIONS,
NO WAIVER OF THE REQUIRED OPINIONS OF ARTHUR ANDERSEN LLP WILL BE EFFECTED BY
WEATHERFORD OR CHRISTIANA WITHOUT DISCLOSURE TO THEIR RESPECTIVE STOCKHOLDERS OF
SUCH WAIVER, INCLUDING THE RISKS THEREOF, AND PROVIDING STOCKHOLDERS WITH AN
OPPORTUNITY TO CHANGE THEIR VOTE ON THE TRANSACTION.
The tax treatment of a shareholder may vary depending upon his or her
particular situation, and certain shareholders that have a special status
(including individuals who hold restricted Christiana Common Stock, individuals
who acquired Christiana Common Stock as a result of the exercise of an employee
stock option, pursuant to an employee stock purchase plan or otherwise as
compensation, insurance companies, tax-exempt organizations, financial
institutions or broker-dealers, persons who do not hold Christiana Common Stock
as a capital asset and persons who are neither citizens nor residents of the
United States, or who are foreign corporations, foreign partnerships or foreign
estates or trusts not subject to United States Federal income tax on income
regardless of source) may be subject to special rules not discussed below.
EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER OWN TAX ADVISOR AS TO THE
PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE TRANSACTIONS DESCRIBED HEREIN,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS,
AND OF CHANGES IN APPLICABLE TAX LAWS.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
In the opinion of Arthur Andersen LLP:
(i) The Merger of Sub will constitute a reorganization pursuant to
Section 368(a)(2)(E) of the Code and Christiana, Weatherford and Sub will
be parties to the reorganization.
(ii) Neither Weatherford nor Sub will recognize any gain or loss as a
result of the Merger.
(iii) No gain or loss will be recognized by Christiana on the
consummation of the Merger.
(iv) Except for the Cash Consideration to be received in the Merger, a
holder of Christiana Common Stock will not recognize any income, gain or
loss as a result of the receipt of Weatherford Common Stock in the Merger.
(v) A holder's tax basis in his or her shares of Weatherford Common
Stock to be received in the Merger will equal such holder's basis in his or
her shares of Christiana Common Stock to be surrendered in exchange
therefor (as determined immediately following the Merger) less the Cash
Consideration to be received in respect of such holder's shares of
Christiana Common Stock and increased by the gain recognized in the Merger
by such holder.
(vi) A holder's holding period for his or her shares of Weatherford
Common Stock to be received in the Merger will include the period for which
the shares of Christiana Common Stock were held, provided such shares were
held as capital assets at the time of the Merger.
(vii) Holders of Christiana Common Stock will recognize gain to the
extent of the Cash Consideration to be received in the Merger. The gain
recognized by the holders of Christiana Common Stock in the Merger will be
a capital gain provided the Christiana Common Stock to be exchanged is a
capital asset in the hands of the shareholder and provided it is not
essentially equivalent to a dividend.
BACKUP WITHHOLDING
Under the backup withholding rules, a holder of Weatherford Common Stock
may be subject to backup withholding at the rate of 31% with respect to
dividends and proceeds of redemption, unless such holder (a) is
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a corporation or comes within certain other exempt categories and, when
required, demonstrates this fact or (b) provides a correct taxpayer
identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding rules. Any amount withheld under these rules will be credited
against the holder's United States Federal income tax liability. Weatherford may
require holders of Weatherford Common Stock to establish an exemption from
backup withholding or to make arrangements satisfactory to Weatherford with
respect to the payment of backup withholding. A holder who does not provide
Weatherford with his or her current taxpayer identification number may be
subject to penalties imposed by the IRS.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION
CHRISTIANA OWNERSHIP
Christiana currently owns -- shares of Weatherford Common Stock, which in
the aggregate represents approximately --% of the total outstanding shares of
Weatherford Common Stock. Sheldon B. Lubar is a member of the Board of Directors
of Weatherford and the Chairman of Christiana. Mr. Lubar in his capacity as a
director of Weatherford did not participate in any business of the Weatherford
Board of Directors relating to the Merger or any transactions ancillary thereto.
As of the date hereof, Mr. Lubar beneficially owns, together with his wife (who
owns 433,705 shares) and as trustee of certain trusts for the benefit of his
grandchildren, 968,615 shares of Christiana Common Stock (18.8% of the
outstanding shares of Christiana Common Stock) and options to purchase an
aggregate of 30,000 shares of Weatherford Common Stock. In addition, certain
members of Mr. Lubar's immediate family own shares of Christiana Common Stock in
the following amounts: David J. Lubar, his son, 427,403 shares (8.2% of the
outstanding shares of Christiana Common Stock); Joan P. Lubar, his daughter,
448,551 shares (8.6% of the outstanding shares of Christiana Common Stock);
Kristine L. Thomson, his daughter, 430,478 shares (8.3% of the outstanding
shares of Christiana Common Stock); and Susan Solvang, his daughter, 442,953
shares (8.5% of the outstanding shares of Christiana Common Stock). As a result
of the Transaction and assuming there are no Additional Purchases, Sheldon B.
Lubar, David J. Lubar, Joan P. Lubar, Kristine L. Thomson and Susan Solvang,
will own -- , -- , -- , -- and -- shares of Weatherford Common Stock,
respectively.
In addition, other directors and executive officers beneficially own shares
of Christiana Common Stock in the following amounts: Albert O. Nicholas, a
Christiana director, 310,700 shares (6.0% of the outstanding shares of
Christiana Common Stock); Nicholas F. Brady, a Christiana director, 200,000
shares (3.8% of the outstanding shares of Christiana Common Stock); William T.
Donovan, President, Chief Financial Officer and a director of Christiana,
167,532 shares (3.3% of the outstanding shares of Christiana Common Stock); Gary
R. Sarner, Chairman of Logistic, 61,000 shares (less than 1.0% of the
outstanding shares of Christiana Common Stock); and John R. Patterson, President
and Chief Executive Officer of Logistic, 45,000 shares (less than 1% of the
outstanding shares of Christiana Common Stock). The amounts reflected for
Messrs. Donovan, Sarner and Patterson include options to purchase 14,000, 55,000
and 32,500 shares of Christiana Common Stock, respectively. As a result of the
Transaction and assuming there are no Additional Purchases, Messrs. Nicholas,
Brady, Donovan, Sarner and Patterson will own -- , -- , -- , -- and --
shares of Weatherford Common Stock, respectively.
Shareholders of Christiana immediately prior to the Effective Time,
including Christiana executive officers and directors, will be entitled to
purchase one share of C2 Common Stock for each share of Christiana Common Stock
held immediately prior to the Effective Time. In addition, in connection with
the Merger and the Logistic Sale, the Lubar Family entered into the Lubar/C2
Agreement wherein they agreed to purchase enough shares of C2 Common Stock as
are necessary to raise $10.67 million. The Lubar/C2 Agreement will insure that
C2 has sufficient funds to complete the Logistic Sale.
Certain executive officers and directors of Christiana will be executive
officers and directors of C2, and, to the extent such officers and directors are
Christiana shareholders, they will have the ability to purchase their pro rata
interest in C2 pursuant to the C2 Offering of up to 5,202,664 shares of C2
Common Stock under the C2 Prospectus. Assuming all shareholders of Christiana
exercise their ability to purchase their pro rata interest
79
<PAGE> 87
in C2 pursuant to the C2 Offering, the Lubar Family and the other officers and
directors of C2 would beneficially own approximately 66% of the outstanding
shares of C2 Common Stock. To the extent Christiana shareholders do not exercise
their ability to purchase their pro rata interest in C2, the beneficial
ownership interest in C2 of the Lubar Family and the other directors and
officers of C2 will increase, and such persons could potentially own up to 100%
of C2 Common Stock.
Under the terms of the Merger Agreement, all employee stock options of
Christiana are required to be exercised or cancelled prior to the Merger. As a
result, the executive officers and other individuals who hold options to
purchase shares of Christiana Common Stock were given a choice to either (i)
cancel, in whole or in part, their options in exchange for an amount equal to
the (A) difference between $40 and the option exercise price, multiplied by (B)
the number of shares subject to the cancelled option or (ii) exercise their
options prior to the Effective Time. Mr. Donovan has elected to cancel options
to purchase shares of Christiana Common Stock in exchange for
$ . Mr. Sarner has elected to cancel options to purchase shares
of Christiana Common Stock, in exchange for $501,751. Mr. Patterson has elected
to cancel options to purchase shares of Christiana Common Stock, in
exchange for $770,703.
INDEMNITY
Pursuant to the Logistic Purchase Agreement, Logistic and C2 are obligated
to indemnify Christiana, Weatherford and their respective affiliates and agents
for various liabilities relating to historical operations of Christiana,
Logistic and their current and historic subsidiaries and predecessors. Among the
matters for which Logistic and C2 are required to indemnify Christiana and
Weatherford are (i) any liability relating to any claim or damage by any
stockholder of Christiana or Weatherford with respect to the Merger, the
Logistic Sale or the transactions relating thereto and (ii) any taxes as a
result of the Merger subsequently being determined to be a taxable transaction
for foreign, federal, state or local law purposes regardless of the theory or
reason for the Merger being subject to tax and any taxes as a result of the
Logistic Sale. This indemnity includes claims and liabilities arising under the
securities laws and claims with respect to this Joint Proxy
Statement/Prospectus.
80
<PAGE> 88
WEATHERFORD SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected historical condensed
consolidated financial data of Weatherford. This information should be read in
conjunction with Weatherford's Management's Discussion and Analysis of Financial
Condition and Results of Operations and its financial statements and related
notes thereto contained in its Annual Report on Form 10-K for the year ended
December 31, 1997, Quarterly Report on Form 10-Q for the period ended June 30,
1998 and the Current Report on Form 8-K dated June 15, 1998, as amended by
Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A dated July 20,
1998, and Christiana's financial statements and related notes thereto, which are
included herein or incorporated herein by reference in this Joint Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------- ----------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
---------- -------- ---------- ---------- ---------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues.................... $1,104,293 $908,252 $1,969,089 $1,467,270 $1,125,803 $858,993 $671,470
Cost of sales............... 740,337 644,177 1,371,126 1,090,814 831,231 630,850 482,878
Selling, general and
administrative expenses... 148,044 122,434 264,553 209,433 195,747 155,860 127,966
Equity in earnings of
unconsolidated
affiliates................ (1,565) (1,052) (2,582) (2,078) (1,477) (1,169) (2,716)
Merger costs and other
charges................... 120,000 -- -- -- 88,182 2,500 4,000
---------- -------- ---------- ---------- ---------- -------- --------
Operating income............ 97,477 142,693 335,992 169,101 12,120 70,952 59,342
Interest expense............ (25,759) (21,148) (43,273) (39,368) (33,504) (22,384) (11,601)
Other income (expense),
net....................... 3,334 7,438 12,242 2,941 8,409 615 2,231
Income tax (provision)
benefit................... (28,800) (45,339) (108,188) (40,513) 4,707 (13,137) (14,741)
---------- -------- ---------- ---------- ---------- -------- --------
Income (loss) from
continuing operations..... $ 46,252 $ 83,644 $ 196,773 $ 92,161 $ (8,268) $ 36,046 $ 35,231
========== ======== ========== ========== ========== ======== ========
Earnings (loss) per share
from continuing
operations:
Basic..................... $ 0.48 $ 0.88 $ 2.04 $ 1.03 $ (0.10) $ 0.53 $ 0.58
Diluted................... 0.47 0.86 2.01 1.01 (0.10) 0.53 0.58
Weighted average shares
outstanding:
Basic..................... 96,766 95,382 96,052 89,842 77,595 67,672 60,628
Diluted................... 97,618 96,832 97,562 90,981 77,595 68,032 60,894
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ---------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets........................ $2,922,306 $2,737,910 $2,243,633 $1,710,568 $1,464,804 $885,981
Long-term debt...................... 246,963 252,322 417,976 416,473 303,854 56,580
5% Convertible Subordinated
Preferred Equivalent Debentures... 402,500 402,500 -- -- -- --
Stockholders' equity................ 1,495,461 1,458,549 1,292,704 958,337 845,287 582,187
Cash dividends per share............ -- -- -- -- -- --
</TABLE>
81
<PAGE> 89
CHRISTIANA SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected historical financial data
for Christiana as of and for each of the five years ended June 30, 1998. The
historical financial data as of and for each of the five years in the period
ended June 30, 1998 was derived from the consolidated financial statements of
Christiana, which were audited by Arthur Andersen LLP, independent public
accountants. The following selected historical consolidated financial data
should be read in conjunction with Christiana's "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and Christiana's
Consolidated Financial Statements and related notes appearing elsewhere in this
Joint Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
------------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- -------- -------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Operating Data:
Revenues............................................ $90,179 $84,208 $77,170 $126,881 $90,153
Direct operating expenses........................... 76,057 70,973 65,418 104,818 74,976
Selling, general and administrative expenses........ 8,364 8,656 7,531 11,739 8,755
------- ------- ------- -------- -------
Operating income.................................... 5,758 4,579 4,221 10,324 6,422
Interest expense.................................... (2,691) (3,166) (3,096) (4,842) (3,710)
Equity in earnings of Weatherford................... 7,872 10,479 1,745 -- --
Other income (expense), net......................... (1,012) (923) 3,141 3,658 3,195
Income tax expenses................................. 3,920 4,306 2,408 3,394 2,256
Minority interest................................... -- -- -- (684) (530)
------- ------- ------- -------- -------
Net income.......................................... $ 6,007 $ 6,663 $ 3,603 $ 5,062 $ 3,121
======= ======= ======= ======== =======
Earnings per share(1):
Basic............................................ $ 1.17 $ 1.30 $ 0.69 $ 0.96 $ 0.59
Diluted.......................................... 1.15 1.29 0.69 0.96 0.59
Weighted average shares outstanding................. 5,143 5,137 5,187 5,276 5,321
</TABLE>
<TABLE>
<CAPTION>
JUNE 30,
-------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets.................................... $239,241 $142,355 $131,018 $121,742 $147,565
Long-term debt.................................. 27,122 36,149 44,013 38,256 53,458
Stockholders' equity............................ 136,229(2) 72,085 61,077 58,710 60,088
Cash dividends per share........................ -- -- -- -- --
</TABLE>
- ---------------
(1) All earnings per share amounts have been restated to reflect the adoption of
Statement of Accounting Standards No. 128, "Earnings Per Share", effective
December 15, 1997.
(2) Includes $57.8 million of unrealized holding gains on securities
available-for-sale resulting from a change in method of accounting for
Christiana's investment in Weatherford.
82
<PAGE> 90
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following tables set forth certain summary unaudited pro forma
condensed consolidated financial data of Weatherford and is based on the
historical financial data of Weatherford and the historical financial data of
Christiana. The Unaudited Pro Forma Condensed Consolidated Statements of Income
for the twelve months ended December 31, 1997, and the six months ended June 30,
1998, give effect to the proposed Merger and the sale by Christiana, prior to
the proposed Merger, of a two-thirds interest in Logistic to C2 for
approximately $10.7 million, as if these transactions had occurred January 1,
1997. The Unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect
to the sale by Christiana of a two-thirds interest in Logistic to C2 for
approximately $10.7 million, and the $10.0 million purchase of Weatherford
Common Stock by Christiana in the Merger as if this transaction had occurred on
June 30, 1998.
The pro forma information set forth below is not necessarily indicative of
the results that actually would have been achieved had such transactions been
consummated as of the aforementioned dates, or that may be achieved in the
future. All other acquisitions by Weatherford are not material individually or
in the aggregate; therefore, pro forma information is not reflected. This
information should be read in conjunction with Weatherford's Management's
Discussion and Analysis of Financial Condition and Results of Operations and its
financial statements and related notes thereto contained in its Annual Report on
Form 10-K for the year ended December 31, 1997, Quarterly Report on Form 10-Q
for the period ended June 30, 1998 and Weatherford's Current Report on Form 8-K
dated June 15, 1998, as amended by Amendment No. 1 to the Current Report on Form
8-K on Form 8-K/A dated July 20, 1998, and Christiana's financial statements and
related notes thereto, which are included herein or are incorporated herein by
reference in this Joint Proxy Statement/Prospectus.
83
<PAGE> 91
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
--------------------------
WEATHERFORD CHRISTIANA SALE OF MERGER WEATHERFORD
HISTORICAL HISTORICAL LOGISTIC(A) ENTRIES PRO FORMA
----------- ---------- ----------- --------- -----------
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents....... $ 66,527 $ 5,539 $ 33,126(b) $ (30,551)(c)(d)(e) $ 74,641
Accounts receivable, net........ 507,731 8,342 (8,342) -- 507,731
Inventories..................... 529,069 -- -- -- 529,069
Other current assets............ 94,226 3,122 (2,349) -- 94,999
---------- -------- -------- --------- ----------
Total current assets.... 1,197,553 17,003 22,435 (30,551) 1,206,440
---------- -------- -------- --------- ----------
Property, plant and equipment,
net............................. 872,045 71,112 (71,112) -- 872,045
Goodwill, net..................... 758,993 5,435 (5,435) -- 758,993
Investment in Weatherford......... -- 144,206 -- (144,206)(f) --
Investment in Logistic............ -- -- 7,671(g) (3,137)(h) 4,534
Other assets...................... 93,715 1,485 (1,485) -- 93,715
---------- -------- -------- --------- ----------
$2,922,306 $239,241 $(47,926) $(177,894) $2,935,727
========== ======== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and
current portion of long-term
debt......................... $ 220,795 $ 3,242 $ (3,242) $ -- $ 220,795
Accounts payable................ 192,183 3,505 (3,505) -- 192,183
Other accrued liabilities....... 236,218 6,763 (377)(i) 3,414(d)(j) 246,018
---------- -------- -------- --------- ----------
Total current
liabilities........... 649,196 13,510 (7,124) 3,414 658,996
---------- -------- -------- --------- ----------
Long-term debt.................... 246,963 27,122 (27,122) -- 246,963
Deferred income taxes and other... 128,186 62,380 (10,848)(i) (47,911)(f) 131,807
5% Convertible Subordinated
Preferred Equivalent
Debentures................... 402,500 -- -- -- 402,500
Stockholders' equity:
Common stock.................... 103,021 5,209 -- (877)(k)(l) 107,353
Capital in excess of par........ 1,040,091 12,347 -- 82,963(k)(l) 1,135,401
Treasury stock, at cost......... (183,435) (1,236) -- (98,406)(k)(l) (283,077)
Retained earnings............... 588,600 62,110 (2,832) (59,278)(d)(l) 588,600
Cumulative foreign currency
translation adjustment....... (52,816) -- -- -- (52,816)
Unrealized gain on securities
available for sale........... -- 57,799 -- (57,799)(f) --
---------- -------- -------- --------- ----------
Total stockholders'
equity................ 1,495,461 136,229 (2,832) (133,397) 1,495,461
---------- -------- -------- --------- ----------
$2,922,306 $239,241 $(47,926) $(177,894) $2,935,727
========== ======== ======== ========= ==========
</TABLE>
84
<PAGE> 92
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
WEATHERFORD CHRISTIANA ------------- WEATHERFORD
HISTORICAL HISTORICAL CHRISTIANA(M) PRO FORMA
------------ ---------- ------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Products................................ $1,097,823 $ -- $ - $1,097,823
Services and rentals.................... 871,266 90,101 (90,101) 871,266
---------- ------- -------- ----------
1,969,089 90,101 (90,101) 1,969,089
---------- ------- -------- ----------
Costs and expenses:
Cost of sales:
Products............................. 790,314 -- -- 790,314
Services and rentals................. 580,812 76,377 (76,377) 580,812
Selling, general and administrative..... 264,553 9,103 (9,103) 264,553
Equity in earnings in unconsolidated
affiliates........................... (2,582) -- -- (2,582)
---------- ------- -------- ----------
1,633,097 85,480 (85,480) 1,633,097
---------- ------- -------- ----------
Operating income.......................... 335,992 4,621 (4,621) 335,992
---------- ------- -------- ----------
Other income (expense):
Interest expense........................ (43,273) (2,991) 2,991 (43,273)
Interest income......................... 8,329 507 (507) 8,329
Equity in earnings in Weatherford....... -- 6,290 (6,290)(n) --
Equity in earnings in Logistic.......... -- -- 130 130
Other income (expense), net............. 3,913 (1,470) 1,470 3,913
---------- ------- -------- ----------
(31,031) 2,336 (2,206) (30,901)
---------- ------- -------- ----------
Income (loss) before income taxes......... 304,961 6,957 (6,827) 305,091
Provision (benefit) for income taxes...... 108,188 2,763 (2,717)(o) 108,234
---------- ------- -------- ----------
Income (loss) from continuing
operations.............................. $ 196,773 $ 4,194 $ (4,110) $ 196,857
========== ======= ======== ==========
Earnings per share from continuing
operations:
Basic................................... $ 2.04 $ 2.05
========== ==========
Diluted................................. $ 2.01 $ 2.02
========== ==========
Weighted average shares outstanding:
Basic................................... 96,052 96,052(p)
========== ==========
Diluted................................. 97,562 97,562
========== ==========
</TABLE>
85
<PAGE> 93
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
WEATHERFORD CHRISTIANA -------------- WEATHERFORD
HISTORICAL HISTORICAL CHRISTIANA (M) PRO FORMA
----------- ---------- -------------- -----------
<S> <C> <C> <C> <C>
Revenues:
Products................................. $ 677,857 $ -- $ -- $ 677,857
Services and rentals..................... 426,436 43,465 (43,465) 426,436
---------- ------- -------- ----------
1,104,293 43,465 (43,465) 1,104,293
---------- ------- -------- ----------
Costs and expenses:
Cost of sales:
Products.............................. 459,723 -- -- 459,723
Services and rentals.................. 280,614 36,740 (36,740) 280,614
Selling, general and administrative...... 148,044 4,022 (4,022) 148,044
Merger costs and other charges........... 120,000 -- -- 120,000
Equity in earnings of unconsolidated
affiliates............................ (1,565) -- -- (1,565)
---------- ------- -------- ----------
1,006,816 40,762 (40,762) 1,006,816
---------- ------- -------- ----------
Operating income........................... 97,477 2,703 (2,703) 97,477
---------- ------- -------- ----------
Other income (expense):
Interest expense......................... (25,759) (1,199) 1,199 (25,759)
Interest income.......................... 1,069 193 (193) 1,069
Equity in earnings in Weatherford........ -- 4,425 (4,425)(n) --
Equity in earnings in Logistic........... -- -- 329 329
Other income (expense), net.............. 2,265 (74) 74 2,265
---------- ------- -------- ----------
(22,425) 3,345 (3,016) (22,096)
---------- ------- -------- ----------
Income (loss) before income taxes.......... 75,052 6,048 (5,719) 75,381
Provision (benefit) for income taxes....... 28,800 2,384 (2,269)(o) 28,915
---------- ------- -------- ----------
Income (loss) from continuing operations... $ 46,252 $ 3,664 $ (3,450) $ 46,466
========== ======= ======== ==========
Earnings per share from continuing
operations:
Basic.................................... $ 0.48 $ 0.48
========== ==========
Diluted.................................. $ 0.47 $ 0.48
========== ==========
Weighted average shares outstanding:
Basic.................................... 96,766 96,766(p)
========== ==========
Diluted.................................. 97,618 97,618
========== ==========
</TABLE>
86
<PAGE> 94
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
The following notes set forth the assumptions used in preparing the
unaudited pro forma condensed consolidated financial statements. The pro forma
adjustments are based on estimates made by Weatherford's management using
information currently available.
PRO FORMA ADJUSTMENTS
The adjustments to the accompanying Unaudited Pro Forma Condensed
Consolidated Balance Sheet are described below:
(a) To reflect the sale of a two-thirds interest in Logistic by
Christiana to C2 for cash of $10.67 million and to reflect a $2.8 million
loss, net of taxes, due to the sale price being less than the $15.3 million
carrying value of the two-thirds interest in Logistic. Such sale is in
accordance with the Merger Agreement as (i) Logistic is required to
distribute $23.0 million to Christiana, funded from borrowings of Logistic
to permit Christiana to have sufficient cash to allow Weatherford to pay
the cash consideration contemplated by the Transaction, (ii) Christiana is
to sell its two-thirds interest in Logistic to C2 for $10.67 million and
(iii) Weatherford is required to pay to the Christiana shareholders an
amount of cash equal to the cash held by Christiana in excess of the amount
of accrued unpaid taxes, the value of certain tax benefits and fixed
liabilities at the closing of the Transaction to be maintained by
Christiana for the benefit of Weatherford.
(b) To reflect an increase in Christiana's cash of $23.0 million from
a dividend from Logistic funded through Logistic's borrowings to meet the
required minimum cash levels required by the Merger Agreement, and to
reflect the cash to Christiana of $10.67 million from its sale of the
two-thirds interest in Logistic less $0.5 million of cash held by Logistic.
(c) To reflect the pro forma cash payment by Weatherford of $18.9
million ($3.67 per share) to the holders of Christiana Common Stock
pursuant to the Merger Agreement. The pro forma cash payment by Weatherford
of $3.67 per share assumes Christiana is not required to make Additional
Purchases and is based on pro forma data for the period presented herein;
however, Christiana currently estimates that such payment will be
approximately $4.00 per share which assumes Christiana is not required to
make Additional Purchases. The cash payment difference of $0.33 per share
reflects expected cash flow through the anticipated closing and timing
differences for cash expenditures, including taxes, for the period from
July 1, 1998, to closing, not reflected in the historical financial
information of Christiana presented herein. If Christiana acquires the
Additional Purchases of up to $5.0 million, Christiana estimates that the
cash payment is estimated to be approximately $3.00 per share.
(d) To reflect the cancellation of Christiana employee stock options
for $1.7 million in cash. The cancellation of Christiana employee stock
options generated a tax benefit of $0.6 million. Cash in this amount is
required to be retained by Christiana for the benefit of Weatherford.
(e) To reflect Christiana's purchase of $10.0 million of Weatherford
Common Stock at the market price on September 22, 1998 of $23.00 per share.
(f) To eliminate Christiana's investment in Weatherford and related
deferred taxes of $47.9 million.
(g) To reflect the remaining one-third interest in Logistic held by
Christiana. The investment represents a one-third interest in the net book
value of Logistic.
(h) Prior to the sale of Christiana's two-thirds interest in Logistic,
the pro forma net book value of Logistic was $23.0 million at June 30,
1998. After the sale of Christiana's two-thirds interest in Logistic, the
remaining net book value of Logistic is $7.7 million. Weatherford reflects
a reduction of $3.1 million in the carrying value of Christiana's remaining
one-third interest in Logistic to reflect the excess fair value of the net
tangible post merger assets of Christiana over the Weatherford Share
Consideration and the Cash Consideration to be paid to the Christiana
shareholders.
87
<PAGE> 95
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(i) To reclassify certain deferred tax liabilities of $8.2 million to
current federal taxes payable as a result of the sale by Christiana of its
two-thirds interest in Logistic.
(j) To record a $4.0 million liability for transaction costs related
to the Transaction.
(k) To reflect the issuance of 4,332,245 shares of Weatherford Common
Stock in the Transaction at a price of $23.00 per share, the market price
of the Weatherford Common Stock on September 22, 1998, and the acquisition
of 4,332,245 shares of Weatherford Common Stock held by Christiana as a
result of the Transaction. The shares of Weatherford Common Stock held by
Christiana have been classified as treasury shares.
(l) To eliminate the remaining Christiana Common Stock of $5.2
million, capital in excess of par of $12.3 million, retained earnings of
$58.2 million and treasury stock of $1.2 million.
The adjustments to the accompanying Unaudited Pro Forma Condensed
Consolidated Statements of Income are described below:
(m) To eliminate Logistic's historical operating results and to
reflect a one-third equity interest in Logistic.
(n) To eliminate Christiana's equity in earnings of Weatherford.
(o) To record the income tax benefit related to the effect of the pro
forma adjustments at the statutory rate.
(p) Weatherford's historical shares outstanding and basic weighted
average pro forma post merger shares outstanding as of December 31, 1997,
were 96,860,622 and 96,050,625, respectively. Weatherford's historical
shares outstanding and basic weighted average pro forma post merger shares
outstanding as of June 30, 1998, were 97,354,228 and 96,765,767,
respectively.
88
<PAGE> 96
DESCRIPTION OF WEATHERFORD
Weatherford is a diversified international energy service and manufacturing
company that provides a variety of services and equipment to the exploration,
production and transmission sectors of the oil and gas industry. Weatherford's
principal industry segments consist of (i) drilling products, (ii) completion
and oilfield products and services and (iii) artificial lift and compression
products and services. Weatherford operates in virtually every oil and gas
exploration and production region in the world.
Weatherford's drilling products segment manufactures (i) drill pipe and
other drilling products, (ii) premium engineered connections and associated
tubulars and (iii) marine connectors and related accessories. Weatherford's
drilling products are designed and engineered for high performance applications.
Drill pipe, as well as drill collars, heavyweights and kellys manufactured by
Weatherford, serve as the principal mechanical drilling tools used to drill an
oil or natural gas well. These products constitute all components of the drill
stem used to drill a well from the rig to the drill bit. Weatherford's premium
tubulars consist of premium tubing, liner and casing and, together with
Weatherford's line of premium engineered connections, are used for the
production of oil and natural gas in harsh downhole environments. Weatherford's
marine connector product line consists of downhole conductors for offshore
applications and is used to define the original architecture of an offshore well
and to support subsea applications.
Weatherford's completion and oilfield products and services segment
manufactures, sells and services cementation products and liner hangers and
equipment used to provide oilfield services. Other products manufactured by this
segment 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. This segment also
provides oilfield equipment rental, downhole services and tubular running
services. Weatherford's rental equipment includes 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 internal casing patch
installation.
Weatherford's artificial lift and compression segment (i) designs,
manufactures and services a complete line of artificial lift equipment and (ii)
manufactures, packages, rents and sells parts and services for gas compressor
units over a broad horsepower range. Weatherford's artificial lift product line
includes a wide range of downhole pumps, surface pump drive units, gas lift
equipment, hydraulic lift products and progressing cavity pumps. Weatherford's
gas compressor units are used for increasing natural gas pressure to facilitate
gas flow from the wellhead and through gas gathering systems and processing
plants and injecting natural gas into oil wells to enhance recovery and into gas
storage wells. Other general applications include cogeneration, seismic marine
surveys and natural gas fueling stations.
Weatherford has achieved significant growth in recent years through a
consistent strategy of synergistic acquisitions and internal development.
Acquisitions have focused on the acquisition of name brand products, geographic
expansion, the development of complete product lines and savings through
consolidation. Internal development has focused on product development and
geographic expansion. Weatherford's growth strategy has resulted in the Company
becoming the largest manufacturer of drill pipe, drill collars and heavyweight
drill pipe in the world, the largest provider of premium tubular connectors in
North America and one of the largest providers of artificial lift equipment in
the world. Weatherford is the leading worldwide supplier of rental tools and
fishing and other downhole services and the leading worldwide provider of
tubular running services. To Weatherford's knowledge, none of its competitors
has as broad a product line of rod lift and progressing cavity pumps.
Weatherford was incorporated in 1972 as a Massachusetts corporation and was
reincorporated in Delaware in 1980. Sub is a wholly owned subsidiary of
Weatherford that was incorporated in Wisconsin in December 1997 for the purpose
of effecting the Merger. Weatherford's and Sub's corporate office is located at
5 Post Oak Park, Suite 1760, Houston, Texas 77027-3415, and their telephone
number is (713) 297-8400.
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<PAGE> 97
MANAGEMENT STOCKHOLDINGS
The following table sets forth as of the Record Date the beneficial
ownership of the outstanding Weatherford Common Stock by each current director
and each current executive officer of Weatherford and all directors and
executive officers of Weatherford as a group.
<TABLE>
<CAPTION>
BEFORE THE MERGER AFTER THE MERGER
------------------------ ------------------------
NUMBER OF NUMBER OF
SHARES PERCENT SHARES PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---- ------------ -------- ------------ --------
<S> <C> <C> <C> <C>
Bernard J. Duroc-Danner........................... 830,000 * 830,000 *
Curtis W. Huff(2)................................. 76,000 * 76,000 *
James G. Kiley.................................... 55,000 * 55,000 *
Frances R. Powell................................. 41,953 * 41,953 *
Randall D. Stilley................................ 23,750 * 23,750 *
John C. Coble..................................... 80,400 * 80,400 *
Robert F. Stiles.................................. 60,200 * 60,200 *
Jon Nicholson(3).................................. 16,257 * 16,257 *
Donald R. Galletly(4)............................. 5,000 * 5,000 *
David J. Butters.................................. 56,712 * 56,712 *
Sheldon B. Lubar(5)............................... 30,000 * 30,000 *
Robert B. Millard................................. 118,960 * 118,960 *
Robert A. Rayne(6)................................ 20,000 * 20,000 *
Philip Burguieres(7).............................. 200,391 * 200,391 *
William E. Macaulay(8)............................ 5,632,350 5.7% 5,632,350 5.7%
Robert K. Moses, Jr.(9) .......................... 424,383 * 424,383 *
All Directors and Executive Officers as a Group
(16 persons).................................... 7,671,356 7.8% 7,671,356 7.8%
</TABLE>
- ---------------
* Less than 1%.
(1) Beneficial ownership by a person includes both outstanding shares of
Weatherford Common Stock owned and shares of Weatherford Common Stock which
such person has a right to acquire within 60 days upon the exercise of
outstanding options of Weatherford Common Stock. Shares beneficially owned
as a result of such options consist of 830,000, 55,000, 19,000, 80,400,
60,000, 10,000, 30,000, 10,000, 20,000, 41,000 and 1,155,400 shares for
Messrs. Duroc-Danner, Kiley, Stilley, Coble, Stiles, Butters, Lubar,
Millard, and Rayne and Ms. Powell and all directors and executive officers
as a group, respectively. Directors and executive officers have sole voting
and investment power with respect to the shares they own.
(2) Includes 75,000 restricted shares subject to vesting over a four year period
extending through June 2002. Until vested, these shares may not be
transferred by him, but may be voted by him.
(3) Includes 1,018 shares of Weatherford Common Stock held under Weatherford's
401(k) Savings Plan in Mr. Nicholson's account, as to which shares Mr.
Nicholson has sole voting and no dispositive power.
(4) Includes 1,000 shares of Weatherford Common Stock held by Mr. Galletly's
wife, with respect to which he has no voting or dispositive power.
(5) Does not include -- shares of Weatherford Common Stock owned
directly by Christiana. Mr. Lubar currently beneficially owns approximately
18.8% of the outstanding shares of Christiana Common Stock. Pursuant to the
Merger, Mr. Lubar will be entitled to receive -- shares of
Weatherford Common Stock or approximately -- % of the outstanding shares of
Weatherford Common Stock after the Merger.
(6) Excludes 400,000 shares beneficially owned by London Merchant Securities
plc, of which Mr. Rayne serves as Executive Director. Mr. Rayne disclaims
beneficial ownership of all of such shares.
(7) Includes (i) 950 shares of Weatherford Common Stock held by Mr. Burguieres'
wife, with respect to which he has no voting or dispositive power, and (ii)
475 shares of Weatherford Common Stock held by
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<PAGE> 98
Mr. Burguieres' adult son supported by him, with respect to which he has
sole voting and dispositive power; Mr. Burguieres disclaims beneficial
ownership of all such shares. Also includes (i) 431 shares of Weatherford
Common Stock held under Weatherford's Employee Stock Purchase Plan (the
"ESPP") in the account of Mr. Burguieres, as to which he has sole voting and
no dispositive power prior to withdrawal of such shares from the ESPP, and
(ii) 421 shares of Weatherford Common Stock held under the 401(k) Plan in
Mr. Burguieres' account, as to which shares Mr. Burguieres has sole voting
and no dispositive power.
(8) Includes 6,619 shares of Weatherford Common Stock held by Mr. Macaulay's
wife, with respect to which he has no voting or dispositive power; Mr.
Macaulay disclaims beneficial ownership of such shares. Includes 5,623,340
shares of Weatherford Common Stock owned beneficially by First Reserve
Corporation ("First Reserve") and certain affiliated funds of which First
Reserve acts as general partner. Mr. Macaulay serves as President and Chief
Executive Officer of First Reserve. However, Mr. Macaulay disclaims
beneficial ownership of the shares of Weatherford Common Stock beneficially
owned by First Reserve.
(9) Includes an aggregate of 42,750 shares of Weatherford Common Stock held in
various trusts for Mr. Moses' children, his brother and his sister, of which
Mr. Moses is the trustee, with respect to which Mr. Moses has sole voting
and dispositive power; Mr. Moses disclaims beneficial ownership of all such
shares. Does not include (i) an aggregate of 49,875 shares of Weatherford
Common Stock held in various trusts for Mr. Moses' children, with respect to
which Mr. Moses has no voting or dispositive power, (ii) 1,758 shares of
Weatherford Common Stock held in a trust for Mr. Moses' son, with respect to
which he has no voting or dispositive power (since Mr. Moses is not a
trustee of such trusts and has no voting or dispositive power, he disclaims
beneficial ownership of all such shares) or (iii) 593 shares of Weatherford
Common Stock held by Mr. Moses' adult son supported by him, with respect to
which Mr. Moses has no voting or dispositive power.
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<PAGE> 99
DESCRIPTION OF CHRISTIANA
BUSINESS
General. Christiana's only operating entity is Logistic. Logistic provides
refrigerated and non-refrigerated warehousing and logistic services. Christiana
also owns -- shares of Weatherford Common Stock, which represents
approximately 4% of the outstanding shares of Weatherford Common Stock.
Christiana also holds, through a wholly-owned subsidiary, mortgage notes
receivable, derived from certain condominium sales, which as of June 30, 1998,
had an aggregate principal amount outstanding of $532,000 (accruing interest at
rates ranging from 7.25% to 8.5%).
Logistic. The operations of Logistic were historically conducted through
two of Christiana's wholly owned subsidiaries, Wiscold, Inc., a Wisconsin
corporation ("Wiscold"), and Total Logistic Control, Inc., a Michigan
corporation ("Total Logistic"). On June 30, 1997, the operations and corporate
structures of Wiscold and Total Logistic were merged to form Logistic.
Christiana acquired Wiscold in September of 1992 and Total Logistic in January
of 1994.
Logistic provides refrigerated and dry (non-refrigerated) third-party
logistic services including warehousing, transportation, distribution and
international freight forwarding. The third-party logistics industry is
comprised generally of entities which provide either asset-based or non-asset
based services. Asset-based entities provide services through their warehousing
and fleet operations, while non-asset based entities provide strategic solutions
to, and arrange for, the distribution and warehousing needs of their customers.
Logistic believes that its ability to offer customers "one-stop shopping"
through its complement of services which include both asset and non-asset based
solutions provides it with a competitive advantage. Christiana's integrated
logistic services generally combine transportation, warehousing and information
services to manage the distribution channel for a customer's products from the
point of manufacturing to the point of consumption and allows it to capitalize
on the growing trend of corporations toward seeking to reduce costs by
outsourcing large components of their logistics function.
Logistic's operations are conducted through a network of 12 distribution
warehouses, comprised of an aggregate of 34 million cubic feet of refrigerated
and frozen storage capacity in seven locations and five dry distribution centers
in key markets, primarily in the upper Midwest. Logistic's refrigerated
warehousing operations include temperature sensitive storage services, blast
freezing, individual quick freeze services, vegetable blanching and processing
and automated poly bag and bulk packaging services. Logistic's transportation
and distribution services include full service truckload, less-than-truckload
and pooled consolidation in both temperature controlled and dry freight
equipment, dedicated fleet services and specialized store-door delivery formats.
Transportation and logistic services are provided utilizing Christiana-owned
equipment as well as through carrier management services utilizing third party
common and contract carriers. Logistic also provides a full range of
international freight management services, fully computerized inventory
management, assembling, repackaging and just-in-time production supply services.
Logistic assists companies in managing the logistics of the physical
movement of product and materials. Logistic offers refrigerated and frozen
warehousing, dry warehousing, transportation, information systems, and
international freight forwarding services. These services can be applied to
customers' needs individually, as a single service or in combination as a
unified set of services.
Logistic provides various solutions that address a wide range of customer
needs. A few examples of the types of services Logistic provides to its
customers follow.
Logistic provides an international food manufacturer a combination of
transportation solutions, which includes the use of Logistic's transportation
fleet and carrier-managed equipment and refrigerated storage. Logistic provides
a national food manufacturer with a consolidation and distribution center and
with outbound transportation. Logistic provides a national food distributor with
refrigerated warehousing, including high volume order selection and shipping to
facilitate rapid inventory turnover. Logistic serves as the distributor for the
Michigan Department of Education school lunch program, which involves a
combination of warehousing, order selection, store door delivery and related
customer billings. Logistic has a strategic alliance with a
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<PAGE> 100
furniture manufacturer to provide warehousing services for the consolidation of
products and order selection for international shipments on a global basis.
Logistic's revenue for each of the basic service lines are detailed below
for fiscal years ended June 30, 1998, 1997, and 1996.
<TABLE>
<CAPTION>
REVENUES
(DOLLARS IN MILLIONS)
-----------------------------------------------
1998 1997 1996
------------- ------------- -------------
AMOUNT % AMOUNT % AMOUNT %
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Refrigerated Warehousing............ $44 49% $38 45% $35 45%
Dry Warehousing..................... 8 9% 12 14% 14 18%
Transportation...................... 39 43% 33 39% 28 36%
International....................... 2 2% 3 4% 3 4%
Eliminations........................ (3) (3%) (2) (2%) (3) (3%)
--- --- --- --- --- ---
Total Revenues............ $90 100% $84 100% $77 100%
=== === === === === ===
</TABLE>
As of June 30, 1998, the pro forma book value of Logistic was approximately
$23.0 million.
Logistic's services target the consumer goods industries; industries in
which logistics performance is important to success. Nearly 75% of Logistic's
revenues come from food manufacturers, food wholesalers and food retailers.
Because of its unique storage and distribution needs, the food industry has
launched broad industry-wide initiatives, such as Efficient Consumer Response
(ECR) and Efficient Foodservice Response (EFR), that are formulated on high
quality logistic services. The basis of ECR is to reduce the cost of delivering
products from the place of manufacture to the point of sale.
While Logistic's top 15 customers, all of which participate in the food
industry, account for 60% of revenues, no one customer represents more than 10%
of the business. Beyond the food industry, the balance of Logistic's customer
base is spread across a broad base of industries including pharmaceuticals,
automotive suppliers, building supplies and office furniture.
Competition in the logistic services industry is very fragmented. Leonard's
Guide, a leading industry publication, lists more than 1500 companies competing
in the United States marketplace. Logistic believes that competitors can be
characterized as either asset or non-asset based providers and single or
integrated service providers. Asset-based companies, such as Exel, AmeriCold
Logistics, Inc., GATX Logistics, Inc., ProLogis, Inc. or Ryder Integrated
Logistics, Inc. own and operate warehouses and/or transportation equipment.
These companies utilize their asset base and the expertise with which to operate
them to provide services. Non-asset based competitors, such as Hub Group
Logistics Services, Menlo Logistics, and C.H. Robinson Logistics offer logistics
management expertise and information systems and sub-contract warehousing and
transportation services to asset-based providers.
Logistic experiences competition for logistic services on a national basis
and in its warehousing and transportation business Logistic competes generally
on a regional and local basis. Other than the high capital requirements of
building a refrigerated warehouse facility, there are no significant barriers to
entry into the transportation, warehousing and non-asset based logistic service
markets in which Logistic operates, permitting a relatively large number of
smaller competitors to enter the various markets.
In addition, Logistic's customers, many of which have substantially greater
resources than Logistic, may divert business from Logistic's warehousing and
transportation operations by building their own warehouse facilities and/or
operating their own transportation fleet.
Logistic's operations are headquartered in Zeeland, Michigan, and Logistic
also maintains an office in Milwaukee, Wisconsin. Logistic is organized into
three main operating units: refrigerated warehousing, dry warehousing and
transportation. Each operating unit is headed up by a group vice
president/general manager. Sales and marketing for Logistic are principally
performed at the corporate level, with support from
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<PAGE> 101
the group vice presidents as well as local warehouse facility managers. Logistic
also maintains a business development group which is responsible for pricing,
logistics engineering, and transporting large logistic accounts over from sales
to operations during start up.
Sales and marketing are principally performed at the corporate level, with
support from the group vice presidents and facility managers. The sales
organization is comprised of seven individuals and is divided into the following
teams: refrigerated warehousing team; dry warehousing team; transportation team;
and logistics sales team. Each of these teams has primary responsibility for
selling their specific services. The goal is to develop the sales team to
effectively present the fullest extent of Logistic's services suited for each
customer.
Marketing and advertising is done centrally for the entire company and uses
a combination of media advertising and direct mail. The marketing organization
also has responsibility for maintaining and gathering information on market
intelligence related to competition, customers and the logistic industry in
general.
Business development supports both sales and operations by providing
logistics engineering capabilities, pricing and costing services, and assists in
the startup of complex logistic projects.
The only employees of Christiana are the executive officers described under
"Directors and Executive Officers". Logistic had approximately 718 employees as
of June 30, 1998. A breakdown of the employees by functional area is set forth
below:
<TABLE>
<CAPTION>
EMPLOYEE BREAKDOWN BY FUNCTION
------------------------------------------
FUNCTION NUMBER OF EMPLOYEES PERCENTAGE OF TOTAL
-------- ------------------- -------------------
<S> <C> <C>
Operations....................................... 448 64.4%
Transportation................................... 208 29.0%
Administration................................... 51 7.1%
Sales and Marketing.............................. 11 1.5%
--- ----
Total............................................ 718 100%
</TABLE>
No Logistic employees are covered by union contracts.
Logistic's operations are not dependent on any particular patent, license,
franchises, or trademarks. Logistic has registered a trademark and the name
"Total Logistic Control" with the United States Patent and Trademark office.
Logistic does not operate in an environment which has a strong need or
reliance on research and development. Logistic has not made material
expenditures with regard to research or development in the past and does not see
it as a material issue in the future.
Weatherford. Christiana owned 3,897,462 shares of Weatherford,
representing an approximate 4% ownership interest as of June 30, 1998.
Christiana's holdings in Weatherford resulted from the June 30, 1995 merger of
Prideco, a former majority owned subsidiary of Christiana, with a subsidiary of
Weatherford and a $13.2 million cash investment to purchase additional
Weatherford shares in connection with the Prideco merger transaction. In
-- , 1998, Christiana purchased an additional -- shares of
Weatherford Common Stock pursuant to the Amended Merger Agreement.
PROPERTIES
As of June 30, 1998, Logistic owned or leased twelve facilities in five
states. Of this total, seven are refrigerated/frozen with the balance being dry
facilities. The refrigerated facilities are operated through seven public
refrigerated warehouses located in Wisconsin (2), Michigan (3), and Illinois
(2). Logistic's refrigerated facilities are large single-story buildings
constructed at dock height with full insulation and vapor barrier protection.
The refrigeration is provided by screw-type compressors in ammonia-based cooling
systems. These facilities are strategically located and well served by rail and
truck.
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<PAGE> 102
In addition to the refrigerated facilities discussed above, there are five
public non-refrigerated (or dry) warehouse distribution facilities, three of
which are located in Michigan and one in each of Indiana and New Jersey. Zeeland
Distribution Center II, located in Zeeland, Michigan is a company-owned
facility. All other dry facilities are held under lease. Lease terms generally
match the underlying contracts with major customers served at each facility.
These facilities are single-story block or metal construction buildings. All dry
facilities are approved as food grade storage facilities.
The following tables list the thirteen facilities by location, size, type,
and if owned or leased.
REFRIGERATED WAREHOUSE FACILITIES
<TABLE>
<CAPTION>
TOTAL STORAGE SPACE
(CUBIC FEET TYPE OF
FACILITY LOCATION IN MILLIONS) FACILITY
-------- -------- ------------------- -------------
<S> <C> <C> <C>
Rochelle Logistic Center I..... Rochelle, Illinois #1 10.6 Distribution
Rochelle Logistic Center II.... Rochelle, Illinois #2 3.5 Distribution
Beaver Dam Logistic Center..... Beaver Dam, Wisconsin 7.2 Distribution/
Production
Milwaukee Logistic Center...... Wauwatosa, Wisconsin 4.3 Distribution
Holland Logistic Center........ Holland, Michigan* 2.1 Distribution/
Production
Kalamazoo Logistic Center I.... Kalamazoo Logistic #1** 3.3 Distribution
Kalamazoo Logistic Center II... Kalamazoo Logistic #2 2.8 Distribution
----
Total................................................... 33.8
====
</TABLE>
DRY WAREHOUSE FACILITIES
<TABLE>
<CAPTION>
TOTAL STORAGE TYPE
SPACE (SQ. FT. OF
FACILITY LOCATION IN THOUSANDS) FACILITY
-------- -------- -------------- --------
<S> <C> <C> <C>
Zeeland Logistic Center I*........................... Zeeland, MI 202 Public
Zeeland Logistic Center II........................... Zeeland, MI 220 Public
Michigan Distr. Center I*............................ Kalamazoo, MI 88 Public
Munster Logistic Center*............................. Munster, IN 125 Public
South Brunswick Logistic Center*..................... South Brunswick, NJ 100 Public
---
Total..................................................................... 735
===
</TABLE>
- ---------------
*Leased facility
**Includes 1.8 million cubic feet of dry storage capacity.
Logistic owns and operates a 10,000 square foot truck maintenance facility
located at the Kalamazoo Logistics Center. This facility is used for the
maintenance of Logistic's transportation equipment.
DESCRIPTION OF PROPERTIES
A brief description of each of the properties described above follows,
listed alphabetically by state and city.
Illinois Properties.
<TABLE>
<S> <C>
Rochelle Logistic Center I Rochelle Logistic Center II
975 South Caron Road 600 Wiscold Drive
Rochelle, IL 61068 Rochelle, IL 61068
</TABLE>
Rochelle Cold Storage campus is Logistic's newest and largest refrigerated
facility, initially constructed in 1986. Logistic believes that Rochelle Cold
Storage is one of the largest and most modern cold storage warehouse facilities
in the United States. Currently this facility is comprised of 14,100,000 cubic
feet of
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<PAGE> 103
capacity after undergoing four capacity expansions in 1988, 1990, 1993, and
1996. All space is capable of temperatures of -20 degreesF to ambient. Rochelle
Cold Storage is strategically located at the intersection of two main line
East-West railroads, the Burlington Northern and the Chicago Northwestern, and
the cross roads of interstate highways I 39 and I 88. Rochelle Cold Storage
serves primarily distribution customers in the Midwest.
Indiana Properties.
Munster Logistic Center
9200 Calumet Avenue
Munster, IN 46321
Munster Logistic Center is located just south of the Chicago market with
access to major north-south and east-west highways. The facility has access to
rail through Conrail and is a food grade warehouse. The total facility has
available 125,000 square feet of dry storage. The warehouse operates as a public
warehouse with most of the customer base on short term contracts.
Michigan Properties.
Holland Logistic Center
449 Howard Avenue
Holland, MI 49424
Holland Logistic Center has undergone a number of expansions over the
years, with a major reconstruction in 1983 after a fire destroyed approximately
50% of the facility. Today, this refrigerated facility comprises 2,100,000 cubic
feet of storage capacity of which 1,300,000 cubic feet is freezer capacity,
400,000 cubic feet is cooler capacity and 400,000 cubic feet is convertible
capacity between freezer and cooler. Holland services both distribution
customers as well as blueberry growers in the West Michigan area. This location
is situated on a CSX rail spur with two refrigerated rail docks. This facility
is held under a lease which expires December 31, 2000.
<TABLE>
<S> <C>
Kalamazoo Logistic Center I Kalamazoo Logistic Center II
6677 Beatrice Drive 6805 Beatrice Drive
Kalamazoo, MI 49009 Kalamazoo, MI 49009
</TABLE>
Kalamazoo Logistic Center campus has two distribution centers at this
location. Facility #1 is a 3,300,000 cubic foot facility with 1,100,000 cubic
feet of freezer capacity, 400,000 cubic feet of cooler capacity and 1,800,000
cubic feet of dry storage capacity. This location services a number of
distribution customers in the Midwest and is strategically located at the I 94
and U.S. 31 crossroads in Michigan, equal distance between Chicago and Detroit.
Facility #2 is located adjacent to Facility #1 and is comprised of
2,800,000 cubic feet of capacity. This facility contains 1,500,000 cubic feet of
cooler capacity and 1,300,000 cubic feet of freezer capacity. Two large
distribution customers utilize 75% of this space. These facilities are held
under long term leases.
Also located at the Kalamazoo Logistic Center is a company owned 10,000
square foot transportation equipment maintenance center. Approximately 50% of
Logistic's fleet of over-the-road transportation units is domiciled in
Kalamazoo, Michigan.
<TABLE>
<S> <C>
Zeeland Logistic Center I Zeeland Logistic Center II
8250 Logistic Drive 8363 Logistic Drive
Zeeland, MI 49464 Zeeland, MI 49464
</TABLE>
Zeeland Logistic Center campus has two facilities each of which provide dry
warehousing storage as public warehouses. Each of these facilities are Foreign
Trade Zones and food grade warehouses, that provide both racked and bulk
storage. Capacity is utilized by both long term contractual customers and as
short term public warehouses. Zeeland Logistic Center I has 201,600 square feet
of storage and Zeeland Logistic Center II has 220,000 square feet.
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<PAGE> 104
New Jersey Properties.
South Brunswick Logistic Center
308 Herrod Blvd.
South Brunswick, NJ 08852
South Brunswick provides warehousing and distribution services for
customers to the Northeast region of the country. The facility has both
contractual and short term customers and operates as a public warehouse. In
total, the facility has 200,000 square feet of dry storage capacity.
Wisconsin Properties.
Beaver Dam Logistic Center
1201 Green Valley Road
Beaver Dam, WI 53916
Beaver Dam Logistic Center was originally constructed in 1975. Since 1975,
this facility has undergone three freezer additions, the most recent in 1991,
and today is comprised of 7,200,000 cubic feet of freezer storage space. Beaver
Dam Logistic Center serves distribution related customers as well as vegetable
and cranberry processors. This facility's unique capabilities involve value
added services for vegetable processors including IQF, blanching, slicing,
dicing and food service and retail poly bag packaging operations. Badger's IQF
tunnels have the capacity to freeze 30,000 pounds of product per hour.
Milwaukee Logistic Center
11400 West Burleigh Street
Milwaukee, WI 53222
Milwaukee Logistic Center was originally constructed in 1954. There have
been six expansions of this facility and today the Milwaukee Logistic Center
facility comprises 4,300,000 cubic feet of which 3,754,000 cubic feet is freezer
capacity and 546,000 cubic feet is cooler space. This facility has
multi-temperature refrigerated storage ranging from -20 degreesF to +40 degreesF
and daily blast freezing capacity of 750,000 pounds. This location has a 7-car
private rail siding. An additional 3,000,000 cubic feet of company owned
refrigerated and processing space adjacent to the Milwaukee Logistic Center
facility is leased on a long term basis to a third party retail grocery company.
OTHER ASSETS
Christiana also holds mortgage notes receivable derived from certain
condominium sales which, as of June 30, 1998, had an aggregate principal amount
outstanding of $532,000 (accruing interest at rates ranging from 7.25% to 8.5%).
In addition, Logistic holds approximately 1.9 acres of undeveloped, partially
submerged land in Huntington Beach, California with a current book value of
zero. This property is currently subject to an easement granted in the favor of
the City of Huntington Beach. Logistic is currently pursuing a change in zoning
applicable to the property in order to conduct residential development on the
property. The outcome of these efforts, and the value of the property if such
efforts are successful, are unable to be predicted at this time.
LEGAL PROCEEDINGS
From time to time, Christiana is named as a defendant in actions arising
out of the normal course of business. As of June 30, 1998, Christiana was not a
party to any pending legal proceeding that it believes to be material.
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<PAGE> 105
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following table reflects the components of Christiana's net earnings
for each of the past three fiscal years:
CONTRIBUTION TO NET EARNINGS
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
-------------------------------------------------------------
1998 1997 1996
------------------- ------------------ ------------------
$ PER SHARE $ PER SHARE $ PER SHARE
------- --------- ------ --------- ------ ---------
(IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
Christiana, including Corporate... $(1,171) $(.23) $ (719) $(.14) $ 971 $0.19
Refrigerated Warehousing and
Logistics....................... 2,392 .47 1,011 .20 1,536 0.29
Weatherford*...................... 4,786 .93 6,371 1.24 1,096 0.21
------- ----- ------ ----- ------ -----
Net Earnings...................... $ 6,007 $1.17 $6,663 $1.30 $3,603 $0.69
======= ===== ====== ===== ====== =====
</TABLE>
- ---------------
* Net of deferred taxes.
Fiscal 1998 compared to Fiscal 1997.
Christiana's consolidated revenues for fiscal 1998 were $90,179,000
compared to $84,208,000 reported for fiscal 1997, an increase of $5,971,000 or
7.1%. Revenue growth at Logistic was primarily attributable to volume increases
in logistic services which include carrier management services, transportation
management services and transportation operations. During fiscal 1998, revenues
attributable to logistic services increased $6,049,000 or 18.1% over the prior
year due to operation of an expanded fleet and strong demand for transportation
services. Revenue growth in Refrigerated Warehousing services was $1,686,000 or
5.1% in fiscal 1998 due primarily to increased utilization of existing
facilities from both new and existing customer relationships. Revenues from Dry
Warehousing operations in fiscal 1998 declined $3,599,000 or 29.9%, due to the
closure of two facilities at the end of fiscal 1997 consistent with Logistic's
strategy to de-emphasize public dry warehousing activities. The balance of the
revenue increase in fiscal 1998 of $1,835,000, is primarily attributable to
expanded volume in distribution services of food products to the State of
Michigan Department of Education under a new five-year contract.
Gross profit for the year increased $887,000 or 6.7% to $14,122,000. Each
of Logistic's service lines with the exception of Dry Warehousing had increased
gross profit due primarily to better utilization of the assets, improved
productivity and strong cost controls. Logistic services increased gross profit
by $1,009,000 or 38.5%, due to volume growth, higher utilization of revenue
producing assets and an expanded fleet compared to fiscal 1997. Refrigerated
Warehousing operations increased gross profit by $465,000 or 6.0%, through
increased capacity utilization of facilities and strong cost control. Dry
Warehousing had a decline in gross profit of $494,000 or 26% primarily due to
reduced revenues in this area. Distribution services gross profit increased
$240,000 or 49%, due to higher volume attributable to a new five-year contract
with Michigan Department of Education covering an expanded region of service.
Selling, general and administrative expenses for the year were reduced
$292,000 due primarily to lower corporate related expenses. Selling, general and
administrative expenses at Logistic increased $305,000 or 4.3% in fiscal 1998
due to increased sale and marketing activities designed to grow Logistic
services.
Earnings from operations of $5,758,000 increased $1,179,000 or 25.7%,
compared to $4,579,000 reported for fiscal 1997. The improvements in earnings
from operations is attributable to revenue growth, improved operating margins
and lower corporate overhead expense.
Interest expense in fiscal 1998 was $2,691,000, a reduction of $475,000
from the prior year due to strong cash flow from Logistic which enabled over
$9,000,000 of debt reduction during fiscal 1998.
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<PAGE> 106
Net earnings in fiscal 1998 totaled $6,007,000 or $1.17 per share ($1.15
diluted) compared to $6,663,000 or $1.30 per share ($1.29 diluted) in fiscal
1997. The decline in net earnings reported for this period is primarily
attributable to two items: in last year's period, Weatherford sold Mallard Bay
Drilling, realizing a $66,900,000 one time after tax gain which resulted in
Christiana recording an after tax gain of $3,475,000 and in this fiscal year,
Christiana incurred a $589,000 after-tax charge related to the settlement of
litigation. Net earnings in fiscal 1998 include equity in earnings of
Weatherford of $4,786,000 for 11 months ended May 27, 1998 when Christiana
changed the method of accounting for its Weatherford investment to the cost
method.
Fiscal 1997 compared to Fiscal 1996.
Christiana's consolidated revenues for fiscal 1997 were $84,208,000
compared to $77,170,000 reported for fiscal 1996, an increase of 9.1%. Revenue
growth was primarily attributable to increased volume in transportation and
refrigerated warehousing services. The most significant improvement was in
transportation revenues which increased 20.6% over the previous year. During
fiscal 1997, Logistic secured a large multi-year contract to provide logistic
services to a major frozen food producer. This contract, as well as certain
management changes, enabled Christiana to significantly improve the operating
performance in transportation related logistic services during fiscal 1997.
Refrigerated warehousing services revenues increased 14.7% over last year's
level due primarily to increased utilization of the expanded capacity at the
Rochelle Logistic Center and higher utilization at all the Michigan based
refrigerated facilities during fiscal 1997.
Revenue growth combined with aggressive cost management resulted in a 1%
increase in gross margin. During fiscal 1997, Logistic closed two dry public
warehouses which were leased facilities, Atlanta, Georgia and Sparks, Nevada.
The closure of these facilities resulted from Christiana's inability to secure
longer term value-added logistic services contracts in line with Christiana's
strategic focus on dry warehousing operations. Warehousing and Logistic expenses
were negatively impacted by $358,000 of charges related to warehouse closures
and corporate restructuring. Selling, general and administrative expenses
increased $1,125,000 or 14.9% due mainly to increased marketing and sales
activities. Earnings from operations increased $358,000 or 8.5% to $4,579,000 in
fiscal 1997 from $4,221,000 in fiscal 1996.
Loss on disposal of assets of $765,000 was primarily related to a
$1,085,000 charge incurred in the disposal of special freezing equipment in
connection with securing a long term contract for vegetable processing, IQF
freezing, and warehouse services with a major customer of the Beaver Dam
Logistic Center. In addition, in fiscal 1997 gains on the sales of real estate
totaled $271,000 which included the final sales of the 366 condominium home
project in San Diego. In fiscal 1996, gains on sales of real estate were
$2,818,000.
Consolidated net earnings for fiscal 1997 were $6,663,000, or $1.30 per
share, up 85% from last year's level of $3,603,000, or $.69 per share. The
principal factors impacting net earnings in fiscal 1997 were the growth in
equity earnings in Weatherford and improved operating performance at Logistic.
Fiscal 1996 compared to Fiscal 1995.
Christiana's consolidated revenues for fiscal 1996 were $77,170,000
compared to $126,881,000 reported for fiscal 1995. Consolidated revenues in
fiscal 1996 all of which were derived from the Refrigerated Warehousing and
Logistics segment were lower due entirely to the June 30, 1995 merger of
Prideco. Prior to the merger, Prideco's operations were included in Christiana's
financial statements. In fiscal 1995, Prideco contributed $55,239,000 or 43.5%
of Christiana's consolidated revenues. In fiscal 1996, revenues of Christiana's
operating business, Logistic grew 8% to $77,170,000 compared to revenues of
$71,642,000 for the previous year. The gain is primarily attributable to
increased warehouse capacity and integrated logistic services.
Selling, general and administrative expenses were lower by $4,208,000
compared to the previous year, of which approximately $3,800,000 was
attributable to the deconsolidation of Prideco.
Operating income for fiscal 1996 was $4,221,000 compared to $10,324,000 in
fiscal 1995. The prior year included $4,225,000 from Prideco. Excluding Prideco
and before non-recurring expenses of $310,000 associated with consolidating the
operations of Wiscold and Total Logistic, operating income for fiscal 1996
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<PAGE> 107
was down $1,568,000 from the prior year to $4,531,000. The decline was the
result primarily of lower vegetable processing and freezing volume distribution
accounts and high operating costs in transportation stemming from less than
optimal utilization of equipment due to lower demand, high maintenance expense
and price pressures related to general market conditions. In addition, during
the year Logistic incurred expenses associated with the construction and initial
occupancy of two new distribution centers without the benefit of concurrent
revenues.
Interest income in fiscal 1996 was $531,000, down from $942,000 the prior
year due primarily to the use of $13,291,000 of cash to purchase additional
Weatherford common stock in connection with the Prideco merger on June 30, 1995.
The decline in interest expense of $1,746,000 in fiscal 1996 compared to
the previous year is mainly related to the deconsolidation of Prideco which had
$1,577,000 of interest expense in fiscal 1995.
Christiana's effective tax rate in fiscal 1996 increased to 40% from 37%
primarily because of the absence of tax exempt interest and increased state
taxes due to year to year changes in the relative state components of
Christiana's earnings.
Consolidated net earnings for fiscal 1996 were $3,603,000 or $.69 per
share, down $1,459,000 from net earnings in fiscal 1995 of $5,062,000 or $.96
per share. Before the effects of the consolidation charges, net income was
$3,789,000 or $.73 per share, a decline of 25% compared to fiscal 1995. Equity
in earnings of Weatherford totaled $1,096,000 after providing for deferred
taxes. In fiscal 1995, Prideco's operations contributed net earnings of
$971,000. Real estate sales in fiscal 1996 totaled 71 condominium homes
contributing net earnings of $1,712,000, compared to sales of 48 homes last year
which generated earnings of $1,850,000. In fiscal 1996, 30 homes were sold to a
single buyer in an as-is condition without Christiana incurring refurbishment
expense. At June 30, 1996, Christiana had 12 condominium homes available for
sale.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash equivalents and short-term investments totaled $5,539,000 at June 30,
1998 compared to $7,499,000 at June 30, 1997. Christiana's working capital at
June 30, 1998 was $3,493,000 compared to $4,257,000 at June 30, 1997.
Prior to May 27, 1998, Christiana accounted for its investment in
Weatherford under the equity method. As such, the Company's proportionate share
of Weatherford earnings through May 27, 1998 is recorded in the statement of
earnings as "Equity in Earnings of Weatherford International, Inc." On May 27,
1998, Weatherford (formerly known as EVI, Inc.) acquired Weatherford Enterra,
Inc., issuing additional shares of common stock which reduced Christiana's
ownership percentage to approximately 4%. As a result of this reduction in
ownership, Christiana no longer accounts for this investment under the equity
method; but rather uses the cost method. Under the cost method, only dividends
paid by Weatherford will be reflected in future earnings of Christiana.
Accordingly, this investment is recorded at fair market value on the balance
sheet as a long-term asset.
Operating activities in fiscal 1998 provided cash of $7,944,000 derived
primarily from net earnings, depreciation and amortization partially offset by
equity in earnings of Weatherford.
Capital expenditures in fiscal 1998 totaled $2,829,000, the major
components of which were: $1,671,000 for machinery and equipment additions
primarily related to warehousing operations; $400,000 for leasehold improvements
at the corporate office; and $163,000 for computer systems. The remaining
expenditures were incurred for equipment and facility improvements within the
dry warehousing and transportation segments.
Also included in cash provided by investing activities is $1,217,000 from
payments on mortgage notes receivable. This decrease is partially the result of
the sale of mortgage notes receivable in the amount of $553,000. The balance of
the decrease resulted from mortgage prepayments.
Financing activities in fiscal 1998 resulted in the reduction of long term
debt by $9,555,000.
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The Company's balance sheet at June 30, 1998, reflects $144,206,000 as its
carrying value for 3,897,462 shares of Weatherford Common Stock. This represents
the fair market value of Christiana's holding in Weatherford at June 30, 1998.
Weatherford has not paid dividends on Weatherford Common Stock since 1984 and it
is anticipated, for the foreseeable future, that its earnings will be retained
for the development of its business. As of September 23, 1998, the fair market
value of this investment decreased from $144.2 million at June 30, 1998 to
approximately $97.4 million as a result of market fluctuations.
At June 30, 1998 Christiana had in place a $15 million unsecured line of
credit for general corporate purposes. Borrowings under this line of credit bear
interest on a floating rate of LIBOR plus 125 basis points or prime at
Christiana's option. At June 30, 1998, there were no borrowings under this
facility. There were no borrowings under this facility during fiscal 1998.
Through March 31, 1998, Logistic had a loan commitment of $40,000,000 under
an amended revolving credit agreement. After April 1, 1998, that loan commitment
was reduced to $35,000,000 which is available beyond fiscal 1998. At June 30,
1998, $27,273,000 was outstanding under this credit facility. In addition, at
June 30, 1998, Logistic has a bank line of credit which permits borrowings up to
$5,000,000. Outstanding under this credit line at June 30, 1998 were $239,000.
Christiana's current sources of capital include: cash generated from
operations, sale of remaining mortgage portfolio, borrowings under its revolving
credit agreement and line of credit and the use of its marketable Weatherford
shares. Christiana believes that current reserves of cash and short-term
investments, access to existing credit facilities and internally generated cash
from operations are sufficient to finance the projected cash requirements of its
current operations.
Christiana continues to evaluate new acquisitions in areas strategic to
existing operations as well as new lines of business. However, while Christiana
is a party to the Merger Agreement with Weatherford, Christiana is restricted
from making acquisitions without the approval of Weatherford. Future
acquisitions may be funded through cash flow from operations, liquidation of
mortgage notes receivable, liquidation of Weatherford Common Stock, borrowings
under its existing line of credit and other facilities, and equity issuance if
desirable.
As of June 30, 1998, Christiana had no material capital commitments.
Year 2000 Disclosure.
During fiscal 1998, Christiana completed a comprehensive assessment of Year
2000 issues for both its financial information systems and other non-financial
systems. Year 2000 issues, as they relate to financial information systems, are
being corrected through hardware and software upgrades. Non-financial systems,
primarily telephone and security, will be repaired or replaced in order to
achieve Year 2000 compliance.
Based upon Christiana's current projections, all Year 2000 compliant
systems both financial and non-financial, will be implemented no later than
January 1, 1999. As of June 30, 1998, Christiana is approximately 60% complete
with the installation of its Year 2000 upgrades. By the time these upgrades are
completed, Christiana estimates that it will have expended approximately
$800,000 to resolve its Year 2000 problems and improve its systems in this
regard.
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DIRECTORS AND EXECUTIVE OFFICERS
The following table provides certain information, as of the date hereof,
about the members of the Board of Directors of Christiana and also provides
information about the beneficial ownership of Christiana's capital stock by all
of the directors and executive officers as a group. The persons shown in the
table as officers of Christiana comprise all of Christiana's executive officers.
Directors of Christiana are elected annually by a plurality of the votes cast by
shareholders. Executive officers are appointed annually by the Board of
Directors.
<TABLE>
<CAPTION>
SERVED AS NO. OF SHARES
PRINCIPAL OCCUPATION DIRECTOR BENEFICIALLY
NAME (AND AGE) DURING LAST FIVE YEARS SINCE OWNED
-------------- ---------------------- --------- -------------
<S> <C> <C> <C>
Nicholas F. Brady(68).......... Chairman and President (since 2/93) 10/93 200,000(1)
of Darby Advisors, Inc., a private (3.9%)
investment company, Easton,
Maryland(1)
William T. Donovan(46)......... President and Chief Financial Officer 10/90 167,532(2)
of Christiana(2) (3.3%)
David J. Lubar(43)............. President of Lubar & Co. Incorporated 10/90 427,403
("Lubar & Co."), venture capital (8.3%)
and investments, Milwaukee, Wisconsin
Sheldon B. Lubar(69)........... Chairman and Chief Executive 1/87 968,615(3)
Officer of Christiana(3) 18.8%
Albert O. Nicholas(67)......... Owner and President of Nicholas 1/90 310,700(4)
Company, Inc., a registered (6.0%)
investment adviser, Milwaukee,
Wisconsin(4)
John R. Patterson(51).......... President and Chief Executive Officer 10/96 45,000(5)*
of Logistic(5)
Gary R. Sarner(52)............. Chairman of Logistic(6) 10/92 61,000(6)*
All directors and executive officers as a group................................... 2,180,250(7)
(42.3%)
</TABLE>
- ---------------
* Less than 1%.
(1) Previously, Secretary of the United States Department of the Treasury for
over four years, and before that, Chairman of Dillon, Read & Co., Inc. He is
also a director of Amerada Hess Corporation and H.J. Heinz Company, as well
as a director (or trustee) of 27 Templeton Funds, which are registered
investment companies. The shares listed are owned by a trust of which Mr.
Brady is the beneficiary and a co-trustee.
(2) Donovan has served in the capacity listed or in another capacity as an
executive officer of Christiana for more than the last five years. He has
also been a principal of Lubar & Co. for more than the last five years. Mr.
Donovan is also a director of Grey Wolf, Inc. The shares listed include
14,000 shares subject to acquisition upon exercise of employee stock options
currently exercisable or exercisable within 60 days from the date hereof.
(3) Mr. Lubar has also been a principal of Lubar & Co. for more than the last
five years. Mr. Lubar is also a director of Ameritech Corporation,
Weatherford, Firstar Corporation, Massachusetts Mutual Life Insurance Co.,
Jefferies & Company, Inc. and MGIC Investment Corporation. Includes 433,705
shares held by Mr. Lubar's wife.
(4) Nicholas Company is the adviser to six registered investment companies:
Nicholas Fund, Inc., Nicholas II, Inc., Nicholas Income Fund, Inc., Nicholas
Limited Edition, Inc., Nicholas Money Market Fund, Inc. and Nicholas Equity
Income Fund. Mr. Nicholas is the president and a director of each of those
companies. Mr. Nicholas is also a director of Bando McGlocklin Capital
Corporation.
(5) Mr. Patterson has served in the capacity listed since February 1996. Before
joining Logistic, Mr. Patterson served as Vice President-Operations for
Schneider Logistics, Inc., Green Bay, Wisconsin (a provider of
transportation and logistics services). For six years prior thereto, Mr.
Patterson was the President and principal owner of Pro Drive, Inc., Green
Bay, Wisconsin (a truck driver recruiting and training firm). The shares
listed include 32,300 shares subject to acquisition upon exercise of
employee stock options currently exercisable or exercisable within 60 days
from the date hereof.
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<PAGE> 110
(6) Chairman of Logistic since January 1994. Before that, Mr. Sarner was the
President of Wiscold, Inc., the business of which was acquired by Christiana
in September 1992. The shares listed include 55,000 shares subject to
acquisition upon exercise of employee stock options currently exercisable or
exercisable within 60 days from the date hereof.
(7) Does not include shares for which Messrs. Donovan, Sarner and Patterson hold
options that are not currently exercisable or exercisable within 60 days of
the date hereof.
Sheldon B. Lubar is the father of David J. Lubar.
During fiscal 1997, the Board of Directors met two times. Each director
attended at least 75% of the aggregate of (i) the total number of all Board
meetings and (ii) the total number of meetings of committees of which he was a
member. The Board has two standing committees: audit and compensation. It has no
standing nominating committee or any committee performing similar functions.
EXECUTIVE COMPENSATION
Summary Compensation Table. This table gives information about the
compensation of the four persons who were executive officers of Christiana
during fiscal 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION -----------------
FISCAL ------------------- SHARES UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#)(1) COMPENSATION(2)
--------------------------- ------ -------- -------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Sheldon B. Lubar, 1998 $ 65,250 -- -- $ 750
Chairman and Chief 1997 66,000 -- -- 750
Executive Officer 1996 66,000 -- -- 750
William T. Donovan, 1998 $150,000 $ 50,000 -- $ 860
President and Chief 1997 150,000 100,000 15,000 750
Financial Officer 1996 150,000 -- -- 750
Gary R. Sarner, 1998 $167,500 $ 15,000 -- $1,055
Chairman of Logistic 1997 167,500 15,000 -- 750
1996 167,500 -- -- 750
John R. Patterson(3) 1998 $175,000 $ 75,000 -- $2,387
President and Chief 1997 175,000 40,000 -- 2,900(3)
Executive Officer of Logistic 1996 55,000 25,000 100,000 2,150(3)
</TABLE>
- ---------------
(1) Christiana's only long-term compensation plan or program is the 1995 Stock
Option Plan. The amounts shown are the number of shares underlying options
granted during the fiscal year.
(2) Except as set forth in footnote 3, this column consists solely of amounts
contributed by Christiana to a Section 401(k) retirement plan.
(3) Mr. Patterson joined Logistic in February 1996. In fiscal 1998, 1997 and
1996, Christiana paid life insurance premiums in the amount of $2,150 on a
term life policy maintained by Christiana for Mr. Patterson's benefit. In
fiscal 1997, Christiana contributed $750 to a Section 401(k) retirement plan
for the benefit of Mr. Patterson.
Fiscal Year-End Option Value Table. The table below gives information about
the number and value of unexercised options for Christiana's stock held by
William T. Donovan, Gary R. Sarner and John R. Patterson at June 30, 1998.
Christiana's other executive officer, Sheldon B. Lubar, does not hold any
options on Christiana's stock. The closing price as reported by the NYSE on that
date was $31.00 per share. At June 30, 1998 only options whose exercise price
was below $31.00 were in-the-money. For these options, the value
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<PAGE> 111
shown is the difference between $31.00 and the exercise price for the number of
options held. The value of options which were not-in-the-money is shown as zero.
<TABLE>
<CAPTION>
JUNE 30, 1997
----------------------------------------------------------
NO. OF SHARES
UNDERLYING OPTIONS VALUE OF IN-THE-MONEY OPTIONS
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -----------------------------
<S> <C> <C>
William T. Donovan.................... 10,000/15,000 $77,000/$115,500
Gary R. Sarner........................ 55,000/40,000 $31,527/$23,851
John R. Patterson..................... --,300/60,000 $218,025/$405,000
</TABLE>
Pensions. Christiana has no pension plans or programs.
Compensation of Directors. Non-employee directors (Nicholas F. Brady, David
J. Lubar and Albert O. Nicholas) are each paid an annual retainer of $15,000 for
attendance at Board and committee meetings and other consultations.
Employment Contracts. No officer of Christiana has an employment contract.
Compensation Committee Interlocks and Insider Participation. The members of
the Compensation Committee are Nicholas F. Brady, Sheldon B. Lubar and Albert O.
Nicholas. This Committee, which also administers Christiana's stock option
program, met twice during fiscal 1998. Mr. Lubar is Christiana's principal
officer and its principal shareholder.
David J. Lubar and Sheldon B. Lubar are officers and directors of Lubar &
Co., and each own 50% of its stock, respectively. Christiana's headquarters are
in part of the premises occupied by Lubar & Co., 700 North Water Street, Suite
1200, Milwaukee, Wisconsin and owned by 700 North Water LLC. The Lubar Family
owns 90% of 700 North Water LLC and William T. Donovan owns 5% of 700 North
Water LLC. Christiana pays 700 North Water LLC its pro rata share ($6,500 per
month for fiscal 1998) of the rent, utilities and other expenses of those
premises.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the Merger, each share of Christiana Common Stock as of the
Effective Time will be converted into the right to receive (i) the Weatherford
Share Consideration, and (ii) the Cash Consideration.
The directors and officers of Christiana beneficially own shares of
Christiana Common Stock (including shares of Christiana Common Stock subject to
options) in the amounts set forth under "-- Management -- Directors and
Executive Officers".
Sheldon B. Lubar's three daughters, Joan P. Lubar, Kristine L. Thomson and
Susan Solvang (the wife of Oyvind Solvang, the Vice President of C2), each own
448,551, 430,478 and 442,953 shares of Christiana Common Stock, respectively.
In connection with the Merger, the Lubar/C2 Agreement was entered into
providing (i) that all Christiana shareholders would have the right to purchase
at least the same percentage ownership in C2 as such Christiana shareholder has
in Christiana immediately prior to the Effective Time and at the same price per
share as each member of the Lubar Family and (ii) that Mr. Lubar and the
remainder of the Lubar Family agreed to purchase shares of C2 Common Stock in
the C2 Offering to raise at least $10.67 million. This agreement will insure
that C2 has sufficient funds to complete the Logistic Sale.
The Lubar Family, Lubar & Co. and Venture Capital Fund, L.P., a fund
managed by Lubar & Co., and William T. Donovan own 5.3%, 0.8%, 6.0% and 0.7%,
respectively, of Emmpak Foods, Inc. ("Emmpak"), a customer of Logistic. During
fiscal 1998, Emmpak accounted for approximately $2.2 million in gross revenue
for Logistic. David J. Lubar serves on the board of directors of Emmpak.
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<PAGE> 112
DESCRIPTION OF C2
GENERAL
C2 was formed on December 11, 1997 for the purpose of acquiring a
two-thirds interest in Logistic. C2 is a Wisconsin corporation with its
executive offices located at 700 North Water Street, Suite 1200, Milwaukee,
Wisconsin 53202, and its telephone number is (414) 291-9000.
Simultaneously herewith, C2 is offering, pursuant to the C2 Prospectus,
5,202,664 shares of C2 Common Stock for $4.00 per share, with the objective of
raising approximately $21.0 million. Approximately $10.67 million of the
proceeds from the C2 Offering will be utilized to fund the acquisition of a
two-thirds interest in Logistic. C2 intends to utilize any additional funds
raised in the C2 Offering for general corporate purposes, including future
acquisitions. The Lubar Family has committed, pursuant to the Lubar/C2
Agreement, to purchase such number of shares of C2 Common Stock as is necessary
for the net proceeds of the C2 Offering, after deducting expenses of the C2
Offering, to equal $10.67 million.
C2 will bear expenses associated with the C2 Offering. These expenses are
estimated as follows: (i) Commission filing fees, $6,140; (ii) Nasdaq listing
fee, $10,000; (iii) printing costs, expenses for state securities laws filings
and transfer agent fees and expenses, $36,000; (iv) accounting and tax services,
$75,000; (v) legal fees and expenses, $140,000; and (vi) miscellaneous, $8,000.
Mr. Lubar will not personally bear any expenses relating to the Merger, the
Logistic Sale or the C2 Offering.
MANAGEMENT
The following table contains the name, age and position with C2 of each
executive officer and director as of January 1, 1998. Each person's respective
background is described following the table.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ---------------------
<S> <C> <C>
William T. Donovan............................... 45 Chairman and Director
President and
David J. Lubar................................... 43 Director
Oyvind Solvang................................... 38 Vice President
David E. Beckwith................................ 69 Secretary
Nicholas F. Brady................................ 67 Director
Sheldon B. Lubar................................. 68 Director
Albert O. Nicholas............................... 66 Director
</TABLE>
William T. Donovan was named Chairman of C2 in December 1997. Mr. Donovan
is also the President, Chief Financial Officer and a director of Christiana,
positions he will vacate at the Effective Time. Mr. Donovan has held various
executive positions with Christiana since June 1988. Mr. Donovan has also been a
principal of Lubar & Co., a venture capital and investments firm located in
Milwaukee, Wisconsin since January 1980. Mr. Donovan is also a Director of Grey
Wolf, Inc.
David J. Lubar has been President of C2 since December 1997. Mr. Lubar also
serves as President of Lubar & Co., a position he has held since January 1991.
Mr. Lubar is a Director of Christiana, a position he will vacate as of the
Effective Time. Mr. Lubar is the son of Sheldon B. Lubar.
Oyvind Solvang has been Vice President of C2 since December 1997. Mr.
Solvang is also the Vice President of Christiana, a position he will vacate at
the Effective Time. Mr. Solvang has served as President of Cleary Gull Reiland &
McDevitt, Inc., an investment banking firm located in Milwaukee, Wisconsin from
January 1996 to October 1996 and Chief Operating Officer of Cleary Gull Reiland
& McDevitt, Inc., from October 1995 to January 1996. Prior thereto, from May
1994 to September 1995, Mr. Solvang served as President of Scinticor,
Incorporated, a manufacturer of cardiac imaging devices, located in Milwaukee,
Wisconsin, and from August 1990 to April 1994 as Vice President and General
Manager of Applied Power, Inc., a supplier of hydraulic systems, located in
Butler, Wisconsin.
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<PAGE> 113
David E. Beckwith has been Secretary of C2 since December 1997. Since May
1995, he served as Secretary of Christiana, a position he will vacate as of the
Effective Time. Mr. Beckwith has been associated with the law firm of Foley &
Lardner since 1952 and has been a Partner at Foley & Lardner since 1960.
Nicholas F. Brady has been a Director of C2 since December 1997. Since
February 1993, Mr. Brady has been Chairman and President of Darby Advisors,
Inc., a private investment company located in Easton, Maryland. Prior thereto,
Mr. Brady served as Secretary of the United States Department of the Treasury
for over four years, and before that, Chairman of Dillon, Reed & Co., Inc. Mr.
Brady is a Director of Amerada Hess Corporation and H.J. Heinz Company, as well
as a Director (or trustee) of 27 Templeton funds, which are registered
investment companies. Mr. Brady is also a Director of Christiana, a position he
will vacate as of the Effective Time.
Sheldon B. Lubar has been a Director of C2 since December 1997. Mr. Lubar
has also been a principal of Lubar & Co. since its inception in 1977. Mr. Lubar
is a Director of Ameritech Corporation, Weatherford, Firstar Corporation,
Massachusetts Mutual Life Insurance Co., Jefferies & Company, Inc. and MGIC
Investment Corporation. Mr. Lubar currently serves as Chairman, Chief Executive
Officer and a Director of Christiana, all of which positions he will vacate as
of the Effective Time. Mr. Lubar is the father of David J. Lubar.
Albert O. Nicholas has been a Director of C2 since December 1997. Mr.
Nicholas has been owner and President of Nicholas Company, Inc., a registered
investment advisor located in Milwaukee, Wisconsin since December, 1967.
Nicholas Company, Inc. is the advisor to six registered investment companies:
Nicholas Fund, Inc., Nicholas Two, Inc., Nicholas Income Fund, Inc., Nicholas
Limited Addition, Inc., Nicholas Money Market Fund, Inc. and Nicholas Equity
Income Fund. Mr. Nicholas is the President and a Director of each of these
investment companies. Mr. Nicholas is also a Director of Bando McGlocklin
Capital Corporation. In addition, Mr. Nicholas serves as a Director of
Christiana, a position he will vacate as of the Effective Time.
DESCRIPTION OF LOGISTIC CREDIT AGREEMENT
In connection with the Transaction, Logistic intends to enter into a credit
agreement (the "Credit Agreement") with Firstar Bank Milwaukee, N.A., as agent,
and certain other banks which will be parties thereto (together, the "Banks"),
on or before the Effective Time of the Merger, Pursuant to the Credit Agreement,
Logistic will, subject to the achievement of certain financial ratios and
compliance with certain conditions, have the right to obtain revolving loans in
the following outstanding principal amounts:
<TABLE>
<CAPTION>
MAXIMUM AMOUNT OF
TIME PERIOD REVOLVING LOANS OUTSTANDING
- ----------- ---------------------------
<S> <C>
Closing date through April 15, 1999................... $ 65 million
April 16, 1999 through April 15, 2000................. $ 61 million
April 16, 2000 through April 15, 2001................. $ 56 million
April 16, 2001 through April 15, 2002................. $50.5 million
April 16, 2002 through April 15, 2003................. $ 43 million
</TABLE>
The entire unpaid principal balance of loans made under the Credit
Agreement will be due and payable on April 15, 2003. There are currently no
plans or arrangements to repay such unpaid principal balance prior to such time.
The proceeds of the initial loans under the Credit Agreement will be used
to refinance existing indebtedness of Logistic to the Banks in the amount of
approximately $36.0 million; finance the payment of a distribution to Christiana
of $20.0 million cash prior to the Effective Time; finance the repayment of the
Wiscold Note prior to the Effective Time; and pay related fees and expenses. The
available balance of the facility, estimated to be $ -- million after completion
of the Merger, will be available for working capital and general corporate
purposes.
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The Credit Agreement will be secured by liens or security interests on all
or substantially all of the assets of Logistic, other than certain
transportation equipment, and mortgages on its real estate.
The initial interest rate on borrowings under the Credit Agreement is
expected to be, at the option of Logistic, LIBOR plus 225 basis points or the
prime rate. These rates will vary over the term of the Credit Agreement pursuant
to a pricing grid based on the ratio of Consolidated Funded Debt to Consolidated
EBITDA (the "Consolidated Funded Debt Ratio"), all as defined in the Credit
Agreement, in accordance with the following table:
APPLICABLE PERCENTAGES
<TABLE>
<CAPTION>
APPLICABLE
PERCENTAGE APPLICABLE APPLICABLE
FOR PERCENTAGE PERCENTAGE
EURODOLLAR FOR PRIME FOR LETTER
PRICING CONSOLIDATED FUNDED REVOLVING RATE OF CREDIT
LEVEL DEBT RATIO LOANS LOANS FEE
------- ----------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
7............................ >4.5:1.0 2.25 0.00 1.25
6............................ <4.5:1.0 but >4.0:1.0 2.00 (0.25) 1.25
5............................ <4.0:1.0 but >3.5:1.0 1.75 (0.25) 1.25
4............................ <3.5:1.0 but >3.0:1.0 1.50 (0.50) 1.25
3............................ <3.0:1.0 but >2.5:1.0 1.25 (0.50) 1.25
2............................ <2.5:1.0 but >2.0:1.0 1.00 (0.50) 1.25
1............................ <2.0:1.0 0.75 (1.00) 1.25
</TABLE>
The Credit Agreement also contains provisions requiring Logistic to reimburse
the Banks for increases in certain taxes, revenue requirements and other costs
incurred by the Banks.
Loans made under the Credit Agreement may be prepaid in whole or in part
without premium or penalty, except for reimbursement of the Banks for any losses
the Banks suffer as a result of repayment of LIBOR-based loan prices to the last
day of that applicable interest period.
The Credit Agreement contains representations and warranties, including
without limitation those relating to financial statements, ownership of
properties, liens and encumbrances, corporate existence, compliance with law,
legal authorization and enforceability, absence of default, litigation, ERISA,
environmental and tax matters, use of proceeds, solvency, accuracy of
information and the matters set forth in the merger and divestiture documents.
The Credit Agreement also contains conditions precedent (or in certain
instances concurrent) to the initial funding at the Closing, which will include,
without limitation, those relating to the following: (i) satisfactory financing
documentation; (ii) the obtaining of certain approvals and agreements; (iii)
consummation of the Merger; (iv) satisfactory pro forma and other financial
statements; (v) environmental reports; (vi) certain appraisals and business
valuations; (vii) the absence of a material adverse change; and (viii) the
delivery of customary closing documents. The conditions to all borrowings
include requirements relating to prior notice of borrowing, the accuracy of
representations and warranties, the absence of any default or potential event of
default and the absence of a material adverse change in Logistic's business.
The Credit Agreement also contains affirmative and negative covenants
(including, where appropriate, certain exceptions and baskets mutually agreed
upon), including but not limited to furnishing financial and other information
payment of obligations, conduct of business, maintenance of existence,
maintenance of property, insurance, inspection of property, books and records,
notices, environmental laws, additional subsidiary guarantors, bank accounts,
indebtedness, liens, nature of business, consolidation, merger, sale or purchase
of assets, advances, investments and loan guarantee obligations, transactions
with affiliates, ownership of subsidiaries, fiscal year, prepayment of
indebtedness and dividends. The Credit Agreement also
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<PAGE> 115
contains the following financial covenants: minimum consolidated tangible net
worth; maximum consolidated funded debt ratio; minimum cash flow ratio; and
positive annual earnings.
Events of default under the Credit Agreement, include without limitation,
those relating to: (i) non-payment of interest, principal or fees payable under
the Credit Agreement; (ii) inaccuracy of representations or warranties in the
loan documents; (iii) non-performance of covenants; (iv) cross-default to other
material debt of the Company and its subsidiaries; (v) bankruptcy or insolvency;
(vi) judgments in excess of specified amounts; (vii) certain ERISA events;
(viii) impairment of security interests in collateral; (ix) invalidity of
guarantees; (x) materially inaccurate or false representations or warranties;
and (xi) a change in control.
As a result of the borrowings under the Credit Agreement, Logistic, as well
as C2 on a pro forma basis, will be highly leveraged. C2's pro forma total
funded debt to total capitalization including minority interest at June 30, 1998
was 63% assuming 5,202,664 shares are sold in the C2 Offering. In addition,
Logistic may, subject to certain restrictions in its debt agreements, incur
further indebtedness from time to time to finance expansion, either through
acquisitions or capital leases, or for other purposes.
Due to Logistic's substantial indebtedness, a significant portion of its
cash flow from operations will be required for debt service. However, on a pro
forma basis, for the fiscal year ended June 30, 1998, C2's earnings will be
sufficient to cover fixed charges by a ratio of approximately 1.13 to 1.0.
The extent to which Logistic is leveraged could have the following
consequences: (i) impairment of Logistic's ability to obtain additional
financing in the future for working capital, capital expenditures, acquisitions
or other purposes; (ii) dedication of a substantial portion of Logistic's cash
flow from operations to the payment of debt service requirements (principal and
interest) on its indebtedness; (iii) vulnerability of Logistic to changes in
general economic conditions; and (iv) limitations on Logistic's ability to
capitalize on significant business opportunities and to respond to competition.
In addition, if Logistic experiences losses, C2 may decide to contribute some or
all of the excess proceeds of the C2 Offering to Logistic to fund such operating
losses. To the extent of such a contribution, the proceeds of the C2 Offering in
excess of the amount necessary to finance the acquisition of two-thirds of
Logistic would be unavailable for future acquisitions.
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<PAGE> 116
DESCRIPTION OF WEATHERFORD AND CHRISTIANA CAPITAL STOCK
WEATHERFORD
Weatherford's authorized capital stock consists of 250,000,000 shares of
Weatherford Common Stock, par value $1.00 per share, and 3,000,000 shares of
Preferred Stock, par value $1.00 per share ("Weatherford Preferred Stock"). At
November -- , 1998, -- shares of Weatherford Common Stock were
outstanding, including (i) -- shares of Weatherford Common Stock
remaining to be exchanged for shares of common stock of GulfMark International,
Inc. ("GulfMark") in connection with Weatherford's prior acquisition of
GulfMark, (ii) -- shares of Weatherford Common Stock remaining to
be exchanged for common shares of Taro Industries Limited ("Taro") in connection
with Weatherford's prior acquisition of Taro and (iii) -- shares of
Weatherford Common Stock remaining to be exchanged for shares of common stock of
Weatherford in connection with the Weatherford Merger. In addition, at November
- --, 1998, there were (i) 5,031,250 shares of Weatherford Common Stock reserved
for issuance upon the conversion of Weatherford's 5% Convertible Subordinated
Preferred Equivalent Debentures due 2027, (ii) -- shares of Weatherford
Common Stock reserved for issuance pursuant to the proposed Merger and (iii)
-- shares of Weatherford Common Stock reserved for issuance pursuant to
various benefit plans of Weatherford and its subsidiaries, of which --
shares of Weatherford Common Stock were reserved for issuance upon the exercise
of outstanding options and awards. At November -- , 1998, there were no shares
of Weatherford Preferred Stock issued or outstanding. The holders of shares of
Weatherford Common Stock are not liable to further calls or assessments by
Weatherford. The description below is a summary of and is qualified in its
entirety by the provisions of Weatherford's Amended and Restated Certificate of
Incorporation as currently in effect.
Subject to the rights of the holders of any outstanding shares of
Weatherford Preferred Stock and those rights provided by law, (i) dividends may
be declared and paid or set apart for payment upon the Weatherford Common Stock
out of any assets or funds of Weatherford legally available for the payment of
dividends and may be payable in cash, stock or otherwise, (ii) the holders of
Weatherford stock have the exclusive right to vote for the election of directors
and, except as provided below, on all other matters requiring stockholder action
generally, with each share being entitled to one vote and (iii) upon the
voluntary or involuntary liquidation, dissolution or winding up of Weatherford,
the net assets of Weatherford will be distributed pro rata to the holders of the
Weatherford Common Stock in accordance with their respective rights and
interests to the exclusion of the holders of any outstanding shares of
Weatherford Preferred Stock.
Although the holders of the Weatherford Common Stock are generally entitled
to vote for the approval of amendments to Weatherford's Amended and Restated
Certificate of Incorporation, the voting rights of the holders of the
Weatherford Common Stock are limited with respect to certain amendments to
Weatherford's Amended and Restated Certificate of Incorporation, as amended,
that affect only the holders of the Weatherford Preferred Stock. Specifically,
subject to the rights of any outstanding shares of any series of Weatherford
Preferred Stock, Weatherford's Amended and Restated Certificate of
Incorporation, as amended, provides that it may be amended from time to time in
any manner that would solely modify or change the relative powers, preferences
and rights and the qualifications or restrictions of any issued shares of any
series of Weatherford Preferred Stock then outstanding with the only required
vote or consent for approval of such amendment being the affirmative vote or
consent of the holders of a majority of the outstanding shares of the series of
Weatherford Preferred Stock so affected, provided that the powers, preferences
and rights and the qualifications and limitations or restrictions of such series
after giving effect to such amendment are no greater than the powers,
preferences and rights and qualifications and limitations or restrictions
permitted to be fixed and determined by the Board of Directors with respect to
the establishment of any new series of shares of Weatherford Preferred Stock
pursuant to the authority vested in the Board of Directors as to such matters.
Holders of the Weatherford Common Stock do not have any cumulative voting,
redemptive or conversion rights and have no preemptive rights to subscribe for,
purchase or receive any class of shares or securities of Weatherford. Holders of
the Weatherford Common Stock have no fixed dividend rights. Dividends may be
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<PAGE> 117
declared by the Board of Directors at its discretion depending on various
factors, although no dividends are anticipated for the foreseeable future.
The Weatherford Preferred Stock may be issued from time to time in one or
more series, with each such series having such powers, preferences and rights
and qualifications and limitations or restrictions as may be fixed by
Weatherford's Board of Directors pursuant to the resolution or resolutions
providing for the issuance of such series.
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except under certain
circumstances, including a breach of the director's duty of loyalty, acts or
omissions of the director not in good faith or which involve intentional
misconduct or a knowing violation of law, the approval of an improper payment of
a dividend or an improper purchase by Weatherford of stock or any transaction
from which the director derived an improper personal benefit. Weatherford's
Amended and Restated Certificate of Incorporation, as amended, provides that
Weatherford's directors are not liable to Weatherford or its stockholders for
monetary damages for breach of their fiduciary duty, subject to the above
described exceptions specified by Delaware law.
As a Delaware corporation, Weatherford is subject to Section 203 of the
Delaware General Corporation Law (the "DGCL"). In general, Section 203 prevents
an "interested stockholder" (defined generally as a person owning 15% or more of
a corporation's outstanding voting stock) from engaging in a "business
combination" (as defined) with a Delaware corporation for three years following
the time such person became an interested stockholder unless (i) before such
person became an interested stockholder, the board of directors of the
corporation approved the transaction in which the interested stockholder became
an interested stockholder or approved the business combination; (ii) upon
consummation of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owns at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock plans that do not provide employees with the
rights to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer); or (iii) following the transaction
in which such person became an interested stockholder, the business combination
is approved by the board of directors of the corporation and authorized at a
meeting of stockholders by the affirmative vote of the holders of two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. Under Section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of one of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors, if such extraordinary transaction is approved or not opposed by a
majority of the directors who were directors prior to any person becoming an
interested stockholder during the previous three years or were recommended for
election or elected to succeed such directors by a majority of such directors.
Weatherford has approved the acquisition by Christiana of the shares of
Weatherford Common Stock owned by them under Section 203 and Christiana are
therefore not subject to the restrictions under Section 203.
The Registrar and Transfer Agent for the Weatherford Common Stock is
American Stock Transfer and Trust Company, New York, New York.
CHRISTIANA
Authorized Capital Stock. The aggregate number of shares of Christiana
capital stock which Christiana has authority to issue is 13,000,000, consisting
of one class, designated as "Common Stock", with a par value of $1.00 per share
and 1,000,000 shares of a class designated as Preferred Stock, with a par value
of $10.00 per share. As of September 30, 1998 there were 5,149,330 shares of
Christiana Common Stock issued and outstanding. Based on certain commitments by
officers of Christiana to exercise options and purchase shares of Christiana
Common Stock, as of the Effective Time, Christiana expects that there will be
5,149,330 shares of Christiana Common Stock issued and outstanding. There are no
shares of Preferred Stock outstanding and
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<PAGE> 118
the Board of Directors of Christiana has not fixed any powers, preferences or
rights with respect to any Preferred Stock.
Dividend and Liquidation Rights. All shares of Christiana Common Stock will
participate equally with respect to dividends and rank equally upon liquidation
subject to the rights of holders of any prior ranking stock which may be
subsequently authorized and issued. In the event of liquidation, dissolution or
winding up of Christiana, the owners of Christiana Common Stock are entitled to
receive pro rata the assets and funds of Christiana remaining after satisfaction
of all creditors of Christiana and payment of all amounts to which owners of
prior ranking stock, if any, then outstanding may be entitled.
Voting Rights. Except as hereinafter set forth, every holder of Christiana
Common Stock has one vote for each share.
No shareholder of Christiana has cumulative voting rights which means that
the holders of shares entitled to exercise more than 50% of the voting power of
shares entitled to vote, represented in person or by proxy at a meeting at which
a quorum (a majority of the shares entitled to vote) is represented, are
entitled to elect all of the directors to be elected. Under Christiana's Bylaws,
each member of the Board of Directors is elected each year at Christiana's
annual meeting.
Certain Statutory Provisions. Section 180.1150 of the WBCL provides that
the voting power of shares of an "issuing public corporation", which includes
Christiana, which are held by any person holding in excess of 20% of the voting
power in the election of directors of the issuing public corporation's shares
shall be limited to 10% of the full voting power of such excess shares. This
statutory voting restriction will not be applicable to shares acquired directly
from Christiana, to shares acquired in a transaction incident to which
shareholders of Christiana vote to restore the full voting power of such shares
(either before or after the acquisition of the shares) and under certain other
circumstances.
Except as may otherwise be provided by law, the requisite affirmative vote
of shareholders for certain significant corporate actions, including a merger or
share exchange with another corporation, sale of all or substantially all of the
corporate property and assets, or voluntary liquidation, is a majority of all
the votes entitled to be cast on the transaction by each voting group of
outstanding shares entitled to vote thereon. Sections 180.1130 through 180.1134
of the WBCL provide generally that, in addition to the vote otherwise required
by law or the articles of incorporation of an "issuing public corporation",
certain business combinations not meeting certain adequacy-of-price standards
specified in the statute must be approved by (a) the holders of at least 80% of
the votes entitled to be cast and (b) two-thirds of the votes entitled to be
cast by the corporation's outstanding voting shares owned by persons other than
a "significant shareholder" who is a party to the transaction or an affiliate or
associate thereof. Section 180.1130 defines "business combination" to include,
subject to certain exceptions, a merger or share exchange of the issuing public
corporation (or any subsidiary thereof) with, or the sale or other disposition
of substantially all assets of the issuing public corporation to, any
significant shareholder or affiliate thereof. "Significant shareholder" is
defined generally to mean a person that is the beneficial owner of 10% or more
of the voting power of the outstanding voting shares of the issuing public
corporation.
Pursuant to the requirements of Sections 180.1130 through 180.1134 of the
WBCL, the Lubar Shares will not be counted for purposes of obtaining the 80%
affirmative vote of Christiana shareholders required to approve the Merger.
Sections 180.1140 through 180.1145 of the WBCL provide that a "resident
domestic corporation", such as Christiana, may not engage in a "business
combination" with an "interested stockholder" (e.g., a person beneficially
owning 10% or more of the aggregate voting power of the stock of such
corporation) within three years after the date (the "stock acquisition date") on
which the interested stockholder acquired his or her 10% or greater interest,
unless the business combination (or the acquisition of the 10% or greater
interest) was approved before the stock acquisition date by the corporation's
board of directors. If the interested stockholder fails to obtain such approval
by the board of directors, then even after such three-year period, a business
combination with the interested stockholder may be consummated only with the
approval of the holders of a majority of the voting stock not beneficially owned
by such interested stockholder, unless the combination
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satisfies certain adequacy-of-price standards intended to provide a fair price
for shares held by non-interested shareholders.
The above sections of the WBCL could have the effect, among others, of
discouraging takeover proposals for Christiana or impeding a business
combination between Christiana and a major shareholder of Christiana.
Preemptive Rights. No holder of Christiana Common Stock has any preemptive
or subscription rights.
Conversion Rights, Redemption Provisions and Sinking Fund
Provisions. Christiana Common Stock is not convertible, is not redeemable and
has no sinking fund.
Liability to Further Calls or to Assessment. Certain statutory personal
liability may be imposed upon shareholders of Wisconsin corporations, including
Christiana, under Section 180.0622(2)(b) of the WBCL. The substantially
identical predecessor to such statute has been judicially interpreted to mean
that shareholders of a Wisconsin corporation are subject to personal liability,
up to an amount equal to the consideration for which their shares were issued
(instead of the aggregate par value in the case of shares with par value, as the
statute states), for all debts owing to employees of the corporation for
services performed for the corporation, but not exceeding six months service in
any one case. The provisions of this Section of the WBCL are presently
applicable to the shares of capital stock of Christiana.
COMPARATIVE RIGHTS OF STOCKHOLDERS OF WEATHERFORD AND CHRISTIANA
The rights of holders of Christiana Common Stock are currently governed by
Wisconsin law, Christiana's Articles of Incorporation, as amended, and
Christiana's By-laws, as amended. Upon consummation of the Merger, holders of
Christiana Common Stock will become holders of Weatherford Common Stock, and
their rights as holders of Weatherford Common Stock will be governed by Delaware
law and Weatherford's Amended and Restated Certificate of Incorporation, as
amended and Amended and Restated By-laws. Set forth below is an explanation of
material differences between the rights of holders of Christiana Common Stock
and rights of holders of Weatherford Common Stock.
SPECIAL VOTE REQUIRED FOR CERTAIN COMBINATIONS
Section 203 of the DGCL applies to Weatherford. Although Weatherford is
subject to Section 203, the Merger with Christiana is not prohibited by Section
203.
Except as may otherwise be provided by law, the requisite affirmative vote
of shareholders for certain significant corporate actions, including a merger or
share exchange with another corporation, sale of all or substantially all of the
corporate property and assets, or voluntary liquidation, is a majority of all
the votes entitled to be cast on the transaction by each voting group of
outstanding shares entitled to vote thereon. Section 180.1131 of the WBCL
provides generally that, in addition to the vote otherwise required by law or
the articles of incorporation of an "issuing public corporation", certain
business combinations not meeting certain adequacy-of-price standards specified
in the statute must be approved by (i) the holders of at least 80% of the votes
entitled to be cast and (ii) two-thirds of the votes entitled to be cast by the
corporation's outstanding voting shares owned by persons other than a
"significant shareholder" who is a party to the transaction or an affiliate or
associate thereof. Section 180.1130 defines "business combination" to include,
subject to certain exceptions, a merger or share exchange of the issuing public
corporation (or any subsidiary thereof) with, or the sale or other disposition
of substantially all assets of the issuing public corporation to, any
significant shareholder or affiliate thereof. "Significant shareholder" is
defined generally to mean a person that is the beneficial owner of 10% or more
of the voting power of the outstanding voting shares of the issuing public
corporation. Although Christiana believes that Sections 180.1130 through
180.1134 of the WBCL are not intended to apply to transactions such as the
Merger, Christiana will require the shareholder vote required under Section
180.1131 under the assumption that such Section applies to the Merger.
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VOTE REQUIRED FOR CORPORATE TRANSACTIONS AND OTHER MATTERS
Under the DGCL, an amendment to a corporation's certificate of
incorporation requires the affirmative vote of the holders of a majority of the
outstanding stock of the corporation entitled to vote thereon and a majority of
the outstanding stock of each class entitled to vote thereon as a class unless
the corporation's certificate of incorporation provides for a higher percentage.
The DGCL also provides that the holders of a majority of the outstanding stock
of the corporation entitled to vote thereon may approve an agreement of merger
or consolidation or the dissolution of a corporation.
The WBCL generally requires the approval of a majority of the votes
entitled to be cast on the amendment by each voting group with respect to which
the amendment would create dissenters' rights and a majority of votes of every
other voting group entitled to vote on the amendment, unless the articles of
incorporation, bylaws adopted under authority granted in the articles of
incorporation or the WBCL require a greater proportion. The WBCL also provides
generally that holders of a majority of outstanding stock of a corporation
entitled to vote thereon may approve an agreement of merger, consideration or
the dissolution of a corporation, subject to the statutory provisions described
above under "-- Special Vote Required for Certain Combinations" and "Description
of Weatherford and Christiana Capital Stock -- Christiana".
Article 8 of Weatherford's Amended and Restated Certificate of
Incorporation, as amended, provides that the Amended and Restated Certificate of
Incorporation, as amended, may be amended, altered, changed or repealed as
prescribed by statute. Under the DGCL, such amendment must be approved by a
majority of the outstanding Weatherford Common Stock. Under Article 4 of
Weatherford's Amended and Restated Certificate of Incorporation, as amended, any
amendment to the Amended and Restated Certificate of Incorporation, as amended,
that affects any series of outstanding preferred stock must be approved by a
majority of the holders of such series. The DGCL does not require a vote of the
Weatherford stockholders for the consummation of the Merger.
Christiana's Articles of Incorporation are silent as to amendments to the
Articles of Incorporation and the vote required to approve mergers and other
material corporate transactions.
DISPOSITION OF ASSETS
The DGCL provides that a corporation may sell, lease or exchange all or
substantially all of its property and assets for such consideration as its Board
of Directors deems expedient and in the best interest of the corporation, when
and as authorized by resolution adopted by the holders of a majority of the
outstanding stock of the corporation entitled to vote thereon.
Under the WBCL, a corporation may sell, lease, exchange or otherwise
dispose of all, or substantially all, of its property and assets otherwise than
in the usual and regular course of business on such terms and conditions and for
the consideration determined by the corporation's Board of Directors, upon
adoption of a resolution by the Board of Directors approving the proposed
transaction and approval by the majority of all the votes entitled to be cast on
the transactions by the shareholders of the corporation.
POWER TO AMEND BY-LAWS
Under the DGCL, the power to adopt, amend or repeal by-laws of a
corporation is vested in the authority of the stockholders entitled to vote,
unless the corporation's certificate of incorporation confers such power upon
its directors. However, power conferred shall not divest the stockholders of
their power to adopt, amend or repeal the by-laws. Weatherford's Amended and
Restated By-laws permit amendments by its board of directors and require an 80%
vote of stockholders to amend the Amended and Restated By-laws.
Under the WBCL, the power to adopt, amend or repeal by-laws of a
corporation is vested in the authority of the board of directors of the
corporation, unless the articles of incorporation provide otherwise. However,
the corporation's stockholders may adopt, amend or repeal by-laws even though
the board of directors has this power as well. Christiana's articles of
incorporation do not divest the directors of their power to adopt, amend and
repeal by-laws.
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QUORUM REQUIREMENTS FOR DIRECTORS' MEETINGS
The DGCL provides that a majority of the total number of directors shall
constitute a quorum for the transaction of business, unless the certificate of
incorporation or by-laws require a greater number. Weatherford's Amended and
Restated By-laws provide that a majority of the total number of directors shall
constitute a quorum for the transaction of business.
The WBCL provides that a majority of the total number of directors shall
constitute a quorum for the transaction of business, unless the articles of
incorporation or by-laws provide for a greater or lesser number, provided that a
quorum may not be fewer than one-third of the number of directors. Christiana's
By-laws provide that a quorum of the board of directors consists of any four
directors of the eight member board of directors.
REMOVAL OF DIRECTORS
The DGCL and Weatherford's Amended and Restated By-laws provide that
directors may be removed, with or without cause, by the holders of a majority of
the shares then entitled to vote at an election of directors. In addition,
Weatherford's Amended and Restated By-laws provide that directors may be
removed, to the extent permitted by law, for cause by vote of the majority of
the directors then in office. A director may be removed for cause only after
reasonable notice and opportunity to be heard before the body proposing to
remove him. The WBCL provides that directors may be removed with or without
cause, unless the articles of incorporation or by-laws provide that directors
may be removed only for cause. Shareholders may remove a director if the number
of shareholder votes cast to remove the director exceeds the numbers of
shareholder votes cast not to remove such director, unless the articles of
incorporation or by-laws provide for a greater voting requirement. Neither
Christiana's Articles of Incorporation nor its By-laws expressly addresses the
removal of directors.
DIRECTOR ELECTIONS, QUALIFICATIONS AND NUMBER
The DGCL provides that the number of directors of a Delaware corporation
shall be fixed by, or in the manner provided in, the by-laws, unless such the
certificate of incorporation fixes such number, in which case, it can only be
changed by amending the certificate. Under the DGCL, a director need not be a
stockholder to be qualified unless so required by the corporation's certificate
of incorporation or by-laws. Weatherford's Amended and Restated By-laws provide
that directors are to be elected by a plurality vote of the stockholders;
provided, however, that any vacancies occurring in the board may be filled by
the remaining directors.
The WBCL provides that the number of directors of a Wisconsin corporation
shall be fixed in accordance with the articles of incorporation or by-laws.
Under the WBCL, a director need not be a stockholder to be qualified unless so
required by the corporation's articles of incorporation or by-laws. Under the
WBCL, unless otherwise provided by the articles of incorporation, directors are
to be elected by a plurality of votes cast by the shares entitled to vote in the
election; provided, however, that a vacancy on the board may be filled by the
shareholders or the board of directors. Christiana's articles of incorporation
are silent with respect to the qualifications and election of directors.
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PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Weatherford Common Stock and Christiana Common Stock are each traded on the
NYSE under the symbols "WFT" and "CST", respectively. The following table sets
forth the range of high and low sale prices for Weatherford Common Stock and
Christiana Common Stock for the periods indicated, as reported on the NYSE. The
prices for the Weatherford Common Stock have been adjusted to reflect a
two-for-one stock split effected in May 1997.
<TABLE>
<CAPTION>
WEATHERFORD CHRISTIANA
---------------------- ----------------------
HIGH LOW HIGH LOW
---- --- ---- ---
<S> <C> <C> <C> <C>
Twelve Months Ended December 31, 1996
Quarter ended March 31, 1996............................. $14 7/16 $11 1/8 $24 3/4 $22 1/4
Quarter ended June 30, 1996.............................. 17 1/2 12 7/8 24 1/4 20 1/8
Quarter ended September 30, 1996......................... 20 1/4 14 22 3/4 20 5/8
Quarter ended December 31, 1996.......................... 25 3/4 19 1/2 25 3/4 23 1/2
Twelve Months Ended December 31, 1997
Quarter ended March 31, 1997............................. $31 7/8 $23 7/8 $33 3/4 $26 1/2
Quarter ended June 30, 1997.............................. 45 1/2 28 39 7/8 31 1/2
Quarter ended September 30, 1997......................... 64 42 1/16 44 3/8 37 5/8
Quarter ended December 31, 1997.......................... 73 40 1/4 46 9/16 36 5/8
Twelve Months Ended December 31, 1998
Quarter ended March 31, 1998............................. $53 7/8 $37 1/2 $41 1/2 $33 15/16
Quarter ended June 30, 1998.............................. 58 7/16 34 3/4 43 5/8 29 3/16
Quarter ended September 30, 1998......................... 39 15/16 15 31 13/16 17 3/8
Quarter ended December 31, 1998 (through October 12,
1998)................................................. 22 5/8 16 19 7/8 16 1/8
</TABLE>
On October 13, 1998, the last trading date prior to the execution by
Weatherford and Christiana of the Amended Merger Agreement, the closing sale
prices of Weatherford Common Stock and of Christiania Common Stock as reported
by the NYSE were $16 13/16 and $16 3/8 per share, respectively.
On November -- , 1998, the closing sale prices of Weatherford Common Stock
and of Christiana Common Stock as reported by the NYSE were $-- and $-- per
share, respectively.
Following the Merger, Weatherford Common Stock will continue to be traded
on the NYSE under the symbol "WFT", and Christiana Common Stock will cease to be
traded and there will be no further market for such stock.
Weatherford has not paid any dividends on the Weatherford Common Stock
since 1984 and currently anticipates that, for the foreseeable future, any
earnings will be retained for the development of Weatherford's business. The
declaration of all dividends is at the discretion of Weatherford's Board of
Directors. Weatherford's dividend policy will be reviewed by the Board of
Directors at such future time as may be appropriate in light of relevant factors
at the time.
Christiana has not declared or paid any dividends during the past five
years.
115
<PAGE> 123
STOCK OWNERSHIP AND CERTAIN BENEFICIAL OWNERS
WEATHERFORD
The following table sets forth certain information with respect to each
person who as of the Record Date, was known by Weatherford to be the beneficial
owner of more than 5% of the outstanding shares of Weatherford Common Stock.
<TABLE>
<CAPTION>
BEFORE THE MERGER AFTER THE MERGER
------------------------------ ------------------------------
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY PERCENT BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED(1) OF CLASS(%) OWNED(1) OF CLASS(%)
---------------- ---------------- ----------- ---------------- -----------
<S> <C> <C> <C> <C>
First Reserve Corporation(2)............ 5,623,340 5.8 5,623,340 5.9
475 Steamboat Road
Greenwich, CT 06830
FMR Corp.(3)............................ 6,200,050 6.4 6,200,050 6.4
82 Devonshire Street
Boston, Massachusetts 02109
</TABLE>
- ---------------
(1) Information with respect to beneficial ownership is based on information
furnished by each stockholder or contained in filings made with the
Commission. Unless otherwise indicated below, the persons or group listed
have sole voting and dispositive power with respect to their shares of
Weatherford Common Stock, and none of such shares are deemed to be owned
because the holder has the right to acquire the shares within 60 days.
(2) Represents shares owned by the following funds (the "First Reserve Funds"),
for each of which First Reserve is the general partner: American Gas & Oil
Investors, Limited Partnership -- 1,292,000 shares; AmGO II, Limited
Partnership -- 807,500 shares; First Reserve Fund V, Limited Partnership --
2,185,000 shares; First Reserve Fund V-2, Limited Partnership -- 608,000
shares; and First Reserve Fund VI, Limited Partnership -- 698,602 shares.
First Reserve, in its role as managing general partner of the First Reserve
Funds and acting on behalf of the First Reserve Funds, has the power to
cause each First Reserve Fund to dispose of or vote shares of Common Stock
held by such First Reserve Fund. Also includes 32,238 shares owned directly
by First Reserve. The principal beneficial owners of the common stock of
First Reserve are its executive officers, including Mr. Macaulay, President
and Chief Executive Officer of First Reserve, who is also a director of
Weatherford.
(3) Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp. ("FMR") and a registered investment adviser, is the
beneficial owner of 5,353,024 shares as a result of acting as investment
adviser to various registered investment companies (the "Funds"). Fidelity
Management Trust Company ("FMTC"), a wholly owned subsidiary of FMR, is the
beneficial owner of 778,781 shares as a result of serving as investment
manager of various institutional accounts. Fidelity International Limited is
the beneficial owner of 49,495 shares and has sole voting and dispositive
power over all such shares. Edward C. Johnson 3d, FMR's Chairman and
principal stockholder, FMR, through its control of Fidelity, and the Funds
each has sole power to dispose of the 5,353,024 shares owned by the Funds
and Mr. Johnson and FMR, through its control of FMTC, each has sole power to
vote and dispose of 709,571 shares owned by the institutional accounts;
however, Mr. Johnson and FMR have no power to vote 69,210 shares owned by
the institutional accounts. The sole power to vote all shares owned by the
Funds resides with the Funds' Boards of Trustees. Fidelity carries out the
voting of the Funds' shares under written guidelines established by the
Funds' Board of Trustees. Additionally, Mr. Johnson and FMR may be deemed to
be the beneficial owner of an additional 18,750 shares resulting from the
assumed conversion of 30,000 of the Debentures. Members of the Mr. Johnson's
family and trusts for their benefit are the predominant owners of Class B
shares of common stock of FMR. Mr. Johnson owns 12.0% and Abigail P.
Johnson, Mr. Johnson's wife and a Director of FMR, owns 24.5% of the voting
stock of FMR. The Johnson family and all other Class B shareholders have
entered into a shareholders' voting agreement under which all Class B shares
will be voted in accordance with the majority vote of Class B shares.
Accordingly, through their ownership of voting common stock and the
execution of the shareholders' voting agreement, members of the Johnson
family may be deemed, under the Investment Company Act of 1940, to form a
controlling group with respect to FMR.
116
<PAGE> 124
CHRISTIANA
The following table gives information, as of the date hereof, about the
beneficial ownership of Christiana Common Stock by the persons known to the
Board of Directors to own beneficially more than 5% of the outstanding
Christiana Common Stock. As used in this proxy statement, "beneficial ownership"
has the meaning set forth in Rule 13d-3 of the Exchange Act. The information is
provided as of the date hereof except that information regarding Dimensional
Fund Advisors, Inc. is provided as of February 10, 1998, the date on which it
filed its Schedule 13G with the Commission.
<TABLE>
<CAPTION>
NO. OF SHARES PERCENT
NAME AND ADDRESS BENEFICIALLY OWNED OF CLASS
---------------- ------------------ --------
<S> <C> <C>
Sheldon B. Lubar............................................ 968,615(1) 18.8%
Suite 1200
700 North Water Street
Milwaukee, WI 53202
Albert O. Nicholas.......................................... 310,700 6.0%
700 North Water Street
Milwaukee, WI 53202
David J. Lubar.............................................. 427,403 8.2%
Joan P. Lubar(1)............................................ 448,551 8.7%
Kristine L. Thomson(1)...................................... 430,478 8.4%
Susan Solvang(1)............................................ 442,953 8.6%
Dimensional Fund Advisors Inc.(2)........................... 290,100 5.6%
</TABLE>
- ---------------
(1) Joan P. Lubar, Kristine L. Thomson and Susan Solvang (the wife of Oyvind
Solvang, the Vice President of Christiana) are Sheldon B. Lubar's daughters.
Their address is c/o Christiana Companies, Inc., 700 North Water Street,
Suite 1200, Milwaukee, Wisconsin 53202.
(2) Includes 22,100 shares owned by DFA Investment Dimensions Group Inc. (the
"Fund") and 69,000 shares owned by The DFA Investment Trust Company (the
"Trust"). Persons who are officers of Dimensional Fund Advisors Inc. also
serve as officers of the Fund and the Trust, each an open-end management
investment company registered under the Investment Company Act of 1940. In
their capacities as officers of the Fund and the Trust, these persons vote
the shares owned by the Fund and the Trust. Dimensional Fund Advisors Inc.'s
address is 1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
The information provided with respect to the Fund and the Trust is based on
a Schedule 13G filed with the Commission.
RELATIONSHIPS WITH INDEPENDENT PUBLIC ACCOUNTANTS
It is expected that representatives of Arthur Andersen LLP will be present
at the Weatherford Special Meeting and the Christiana Special Meeting to respond
to appropriate questions of stockholders and make a statement if they so desire.
117
<PAGE> 125
LEGAL MATTERS
The validity of the shares of Weatherford Common Stock to be issued in
connection with the Merger will be passed upon by Fulbright & Jaworski L.L.P.,
1301 McKinney, Suite 5100, Houston, Texas 77010. Uriel E. Dutton, formerly a
director of Weatherford, is a partner of Fulbright & Jaworski L.L.P. Mr. Dutton
currently holds options to purchase 70,000 shares of Weatherford Common Stock,
which options were granted to him pursuant to Weatherford's Amended and Restated
Non-Employee Director Stock Option Plan. In addition, Curtis W. Huff, who has
been engaged as a special consultant to Fulbright & Jaworski L.L.P. on matters
unrelated to Weatherford and its competitors, is Senior Vice President, General
Counsel and Secretary of Weatherford and, pursuant to an agreement with
Weatherford, holds 75,000 restricted shares of Weatherford Common Stock and
options to purchase 200,000 shares of Weatherford Common Stock.
EXPERTS
Weatherford's supplemental restated consolidated financial statements as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997, and historical consolidated financial statements, prior to
the restatement thereof for the merger of EVI, Inc. and Weatherford Enterra,
Inc., as of December 31, 1997 and 1996 and for each of the three years in the
period ended December 31, 1997, incorporated by reference in this Joint Proxy
Statement/Prospectus and the Registration Statement have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
Christiana's consolidated financial statements as of June 30, 1998 and 1997
and for each of the three years in the period ended June 30, 1998, included in
this Joint Proxy Statement/Prospectus and the Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
Weatherford Enterra, Inc.'s consolidated financial statements as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997, incorporated by reference in this Joint Proxy
Statement/Prospectus and the Registration Statement, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports with
respect thereto, and are incorporated by reference herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
GulfMark Retained Assets' (a business segment of GulfMark International,
Inc.) financial statements as of December 31, 1996 and 1995 and for each of the
three years in the period ended December 31, 1996, incorporated by reference in
this Joint Proxy Statement/Prospectus and the Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
The consolidated financial statements of Trico at December 31, 1995 and
1996 and for the years then ended, appearing in Weatherford's Amendment No. 1 to
Form 8-K dated December 2, 1997 on Form 8-K/A, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The combined financial statements for BMW as of March 31, 1997 and 1996,
and for each of the two years in the period ended March 31, 1997, incorporated
by reference in this Joint Proxy Statement/Prospectus and the Registration
Statement have been audited by Arthur Andersen & Co., independent chartered
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
118
<PAGE> 126
STOCKHOLDERS' PROPOSALS
Any proposals of holders of Weatherford Common Stock intended to be
presented at the Annual Meeting of Stockholders of Weatherford to be held in
1999 must be submitted in writing and received by Weatherford, addressed to the
Secretary at 5 Post Oak Park, Suite 1760, Houston, Texas 77027, no later than
January 15, 1999, to be considered for inclusion in the proxy statement and form
of proxy relating to that meeting.
If the Merger is not consummated, any proposals of stockholders of
Christiana intended to be presented at the Annual Meeting of Stockholders of
Christiana to be held in 1998 are required to be received by Christiana,
addressed to the Secretary at 700 North Water Street, Suite 1200, Milwaukee,
Wisconsin 53202, no later than -- , 1998, to be considered for
inclusion in the proxy statement and form of proxy relating to that meeting.
119
<PAGE> 127
CHRISTIANA COMPANIES, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Report of Independent Public Accountants.................... F-2
Consolidated Statements of Earnings for the years ended June
30, 1998, 1997, and 1996.................................. F-3
Consolidated Balance Sheets as of June 30, 1998 and June 30,
1997...................................................... F-4
Consolidated Statements of Shareholders' Equity for the
years ended June 30, 1998, 1997
and 1996.................................................. F-5
Consolidated Statements of Cash Flows for the years ended
June 30, 1998, 1997 and 1996.............................. F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 128
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Christiana Companies, Inc.:
We have audited the accompanying consolidated balance sheets of Christiana
Companies, Inc. (a Wisconsin corporation) and subsidiary as of June 30, 1998 and
1997, and the related consolidated statements of earnings, shareholders' equity
and cash flows for each of the years in the three year period ended June 30,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Christiana Companies, Inc. as of June 30, 1998 and 1997, and the results of
their consolidated operations and their cash flows for each of the three years
in the period ended June 30, 1998, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
September 23, 1998
F-2
<PAGE> 129
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues:
Warehousing and Logistic Services................... $90,179,000 $84,208,000 $77,170,000
----------- ----------- -----------
Costs and Expenses:
Warehousing and Logistic Expenses................... 76,057,000 70,973,000 65,418,000
Selling, General & Administrative Expenses.......... 8,364,000 8,656,000 7,531,000
----------- ----------- -----------
84,421,000 79,629,000 72,949,000
----------- ----------- -----------
Earnings From Operations.............................. 5,758,000 4,579,000 4,221,000
----------- ----------- -----------
Other Income (Expense):
Interest Income..................................... 441,000 516,000 531,000
Interest Expense.................................... (2,691,000) (3,166,000) (3,096,000)
Gain (Loss) on Disposal of Assets................... (17,000) (765,000) 2,818,000
Equity in Earnings of Weatherford................... 7,872,000 10,479,000 1,745,000
Other Expense, Net.................................. (1,436,000) (674,000) (208,000)
----------- ----------- -----------
4,169,000 6,390,000 1,790,000
----------- ----------- -----------
Earnings Before Income Taxes.......................... 9,927,000 10,969,000 6,011,000
Income Tax Provision.................................. 3,920,000 4,306,000 2,408,000
----------- ----------- -----------
Net Earnings.......................................... $ 6,007,000 $ 6,663,000 $ 3,603,000
=========== =========== ===========
Basic Net Earnings Per Share.......................... $ 1.17 $ 1.30 $ 0.69
=========== =========== ===========
Diluted Net Earnings Per Share........................ $ 1.15 $ 1.29 $ 0.69
=========== =========== ===========
Weighted Average Number of Shares Outstanding......... 5,142,963 5,136,630 5,186,679
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE> 130
CHRISTIANA COMPANIES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
AS OF JUNE 30
---------------------------
1998 1997
------------ ------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents................................. $ 5,539,000 $ 2,888,000
Short-Term Investments.................................... -- 4,611,000
Accounts Receivable, Net.................................. 8,342,000 7,649,000
Inventories, Prepaids and Other Assets.................... 1,330,000 978,000
Current Portion of Mortgage Notes Receivable.............. 347,000 --
Deferred Tax Asset........................................ 1,445,000 750,000
------------ ------------
Total Current Assets.............................. 17,003,000 16,876,000
------------ ------------
Long-Term Assets:
Investment in Weatherford International Inc............... 144,206,000 41,257,000
Mortgage Notes Receivable................................. 185,000 1,749,000
Fixed Assets, Net......................................... 71,112,000 75,604,000
Goodwill.................................................. 5,435,000 5,592,000
Other Assets.............................................. 1,300,000 1,277,000
------------ ------------
Total Long-Term Assets............................ 222,238,000 125,479,000
------------ ------------
TOTAL ASSETS...................................... $239,241,000 $142,355,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Line of Credit............................................ $ 239,000 $ --
Current Portion of Long-Term Debt......................... 3,003,000 3,531,000
Accounts Payable.......................................... 3,505,000 3,526,000
Accrued Liabilities....................................... 6,763,000 5,562,000
------------ ------------
Total Current Liabilities......................... 13,510,000 12,619,000
------------ ------------
Long-Term Liabilities:
Long-Term Debt............................................ 27,122,000 36,149,000
Deferred Tax Liability.................................... 61,207,000 20,288,000
Other Liabilities......................................... 1,173,000 1,214,000
------------ ------------
Total Long-Term Liabilities....................... 89,502,000 57,651,000
------------ ------------
Total Liabilities................................. 103,012,000 70,270,000
------------ ------------
Shareholders' Equity:
Preferred Stock........................................... -- --
Common Stock.............................................. 5,209,000 5,196,000
Additional Paid-In Capital................................ 12,347,000 12,022,000
Unrealized Gain on Securities Available for Sale.......... 57,799,000 --
Treasury Stock, at Cost................................... (1,236,000) (1,236,000)
Retained Earnings......................................... 62,110,000 56,103,000
------------ ------------
Total Shareholders' Equity........................ 136,229,000 72,085,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $239,241,000 $142,355,000
============ ============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE> 131
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY(1)(2)
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON
COMMON STOCK TREASURY STOCK ADDITIONAL SECURITIES
---------------------- --------------------- PAID-IN AVAILABLE RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL FOR SALE EARNINGS TOTAL
--------- ---------- ------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, June 30,
1995.................. 5,195,630 $5,196,000 -- $ -- $12,022,000 $ -- $41,492,000 $ 58,710,000
Purchase of Treasury
Stock................. -- -- (59,000) (1,236,000) -- -- -- (1,236,000)
Net Earnings............ -- -- -- -- -- -- 3,603,000 3,603,000
--------- ---------- ------- ----------- ----------- ----------- ----------- ------------
Balance, June 30,
1996.................. 5,195,630 $5,196,000 (59,000) $(1,236,000) $12,022,000 $ -- $45,095,000 $ 61,077,000
Weatherford Stock
Issuance.............. -- -- -- -- -- -- 4,345,000 4,345,000
Net Earnings............ -- -- -- -- -- -- 6,663,000 6,663,000
--------- ---------- ------- ----------- ----------- ----------- ----------- ------------
Balance, June 30,
1997.................. 5,195,630 $5,196,000 (59,000) $(1,236,000) $12,022,000 $ -- $56,103,000 $ 72,085,000
Unrealized Gain on
Securities Available
for Sale.............. -- -- -- -- -- 57,799,000 -- 57,799,000
Exercise of Options..... 12,700 13,000 -- -- 325,000 -- -- 338,000
Net Earnings............ -- -- -- -- -- -- 6,007,000 6,007,000
--------- ---------- ------- ----------- ----------- ----------- ----------- ------------
Balance, June 30,
1998.................. 5,208,330 $5,209,000 (59,000) $(1,236,000) $12,347,000 $57,799,000 $62,110,000 $136,229,000
========= ========== ======= =========== =========== =========== =========== ============
</TABLE>
- ---------------
(1) Preferred stock: $10 par value, 1,000,000 shares authorized, none issued.
(2) Common stock: $1 par value, 12,000,000 shares authorized.
See notes to consolidated financial statements.
F-5
<PAGE> 132
CHRISTIANA COMPANIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30
-----------------------------------------
1998 1997 1996
----------- ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Earnings.......................................... $ 6,007,000 $ 6,663,000 $ 3,603,000
Adjustments to Reconcile Net Earnings to Net Cash
Provided By Operating Activities:
Depreciation and Amortization....................... 6,678,000 7,155,000 7,159,000
(Gain) Loss on Disposal of Assets................... 177,000 765,000 (3,024,000)
Deferred Income Tax (Benefit) Provision............. 2,955,000 4,813,000 (1,084,000)
Equity in Earnings of Weatherford................... (7,872,000) (10,479,000) (1,745,000)
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable.......... (693,000) 645,000 (34,000)
(Increase) Decrease in Inventories.................. 119,000 (166,000) (191,000)
(Increase) Decrease in Prepaids and Other Assets.... (565,000) (303,000) 788,000
Increase (Decrease) in Accounts Payable and Accrued
Liabilities...................................... 1,138,000 90,000 3,091,000
----------- ------------ ------------
Net Cash Provided By Operating Activities............. 7,944,000 9,183,000 8,563,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from (Purchase of) Short-Term Investments,
Net.............................................. 4,611,000 (3,861,000) 2,072,000
Investments Capital Expenditures.................... (2,829,000) (3,488,000) (19,715,000)
(Increase) Decrease in Mortgage Notes Receivable.... 1,217,000 1,565,000 (109,000)
Proceeds from Sales of Assets....................... 686,000 2,743,000 8,894,000
----------- ------------ ------------
Net Cash Provided By (Used In) Investing Activities... 3,685,000 (3,041,000) (8,858,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (Payments) on Line of Credit, Net........ 239,000 (1,354,000) (489,000)
Proceeds from Issuance of Common Stock.............. 338,000 -- --
Proceeds from Notes Payable......................... -- -- 9,011,000
Stock Repurchase.................................... -- -- (1,236,000)
Payments of Long-Term Debt.......................... (9,555,000) (5,628,000) (3,638,000)
----------- ------------ ------------
Net Cash Provided By (Used In) Financing Activities... (8,978,000) (6,982,000) 3,648,000
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................................... 2,651,000 (840,000) 3,353,000
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.......... 2,888,000 3,728,000 375,000
----------- ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR................ $ 5,539,000 $ 2,888,000 $ 3,728,000
=========== ============ ============
Supplemental Disclosures of Cash Flow Information:
Interest Paid....................................... $ 2,683,000 $ 3,190,000 $ 3,228,000
Income Taxes Paid................................... $ 813,000 $ 1,396,000 $ 2,579,000
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE> 133
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(THREE YEARS ENDED JUNE 30, 1997)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Description of Business: At June 30, 1998, Christiana is engaged in
providing public refrigerated and dry (non-refrigerated) warehousing and
logistic services; and owning 3,897,462 shares of Weatherford International,
Inc. common stock which represents an approximate 4% ownership interest.
Revenue Recognition: Transportation revenue is recognized when the goods
are delivered to the customer. Warehousing revenue is recognized as services are
provided. Costs and related expenses are recorded as incurred.
Principles of Consolidation: The consolidated financial statements include
the accounts of Christiana Companies, Inc., ("Christiana") and its wholly-owned
subsidiary (together with Christiana referred to as the "Company"). All material
intercompany transactions have been eliminated in consolidation.
Use of 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 disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Short-Term Investments: Short-term investments consist of U.S. Treasury
securities and commercial paper maturing in less than one year. These
investments are carried at amortized cost, which approximates fair value.
Accounts Receivable: Accounts receivable are presented net of a reserve for
bad debts of $222,000 and $333,000 at June 30, 1998 and 1997, respectively. The
provision for bad debts was $119,000, $227,000 and $123,000 for the years ended
June 30, 1998, 1997 and 1996, respectively.
Inventories: Inventories consist predominately of transportation equipment
repair parts. These items are carried at their lower of FIFO (first-in,
first-out) cost or market value.
Investment in Weatherford International, Inc.: Prior to May 27, 1998, the
Company accounted for its investment in Weatherford under the equity method. As
such, the Company's proportionate share of Weatherford earnings through May 27,
1998, is recorded in the statement of earnings as "Equity in Earnings of
Weatherford International, Inc." On May 27, 1998, Weatherford acquired
Weatherford Enterra, Inc. issuing additional shares of common stock which
reduced the Company's ownership percentage to approximately 4%. As a result of
this reduction in ownership, the Company no longer accounts for this investment
under the equity method; but rather accounts for its investment in Weatherford
using the cost method. Under the cost method, only dividends paid by Weatherford
will be reflected in future earnings of the Company.
The Company has classified its investment in Weatherford as "available-for
sale." Accordingly, the Weatherford shares owned by the Company (3,897,462
shares as of June 30, 1998) are recorded at their fair market value on the
balance sheet. Unrealized gains, net of deferred taxes, in the amount of
$57,799,000, are reflected as an increase to Shareholders' Equity.
Mortgage Notes Receivable: At June 30, 1998, mortgage notes receivable,
derived from condominium sales, totaled $532,000 and accrue interest at rates
ranging from 7.250% to 8.500%.
The principal balance of mortgage notes receivable matures as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
- ------------------
<S> <C>
1999......................... $347,000
2000......................... 3,000
2001......................... 3,000
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
- ------------------
<S> <C>
2002......................... $ 3,000
2003......................... 4,000
Thereafter................... 172,000
</TABLE>
F-7
<PAGE> 134
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
During the years ended June 30, 1998 and 1997, mortgage notes receivable of
$1,170,000 and $1,882,000, respectively, were sold or prepaid.
Fixed Assets: Fixed assets are carried at cost less accumulated
depreciation, which is computed using both straight-line and accelerated methods
for financial reporting purposes. The cost of major renewals and improvements
are capitalized; repair and maintenance costs are expensed as incurred. A
summary of the cost of fixed assets and the estimated useful lives for financial
reporting purposes is as follows:
<TABLE>
<CAPTION>
AT JUNE 30,
--------------------------- ESTIMATED
1998 1997 USEFUL LIVES
------------ ------------ ------------
<S> <C> <C> <C>
Fixed Assets:
Land........................................ $ 3,331,000 $ 3,380,000 --
Machinery and Equipment..................... 53,644,000 53,171,000 5-7 years
Buildings and Improvements.................. 41,488,000 41,534,000 30-32 years
Construction-In-Progress.................... 616,000 451,000 --
Less: Accumulated Depreciation.............. (27,967,000) (22,932,000)
------------ ------------
$ 71,112,000 $ 75,604,000
============ ============
</TABLE>
Goodwill: Goodwill is amortized on a straight-line basis over 40 years
($157,000 in 1998, 1997 and 1996). The accumulated amortization at June 30, 1998
and 1997 was $723,000 and $566,000, respectively. The Company continually
evaluates whether events and circumstances have occurred that indicate the
remaining estimated useful life may warrant revision or that the remaining
balance of goodwill may not be recoverable. When factors indicate that goodwill
should be evaluated for possible impairment, the Company uses an estimate of
undiscounted cash flows over the remaining life of the goodwill measuring
whether the goodwill is impaired. If impaired, a loss is recognized for the
amount that the carrying value exceeds the fair value.
Long-Lived Assets: During fiscal 1997, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-lived Assets and Assets to be Disposed of." Adoption of this standard
did not have a material impact on the Company's financial position or results of
operations. The Company continually evaluates whether events and circumstances
have occurred that may indicate the remaining estimated useful life may warrant
revision or that the remaining balance of long-lived assets may be not
recoverable. When factors indicate that long-lived assets should be evaluated
for possible impairment, the Company uses an estimate of the undiscounted cash
flows over the remaining life of the long-lived assets measuring whether these
assets are impaired. If impaired, a loss is recognized for the amount that the
carrying value exceeds the fair value.
Other Assets: Other Assets primarily represent deferred charges and cash
surrender value of officer's life insurance.
Income Taxes: Deferred income taxes are provided on the temporary
differences in the carrying values of assets and liabilities for financial
reporting and income tax purposes.
Cash and Cash Equivalents: The Company considers all highly liquid
investments with original maturities of less than ninety days to be cash
equivalents.
Reclassifications: Certain reclassifications have been made in the 1997
statements to conform with 1998 presentation.
F-8
<PAGE> 135
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
B. WEATHERFORD INTERNATIONAL, INC. MERGER AGREEMENT:
On December 12, 1997, the Company entered into an agreement with
Weatherford International, Inc. ("Weatherford") whereby Weatherford will
purchase all of the outstanding shares of the Company. The terms of the merger
provide that each Christiana common share will be converted into (i) .7453
shares of Weatherford International, Inc. common stock, (ii) cash in the
approximate amount of $4.00, depending upon the balance of certain assets and
liabilities at the time of closing and (iii) a contingent cash payment of
approximately $1.92 after 5 years, subject to the incurrence of any indemnity
claims by Weatherford during this period.
On August 17, 1998, the shareholders of both Weatherford and Christiana
overwhelmingly approved the Merger agreement and sale of Total Logistic Control
to C2, Inc. However, due to the recent decline in the value of Weatherford's
common stock price, the merger transaction was postponed until the conditions
are met for Christiana's shareholders to not recognize any taxable gain or loss
on their exchange of Christiana shares for Weatherford common stock in the
merger. To meet this requirement, Weatherford's stock price must be
approximately $30.00 per share. As of September 23, 1998, the fair market value
of this investment decreased from $144.2 million at June 30, 1998 to
approximately $97.4 million as a result of market fluctuations.
By its terms, the Merger Agreement may be terminated by either party after
October 31, 1998. Currently, both Christiana and Weatherford are monitoring
Weatherford's stock price and will close the merger on or prior to October 31,
1998, if it exceeds $30.00 per share and all other requirements remain
satisfied.
As of June 30, 1998, the Company has deferred approximately $773,000 of
transaction costs related to the merger. If the merger is not completed, these
costs will be charged to earnings during fiscal 1999 at the time of termination.
Total merger related costs that would ultimately be charged to earnings,
including those amounts deferred at June 30, 1998, are estimated at
approximately $1.8 million.
C. INDEBTEDNESS:
The following is a summary of consolidated indebtedness:
<TABLE>
<CAPTION>
AT JUNE 30,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Christiana Corporate
Notes Payable............................................ $ -- $ 2,286,000
Total Logistic Control, LLC
Revolving Credit Agreement............................... 27,273,000 31,248,000
Notes Payable, Equipment Related......................... 1,088,000 4,382,000
Subordinated Note........................................ 1,764,000 1,764,000
----------- -----------
Subtotal......................................... 30,125,000 39,680,000
Less: Current Portion of Long-Term Debt.................... (3,003,000) (3,531,000)
----------- -----------
Long-Term Debt............................................. $27,122,000 $36,149,000
=========== ===========
</TABLE>
Christiana has a $15,000,000 unsecured line of credit, renewable annually.
Borrowings under this line bear interest at either the London Interbank Offered
Rate ("LIBOR") plus 125 basis points, or prime at the Company's option. No
compensating balances are required under the terms of this credit facility.
There were no borrowings under this credit line in fiscal 1998 or 1997.
Total Logistic Control, LLC ("TLC") has a $5,000,000 line of credit with a
bank, renewable annually. Borrowings under this credit facility bear interest at
either LIBOR plus 200 basis points or the bank's prime
F-9
<PAGE> 136
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
rate (8.5% at June 30, 1998) and are secured by certain accounts receivable. As
of June 30, 1998 and 1997, $239,000 and $0 was outstanding under this line. This
line of credit was terminated on August 5, 1998.
TLC has a revolving credit agreement that provides for borrowings at June
30, 1998 up to $35,000,000. Borrowings under this agreement mature on March 31,
2001 and bear interest, payable monthly at either LIBOR plus 125 basis points
(6.906% at June 30, 1998) or the bank's prime rate (8.5% at June 30, 1998) and
are unsecured. The revolving credit agreement requires, among other things, that
defined levels of net worth and debt service coverage be maintained and
restricts certain activities including limitation on new indebtedness and the
disposition of assets. As of June 30, 1998, the Company was in compliance with
all covenants. No compensating balances are required under the terms of this
credit facility.
TLC's notes payable relate to specific equipment purchases, primarily
transportation and material handling equipment and are secured by specified
assets. These notes bear interest on both fixed and floating terms ranging from
6.375% to 9.37%. No compensating balances are required under the terms of these
credit arrangements. TLC's subordinated note bears interest at 8% and was
incurred in the redemption of a former shareholder's ownership coincident with
the sale to Christiana. This obligation is guaranteed by Christiana.
Future maturities of consolidated indebtedness are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30 TOTAL
---------- -----------
<S> <C>
1999........................................................ $ 3,003,000
2000........................................................ 5,008,000
2001........................................................ 22,114,000
</TABLE>
D. INCOME TAXES:
The Income Tax Provision consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------------------------
1998 1997 1996
---------- ---------- -----------
<S> <C> <C> <C>
Current
Federal...................................... $ 837,000 $ (442,000) $ 3,029,000
State........................................ 128,000 (65,000) 463,000
Deferred....................................... 2,955,000 4,813,000 (1,084,000)
---------- ---------- -----------
$3,920,000 $4,306,000 $ 2,408,000
========== ========== ===========
</TABLE>
F-10
<PAGE> 137
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The components of Deferred Income Taxes are:
<TABLE>
<CAPTION>
AT JUNE 30
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Deferred Tax Assets:
Accrued Expenses and Other Reserves...................... $ 1,722,000 $ 1,612,000
----------- -----------
Total Deferred Tax Assets........................ $ 1,722,000 $ 1,612,000
----------- -----------
Deferred Tax Liabilities:
Tax Over Book Depreciation............................... $12,795,000 $12,329,000
Unrealized Gain on Weatherford shares.................... 37,270,000 --
Equity in Earnings of Weatherford........................ 7,854,000 4,767,000
Weatherford Stock Issuance............................... 2,787,000 2,787,000
Installment Sales........................................ -- 407,000
Other.................................................... 779,000 860,000
----------- -----------
Total Deferred Tax Liability..................... 61,485,000 21,150,000
----------- -----------
Net Deferred Tax Liability................................. $59,763,000 $19,538,000
=========== ===========
</TABLE>
A reconciliation of the statutory Federal income tax rate to the Company's
effective tax rate follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Statutory Federal Income Tax Rate........................... 34% 35% 34%
Increase (Reduction) in Taxes Resulting From:
State Income Tax, Net..................................... 4 5 5
Other, Net................................................ 1 (1) 1
== == ==
39% 39% 40%
== == ==
</TABLE>
E. STOCK OPTIONS AND EMPLOYEE BENEFIT PLAN:
The Company has 295,000 shares of its common stock reserved for issuance
under a stock option plan, which permits the granting of options as well as
appreciation rights and awards. During fiscal 1998, options totaling 16,666 were
cancelled and 12,700 options were exercised. During fiscal 1997, options for a
total of 40,000 shares were granted at exercise prices of $21.50 and $22.25.
During fiscal 1996, options for a total of 100,000 shares were granted at an
exercise price of $24.25 per share. At June 30, 1998 and 1997, 52.8% and 36.0%,
respectively, of total options granted were exercisable. The remaining options
are exercisable over the next six years.
As of June 30, 1998, the total number of stock options outstanding and
those currently exercisable were 254,384 and 134,384, respectively. The
weighted-average exercise price of total stock options outstanding and those
currently exercisable was $27.49 and $28.31, respectively. Additionally, the
weighted average contractual life of stock options outstanding as of June 30,
1998 was 2.2 years.
F-11
<PAGE> 138
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Changes in stock options outstanding are summarized as follows:
<TABLE>
<CAPTION>
NUMBER OF EXERCISE PRICE
OPTIONS PER OPTION
--------- ---------------
<S> <C> <C>
Balance, June 30, 1995................................... 151,250 26.000 - 34.375
Options Granted........................................ 100,000 24.250
Options Cancelled...................................... 7,500 27.125 - 34.375
------- ---------------
Balance, June 30, 1996................................... 243,750 24.250 - 34.375
Options Granted........................................ 40,000 21.500 - 22.250
------- ---------------
Balance, June 30, 1997................................... 283,750 21.500 - 34.375
Options Cancelled...................................... 16,666 22.250
Options Exercised...................................... 12,700 24.250 - 30.150
------- ---------------
Balance, June 30, 1998................................... 254,384 21.500 - 34.375
======= ===============
</TABLE>
Pro forma information regarding net income and earnings per share is
required by Statement of Financial Accounting Standards No. 123 and has been
determined as if the Company had accounted for its stock options under the fair
value method as provided therein. The fair value of each option is estimated on
the date of the grant using an option pricing model with the following
weighted-average assumptions used for options issued in fiscal 1997 and 1996,
respectively: risk-free interest rate of 6.5%; expected remaining lives of 5 and
6 years; expected volatility of 25% and 20%; and no expected dividends.
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. Set forth
below is a summary of the Company's net earnings and earnings per share as
reported and pro forma, as if the fair value based method of accounting defined
in SFAS No. 123 had been applied. The pro forma information is not meant to be
representative of the effects on reported net income for future years, because
as provided by SFAS No. 123, only the effects of awards granted after July 1,
1996 are considered in the pro forma calculation.
<TABLE>
<CAPTION>
JUNE 30, 1998 JUNE 30, 1997
------------------------ ------------------------
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net Earnings................................. $6,007,000 $5,767,000 $6,663,000 $6,282,000
Basic Earnings Per Share..................... $ 1.17 $ 1.12 $ 1.30 $ 1.22
</TABLE>
The Company has a 401(k) plan covering substantially all of its employees.
The costs under this plan have not been material. The Company does not provide
post employment medical or life insurance benefits.
F. COMMITMENTS:
TLC has operating leases for certain warehousing and office facilities.
Rental expense under these leases was $6,812,000, $7,213,000 and $5,479,000 in
fiscal 1998, 1997 and 1996, respectively. At June 30, 1998, future minimum lease
payments under these operating leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
JUNE 30
----------
<S> <C>
1999........................................................ $4,226,000
2000........................................................ 3,765,000
2001........................................................ 3,304,000
2002........................................................ 2,630,000
2003........................................................ 1,825,000
Thereafter.................................................. 8,456,000
</TABLE>
F-12
<PAGE> 139
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
G. EARNINGS PER SHARE:
In fiscal 1998, the Company adopted SFAS No. 128, "Earnings per Share". As
a result, a summary of basic and diluted earnings per share for the years ended
June 30, 1998, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30,
------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Basic Earnings per share:
Net income available to common shareholders.... $6,007,000 $6,663,000 $3,603,000
========== ========== ==========
Average shares of common stock outstanding..... 5,142,963 5,136,630 5,186,679
Basic earnings per share....................... $ 1.17 $ 1.30 $ 0.69
========== ========== ==========
Diluted earnings per share:
Average shares of common stock outstanding..... 5,142,963 5,136,630 5,186,679
Incremental common shares applicable to common
stock options............................... 66,290 22,974 --
---------- ---------- ----------
Average common shares assuming full dilution... 5,209,253 5,159,604 5,186,679
Diluted earnings per share..................... $ 1.15 $ 1.29 $ 0.69
========== ========== ==========
</TABLE>
H. WEATHERFORD INTERNATIONAL, INC. SUMMARY FINANCIAL INFORMATION:
The following represents summarized financial information for Weatherford
International, Inc. Weatherford's fiscal year ends on December 31, 1997. For
more information regarding Weatherford's financial condition and operations,
reference is made to Weatherford's Form 10-K filed with the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------
1997 1996
---------- --------
(IN THOUSANDS)
<S> <C> <C>
Current Assets.............................................. $ 631,025 $558,681
Noncurrent Assets........................................... 735,041 294,162
---------- --------
Total Assets...................................... $1,366,066 $852,843
========== ========
Current Liabilities......................................... $ 314,165 $233,126
Noncurrent Liabilities...................................... 524,668 165,633
Stockholders' Equity........................................ 527,233 454,084
---------- --------
Total Liabilities & Stockholders' Equity.......... $1,366,066 $852,843
========== ========
</TABLE>
F-13
<PAGE> 140
CHRISTIANA COMPANIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SUMMARIZED INCOME STATEMENTS
<TABLE>
<CAPTION>
FOR YEAR ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues.................................................. $ 892,264 $ 478,020 $ 351,587
Operating Expenses........................................ (750,260) (431,733) (319,147)
Other Expenses, Net....................................... (13,350) (14,741) (16,049)
--------- --------- ---------
Income Before Taxes....................................... 128,654 31,546 16,391
Provision for Taxes....................................... (44,959) (7,041) (5,080)
--------- --------- ---------
Income from Continuing Operations......................... 83,695 24,505 11,311
Discontinued Operations, Net of Taxes..................... -- 74,392 --
--------- --------- ---------
Income before Extraordinary Item.......................... 83,695 98,897 11,311
Extraordinary Item........................................ (9,010) (731) --
--------- --------- ---------
Net Income................................................ $ 74,685 $ 98,166 $ 11,311
========= ========= =========
Earnings per Share........................................ $ 1.62 $ 2.41 $ 0.38
========= ========= =========
</TABLE>
During fiscal 1997, Weatherford issued additional stock in a public
offering. The Company's proportionate share of the gain was $4,345,000 and is
reflected as an increase in retained earnings in the consolidated statement of
Shareholders' Equity.
Included in the Company's retained earnings is $16,598,000 of undistributed
earnings related to its' investment in Weatherford.
I. ACCOUNTING PRONOUNCEMENTS:
Effective July 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." This
statement establishes standards for reporting and display of comprehensive
income and its components. Components of comprehensive income are net income and
all other non-shareholder changes in equity. For the quarter ended September 30,
1998, the Company will be required to show components of comprehensive income in
a separate financial statement.
Effective July 1, 1998, the Company adopted SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information." This statement establishes
standards for the way that a public company reports information about operating
segments in its annual financial statements. It also requires the company to
report selected information about operating segments in its interim financial
reports. This statement requires that a public company report financial and
descriptive information about its operating segments based on the way that the
chief operating decision maker organizes segments within the company for making
operating decisions and assessing performance. For the quarter ended September
30, 1998, the Company will be required to disclose segment information in the
notes to financial statements.
F-14
<PAGE> 141
CHRISTIANA COMPANIES, INC.
QUARTERLY FINANCIAL INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------
SEPTEMBER DECEMBER MARCH JUNE TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
FISCAL 1998
Revenues...................... $23,047,000 $23,667,000 $21,865,000 $21,600,000 $90,179,000
Earnings From Operations...... 1,617,000 1,438,000 1,066,000 1,637,000 5,758,000
Earnings Before Taxes......... 2,438,000 1,441,000 3,001,000 3,047,000 9,927,000
Net Earnings.................. 1,485,000 858,000 1,833,000 1,831,000 6,007,000
Basic Earnings Per Share...... $ 0.29 $ 0.17 $ 0.36 $ 0.35 $ 1.17
Diluted Earnings Per Share.... $ 0.29 $ 0.16 $ 0.35 $ 0.35 $ 1.15
FISCAL 1997
Revenues...................... $20,480,000 $20,342,000 $22,450,000 $20,936,000 $84,208,000
Earnings From Operations...... 1,489,000 1,525,000 1,093,000 472,000 4,579,000
Earnings Before Taxes......... 1,767,000 6,126,000* 1,671,000 1,405,000 10,969,000
Net Earnings.................. 1,083,000 3,730,000 1,019,000 831,000 6,663,000
Basic Earnings Per Share...... $ 0.21 $ 0.73 $ 0.20 $ 0.16 $ 1.30
Diluted Earnings per Share.... $ 0.21 $ 0.73 $ 0.20 $ 0.16 $ 1.30
</TABLE>
- ---------------
* Includes $5,715,000 of gain on the sale of Mallard Drilling, a Weatherford
subsidiary.
FIVE YEAR FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Product Sales............ $ -- $ -- $ -- $ 55,239,000 $ 46,428,000
Warehousing and
Logistic Services... 90,179,000 84,208,000 77,170,000 71,642,000 43,725,000
------------ ------------ ------------ ------------ ------------
90,179,000 84,208,000 77,170,000 126,881,000 90,153,000
Net Earnings............... 6,007,000 6,663,000 3,603,000 5,062,000 3,121,000
Basic Earnings Per Share... $ 1.17 $ 1.30 $ 0.69 $ 0.96 $ 0.59
Total Assets............... 239,241,000 142,355,000 131,018,000 121,742,000 147,565,000
Long-Term Liabilities...... 89,502,000 57,651,000 57,926,000 51,388,000 67,154,000
Shareholders' Equity....... 136,229,000 72,085,000 61,077,000 58,710,000 60,088,000
</TABLE>
F-15
<PAGE> 142
APPENDIX A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
WEATHERFORD INTERNATIONAL, INC.,
CHRISTIANA ACQUISITION, INC.,
CHRISTIANA COMPANIES, INC.
AND
C2, INC.
DATED AS OF
OCTOBER 14, 1998
<PAGE> 143
TABLE OF CONTENTS
ARTICLE I
<TABLE>
<S> <C> <C>
THE MERGER.................................................. A-3
1.1 THE MERGER.................................................. A-3
1.2 CLOSING DATE................................................ A-4
1.3 CONSUMMATION OF THE MERGER.................................. A-4
1.4 EFFECTS OF THE MERGER....................................... A-4
1.5 ARTICLES OF INCORPORATION; BYLAWS........................... A-4
1.6 DIRECTORS AND OFFICERS...................................... A-4
1.7 CONVERSION OF SECURITIES.................................... A-4
1.8 EXCHANGE OF CERTIFICATES.................................... A-5
(a) Exchange Agent.......................................... A-5
(b) Payment of Merger Consideration......................... A-5
(c) Retention of Cash Pending Post Closing Audit............ A-5
(d) [Intentionally Omitted]................................. A-5
(e) Exchange Procedure...................................... A-5
(f) Distributions with Respect to Unexchanged Christiana
Shares...................................................... A-6
(g) No Further Ownership Rights in Christiana Shares........ A-6
(h) Escheat................................................. A-6
1.9 TAKING OF NECESSARY ACTION; FURTHER ACTION.................. A-6
ARTICLE II
REPRESENTATIONS AND WARRANTIES.............................. A-7
2.1 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD AND SUB....... A-7
(a) Organization and Compliance with Law.................... A-7
(b) Capitalization.......................................... A-7
(c) Authorization and Validity of Agreement................. A-7
(d) No Approvals or Notices Required; No Conflict........... A-8
(e) Commission Filings; Financial Statements................ A-8
(f) Absence of Certain Charges and Events................... A-8
(g) Tax Matters............................................. A-8
(h) Voting Requirements..................................... A-9
(i) Brokers................................................. A-9
(j) Information Supplied.................................... A-9
2.2 REPRESENTATIONS AND WARRANTIES OF CHRISTIANA AND C2......... A-9
(a) Organization............................................ A-9
(b) Capitalization.......................................... A-10
(c) Authorization and Validity of Agreement................. A-11
(d) No Approvals or Notices Required; No Conflict with
Instruments
to which Christiana is a Party.............................. A-11
(e) Commission Filings; Financial Statements................ A-12
(f) Conduct of Business in the Ordinary Course; Absence of
Certain Changes and Events.................................. A-12
(g) Litigation.............................................. A-13
(h) Employee Benefit Plans.................................. A-13
(i) Taxes................................................... A-14
(j) Environmental Matters................................... A-15
(k) Investment Company...................................... A-16
(l) Severance Payments...................................... A-16
(m) Voting Requirements..................................... A-16
(n) Brokers................................................. A-16
(o) Assets and Liabilities at Closing....................... A-16
(p) Compliance with Laws.................................... A-17
(q) Contracts............................................... A-17
(r) Title to Property....................................... A-18
</TABLE>
A-1
<PAGE> 144
<TABLE>
<S> <C> <C>
(s) Insurance Policies...................................... A-18
(t) Loans................................................... A-18
(u) No Fraudulent Transfer.................................. A-18
(v) Information Supplied.................................... A-19
ARTICLE III
COVENANTS OF CHRISTIANA..................................... A-19
3.1 CONDUCT OF BUSINESS BY CHRISTIANA PENDING THE MERGER........ A-19
3.2 CASH REQUIREMENTS........................................... A-21
3.3 AFFILIATES' AGREEMENTS...................................... A-22
3.4 WEATHERFORD COMMON STOCK PURCHASES.......................... A-22
ARTICLE IV
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME........ A-22
4.1 RESERVATION OF WEATHERFORD STOCK............................ A-22
4.2 CONDUCT OF WEATHERFORD PENDING THE MERGER................... A-22
4.3 STOCK EXCHANGE LISTING...................................... A-22
ARTICLE V
ADDITIONAL AGREEMENTS....................................... A-22
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.... A-22
5.2 ACCOUNTANTS LETTER.......................................... A-23
5.3 MEETINGS OF STOCKHOLDERS.................................... A-23
5.4 FILINGS; CONSENTS; REASONABLE EFFORTS....................... A-23
5.5 NOTIFICATION OF CERTAIN MATTERS............................. A-24
5.6 EXPENSES.................................................... A-24
5.7 CHRISTIANA'S EMPLOYEE BENEFITS.............................. A-24
5.8 LIQUIDATION OR MERGER OF CHRISTIANA......................... A-24
ARTICLE VI
CONDITIONS.................................................. A-25
CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
6.1 MERGER...................................................... A-25
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD......... A-25
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF CHRISTIANA.......... A-27
ARTICLE VII
MISCELLANEOUS............................................... A-27
7.1 TERMINATION................................................. A-27
7.2 EFFECT OF TERMINATION....................................... A-28
7.3 WAIVER AND AMENDMENT........................................ A-28
7.4 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES............... A-28
7.5 PUBLIC STATEMENTS........................................... A-29
7.6 ASSIGNMENT.................................................. A-29
7.7 NOTICES..................................................... A-29
7.8 GOVERNING LAW............................................... A-30
7.9 ARBITRATION................................................. A-30
7.10 SEVERABILITY................................................ A-31
7.11 COUNTERPARTS................................................ A-31
7.12 HEADINGS.................................................... A-31
7.13 CONFIDENTIALITY AGREEMENT................................... A-31
7.14 ENTIRE AGREEMENT: THIRD PARTY BENEFICIARIES................. A-31
7.15 DISCLOSURE LETTERS.......................................... A-31
</TABLE>
LIST OF EXHIBITS
Exhibit A -- Logistic Purchase Agreement
Exhibit B -- Amended and Restated Articles of Incorporation of Christiana
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of October
14, 1998 (this "Agreement"), is made and entered into by and among WEATHERFORD
INTERNATIONAL, INC. (formerly known as EVI, Inc.), a Delaware corporation
("Weatherford"), CHRISTIANA ACQUISITION, INC., a Wisconsin corporation and
wholly owned subsidiary of Weatherford ("Sub"), CHRISTIANA COMPANIES, INC., a
Wisconsin corporation ("Christiana"), and C2, INC., a Wisconsin corporation
("C2").
WHEREAS, Weatherford, Sub, Christiana and C2 entered into an Agreement and
Plan of Merger, dated as of December 12, 1997, and an Amendment No. 1 to
Agreement and Plan of Merger and Logistic Purchase Agreement dated May 26, 1998;
WHEREAS, Weatherford, Sub, Christiana and C2 desire to amend and restate
the Agreement and Plan of Merger to provide for additional amendments set forth
herein;
WHEREAS, subject to and in accordance with the terms and conditions of this
Agreement, the respective Boards of Directors of Weatherford, Sub and
Christiana, and Weatherford as sole stockholder of Sub, have approved the merger
of Sub with and into Christiana (the "Merger"), whereby each issued and
outstanding share of common stock, $1.00 par value, of Christiana ("Christiana
Common Stock") not owned directly or indirectly by Christiana will be converted
into the right to receive (i) common stock, $1.00 par value, of Weatherford
("Weatherford Common Stock") plus (ii) the Cash Consideration Per Share (as
defined in Section 1.7(e));
WHEREAS, as a condition to the Merger, Christiana will sell to C2
two-thirds of the interest (the "Logistic Interest") in Total Logistic Control,
LLC, a Delaware limited liability company and wholly owned subsidiary of
Christiana ("Logistic"), in consideration for $10,666,667 in cash (the "Logistic
Sale") pursuant to a Purchase Agreement, as amended by Amendment No. 1 to
Agreement and Plan of Merger and Logistic Purchase Agreement, dated May 26, 1998
and Amendment No. 2 to Logistic Purchase Agreement dated October 14, 1998,
between Christiana, C2, EVI, Inc. (now known as Weatherford International, Inc.)
and Sub in substantially the form attached hereto as Exhibit A (the "Logistic
Purchase Agreement");
WHEREAS, immediately after the Effective Time, Christiana will only hold
the Christiana Assets, as such terms are hereinafter defined in Sections 1.3 and
2.2(o);
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) by
reason of Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended
(the "Code"); and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to and in accordance with the terms and conditions
of this Agreement and in accordance with the Wisconsin Business Corporation Law
("WBCL"), at the Effective Time (as defined in Section 1.3), Sub shall be merged
with and into Christiana. As a result of the Merger, the separate corporate
existence of Sub shall cease and Christiana shall continue as the surviving
corporation (sometimes referred to herein as the "Surviving Corporation"), and
all the properties, rights, privileges, powers and franchises of Sub and
Christiana shall vest in the Surviving Corporation, without any transfer or
assignment having occurred, and certain liabilities, debts and duties of Sub and
Christiana shall attach to the Surviving Corporation, all in accordance with the
WBCL and subject to the provisions of the Logistic Purchase Agreement.
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1.2 CLOSING DATE. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Fulbright &
Jaworski L.L.P., Houston, Texas, as soon as practicable after the satisfaction
or waiver of the conditions set forth in Article VI hereof or at such other time
and place and on such other date as Weatherford and Christiana shall agree;
provided that the closing conditions set forth in Article VI hereof shall have
been satisfied or waived at or prior to such time. The date on which the Closing
occurs is herein referred to as the "Closing Date".
1.3 CONSUMMATION OF THE MERGER. As soon as practicable on the Closing
Date, the parties hereto will cause the Merger to be consummated by filing with
the Department of Financial Institutions of the State of Wisconsin the Articles
of Merger in such form as required by, and executed in accordance with, the
relevant provisions of the WBCL. The "Effective Time" of the Merger, as that
term is used in this Agreement, shall mean such time as the Articles of Merger
are duly filed with the Department of Financial Institutions of the State of
Wisconsin or at such later time (not to exceed seven days from the date the
Articles of Merger are filed) as is specified in the Articles of Merger pursuant
to the mutual agreement of Weatherford and Christiana.
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
the applicable provisions of the WBCL. If at any time after the Effective Time
of the Merger, the Surviving Corporation shall consider or be advised that any
further assignments or assurances in law or otherwise are necessary or desirable
to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, all rights, title and interests in all real estate and other
property and all privileges, powers and franchises of Christiana and Sub, the
Surviving Corporation and its proper officers and directors, in the name and on
behalf of Christiana and Sub, shall execute and deliver all such proper deeds,
assignments and assurances in law and do all things necessary and proper to
vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purpose of this Agreement, and the
proper officers and directors of the Surviving Corporation are fully authorized
in the name of Christiana or otherwise to take any and all such action.
1.5 ARTICLES OF INCORPORATION; BYLAWS. The Articles of Incorporation of
Christiana, as amended and restated by the amendment set forth in Exhibit B
attached hereto, shall be the Articles of Incorporation of the Surviving
Corporation and thereafter shall continue to be its Articles of Incorporation
until amended as provided therein or under the WBCL. The bylaws of Sub, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation and thereafter shall continue to be its bylaws until
amended as provided therein or under the WBCL.
1.6 DIRECTORS AND OFFICERS. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation at and after
the Effective Time, each to hold office in accordance with the Articles of
Incorporation and bylaws of the Surviving Corporation, and the officers of Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation at and after the Effective Time, in each case until the earlier of
their resignation or removal or their respective successors are duly elected or
appointed and qualified.
1.7 CONVERSION OF SECURITIES. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any
further action on the part of Weatherford, Christiana, Sub or their
stockholders:
(a) Subject to adjustments pursuant to Section 1.7(e) hereof, each
share of Christiana Common Stock issued and outstanding immediately prior
to the Effective Time (the "Christiana Shares") shall be converted into the
right to receive (i) a fraction of a share of Weatherford Common Stock
equal to the number of shares of Weatherford Common Stock held by
Christiana at the Effective Time divided by the number of shares of
Christiana Common Stock outstanding immediately prior to the Effective Time
(the "Stock Exchange Ratio") plus (ii) the Cash Consideration Per Share as
defined in Section 1.7(e); provided, however, that no fractional shares of
Weatherford Common Stock shall be issued and, in lieu thereof, all
fractional shares of Weatherford Common Stock that would otherwise be
issuable in the Merger shall be rounded to the nearest whole share of
Weatherford Common Stock. Except as set forth in the preceding sentence
with respect to the Cash Consideration Per Share, no other consideration
will be paid to the Christiana stockholders.
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(b) Each Christiana Share owned directly or indirectly by Christiana
as treasury stock and each Christiana Share owned by Sub, Weatherford or
any direct or indirect wholly-owned subsidiary of Weatherford or of
Christiana immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment or other
consideration shall be made or paid with respect thereto.
(c) Each share of common stock, $1.00 par value, of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
one fully paid and nonassessable share of common stock, $1.00 par value, of
the Surviving Corporation.
(d) [Intentionally Omitted]
(e) The "Cash Consideration Per Share", shall equal the quotient of
the Christiana Net Cash divided by 5,149,330. The "Christiana Net Cash"
shall mean and be equal to all cash on hand of Christiana at the Closing
minus (ii) an amount of cash necessary to pay the Christiana Liabilities in
full without giving effect to the use or application of any tax deductions
relating to the exercise of options or any tax benefits that may be
realized as a result of amended Tax Returns. The "Cash Consideration Per
Share" is based on 5,149,330 shares of Christiana Common Stock being issued
and outstanding immediately prior to the Effective Time. In the event the
number of shares of Christiana Common Stock outstanding immediately prior
to the Effective Time is greater or less than 5,149,330, the Cash
Consideration Per Share shall be adjusted to equal the quotient of the
Christiana Net Cash divided by the number of shares of Christiana Common
Stock issued and outstanding immediately prior to the Effective Time.
1.8 EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Prior to the Effective Time of the Merger,
Weatherford shall select a bank or trust company to act as exchange agent
(the "Exchange Agent") for the issue of shares of Weatherford Common Stock
upon surrender of certificates representing Christiana Shares.
(b) Payment of Merger Consideration. Weatherford shall take all steps
necessary to enable and cause there to be provided to the Exchange Agent on
a timely basis, as and when needed after the Effective Time of the Merger,
certificates for the shares of Weatherford Common Stock to be issued upon
the conversion of the Christiana Shares pursuant to Section 1.7 and the
cash necessary to be issued for the Cash Consideration Per Share.
(c) Retention of Cash Pending Post Closing Audit. Within 30 days
following the Effective Date, Weatherford shall (i) complete a post closing
audit by Weatherford of the Christiana Net Cash and (ii) pay to the
Exchange Agent on behalf of the holders of the Christiana Shares the Cash
Consideration Per Share in respect of such Christiana Shares subject to the
prior presentation of the certificates that immediately prior to the
Effective Time represented the outstanding Christiana Shares (the
"Certificates").
(d) [Intentionally Omitted]
(e) Exchange Procedure. As soon as reasonably practical after the
Effective Time of the Merger, the Exchange Agent shall mail to each holder
of record of a Certificate or Certificates, other than Weatherford, Sub and
Christiana and any directly or indirectly wholly owned subsidiary of
Weatherford, Sub or Christiana, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in a form and have such other provisions as
Weatherford and Sub may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the
certificates representing the shares of Weatherford Common Stock and the
Cash Consideration Per Share. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by the Surviving Corporation, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate or certificates
representing the number of whole shares of Weatherford Common Stock into
which the Christiana Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 1.7 and the Cash
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Consideration Per Share as provided in Section 1.8(c), and the Certificate
so surrendered shall forthwith be canceled. If the shares of Weatherford
Common Stock are to be issued to an individual, corporation, limited
liability company, partnership, governmental authority or any other entity
(a "Person"), other than the person in whose name the Certificate so
surrendered is registered, it shall be a condition of exchange that such
Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the Person requesting such exchange shall pay any
transfer or other taxes required by reason of the exchange to a Person
other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 1.8, each
Certificate shall be deemed at any time after the Effective Time of the
Merger to represent only the right to receive upon such surrender the
number of shares of Weatherford Common Stock and the Cash Consideration Per
Share payable in respect of the Christiana Shares pursuant to Section 1.7.
The Exchange Agent shall not be entitled to vote or exercise any rights of
ownership with respect to the shares of Weatherford Common Stock held by it
from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect thereto
for the account of Persons entitled thereto. Any unexchanged shares of
Weatherford Common Stock issuable pursuant to the Merger in respect of the
Christiana Shares shall be issued in the name of the Exchange Agent pending
the receipt by the Exchange Agent of Certificates.
(f) Distributions with Respect to Unexchanged Christiana Shares. No
dividends or other distributions declared or made after the Effective Time
of the Merger with respect to the shares of Weatherford Common Stock with a
record date after the Effective Time of the Merger shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of
Weatherford Common Stock represented thereby and the Cash Consideration Per
Share shall not be paid until the holder of record of such Certificate
shall surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the
record holder of the Certificates representing the shares of Weatherford
Common Stock issued in exchange therefor, without interest, (i) the amount
of dividends or other distributions with a record date after the Effective
Time of the Merger theretofore paid with respect to such whole shares of
Weatherford Common Stock, as the case may be, (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record
date after the Effective Time of the Merger but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole
shares of Weatherford Common Stock and (iii) the Cash Consideration Per
Share at the appropriate payment date as provided in this Section 1.8.
(g) No Further Ownership Rights in Christiana Shares. All shares of
Weatherford Common Stock issued upon the surrender of Certificates in
accordance with the terms of this Article I, together with any dividends
payable thereon to the extent contemplated by this Section 1.8 and the
rights to receive the Cash Consideration Per Share as provided herein,
shall be deemed to have been exchanged and paid in full satisfaction of all
rights pertaining to the Christiana Shares theretofore represented by such
Certificates and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Christiana Shares
that were outstanding immediately prior to the Effective Time of the
Merger. If, after the Effective Time of the Merger, Certificates are
presented to the Surviving Corporation for any reason, they shall be
canceled and exchanged as provided in this Article I.
(h) Escheat. None of Weatherford, Sub, Christiana, the Surviving
Corporation or their transfer agents shall be liable to a holder of the
Christiana Shares for any amount properly paid to a public official
pursuant to applicable property, escheat or similar laws.
1.9 TAKING OF NECESSARY ACTION; FURTHER ACTION. The parties hereto shall
take all such reasonable and lawful action as may be necessary or appropriate in
order to effectuate the Merger and the Logistic Sale as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement or the Logistic Sale,
and to vest the Surviving Corporation with full right, title and possession to
all assets, property, rights, privileges, powers and franchises of Christiana or
Sub as of the Effective Time, such corporations shall direct their respective
officers and directors to take all such lawful and necessary action.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD AND SUB. Weatherford and
Sub hereby jointly and severally represent and warrant to Christiana that:
(a) Organization and Compliance with Law. Weatherford and Sub are
corporations duly incorporated, validly existing and in good standing under
the laws of the states of Delaware and Wisconsin, respectively. Each of
Weatherford and Sub has all requisite corporate power and corporate
authority to own, lease and operate all of its properties and assets and to
carry on its business as now being conducted, except where the failure to
be so organized, existing or in good standing would not have a material
adverse effect on the financial condition of Weatherford and its
subsidiaries (the "Weatherford Subsidiaries"), taken as a whole (a
"Weatherford MAE"). Each of Weatherford and Sub is duly qualified to do
business, and is in good standing, in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be duly qualified would not have a
Weatherford MAE. Each of Weatherford and Sub is in compliance with all
applicable laws, judgments, orders, rules and regulations, except where
such failure would not have a Weatherford MAE. Weatherford has heretofore
delivered to Christiana true and complete copies of Weatherford's Amended
and Restated Certificate of Incorporation (the "Weatherford Certificate"),
and Sub's Articles of Incorporation and their respective bylaws as in
existence on the date hereof.
(b) Capitalization.
(i) The authorized capital stock of Weatherford consists of
250,000,000 shares of Weatherford Common Stock, $1.00 par value, and
3,000,000 shares of preferred stock, $1.00 par value ("Weatherford
Preferred Stock"). As of July 10, 1998, there were 97,511,967 shares of
Weatherford Common Stock issued and outstanding. As of July 10, 1998,
(i) 5,031,250 shares of Weatherford Common Stock were reserved for
issuance pursuant to the conversion provisions of Weatherford's 5%
Convertible Subordinated Preferred Equivalent Debentures due 2027, (ii)
3,900,000 shares of Weatherford Common Stock were reserved for issuance
pursuant to pending or proposed acquisitions, (iii) 1,577,410 shares of
Weatherford Common Stock were remaining to be exchanged for shares of
stock in connection with various completed acquisitions and (iv)
3,269,376 shares of Weatherford Common Stock were reserved for issuance
pursuant to Weatherford's employee and director benefit plans and
arrangements, of which 1,897,704 shares of Weatherford Common Stock were
reserved for issuance upon exercise of outstanding options. At July 10,
1998, there were no shares of Weatherford Preferred Stock issued or
outstanding. No holder of Weatherford Common Stock is entitled to
preemptive rights under Delaware law or Weatherford's Certificate of
Incorporation.
(ii) As of the date hereof, the authorized capital stock of Sub
consists of 1,000 shares of common stock, $1.00 par value, all of which
are validly issued, fully paid and nonassessable and are owned by
Weatherford.
(iii) Each share of Weatherford Common Stock to be issued hereunder
as a result of the Merger will be fully paid and non-assessable upon
issuance.
(c) Authorization and Validity of Agreement. The execution and
delivery by Weatherford and Sub of this Agreement and the consummation by
each of them of the transactions contemplated hereby have been duly
authorized by all necessary corporate action (subject only, with respect to
the Merger, to approval of this Agreement by each of their stockholders as
provided for in Section 5.3). On or prior to the date hereof, the Board of
Directors of Weatherford or duly authorized committee thereof has
determined to recommend approval of the Merger to the stockholders of
Weatherford, and such determination is in effect on the date hereof. This
Agreement has been duly executed and delivered by Weatherford and Sub and
is the valid and binding obligation of Weatherford and Sub, enforceable
against Weatherford and Sub in accordance with its terms.
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<PAGE> 150
(d) No Approvals or Notices Required; No Conflict. Neither the
execution and delivery of this Agreement nor the performance by Weatherford
or Sub of its obligations hereunder, nor the consummation of the
transactions contemplated hereby by Weatherford and Sub, will (i) conflict
with the Weatherford Certificate or the bylaws of Weatherford or Sub; (ii)
assuming satisfaction of the requirements set forth in clause (iii) below,
violate any provision of law applicable to Weatherford or any of the
Weatherford Subsidiaries; (iii) except for (A) requirements of Federal or
state securities laws, (B) requirements arising out of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (C)
requirements of notice filings in such foreign jurisdictions as may be
applicable, and (D) the filing of Articles of Merger by Sub in accordance
with the WBCL, require any consent or approval of, or filing with or notice
to, any public body or authority, domestic or foreign, under any provision
of law applicable to Weatherford or any of the Weatherford Subsidiaries; or
(iv) require any consent, approval or notice under, or violate, breach, be
in conflict with or constitute a default (or an event that, with notice or
lapse of time or both, would constitute a default) under, or permit the
termination of any provision of, or result in the creation or imposition of
any lien, mortgage, pledge, security interest, restriction on transfer,
option, charge, right of any third Person or any other encumbrance of any
nature (a "Lien") upon any properties, assets or business of Weatherford or
any of the Weatherford Subsidiaries under, any note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument or other agreement or commitment or any order,
judgment or decree to which Weatherford or any of the Weatherford
Subsidiaries is a party or by which Weatherford or any of the Weatherford
Subsidiaries or any of its or their assets or properties is bound or
encumbered, except (A) those that have already been given, obtained or
filed and (B) those that, in the aggregate, would not have a Weatherford
MAE.
(e) Commission Filings; Financial Statements. Weatherford has filed
all reports and documents required to filed with the Securities and
Exchange Commission (the "Commission") since December 31, 1995. All
reports, registration statements and other filings (including all notes,
exhibits and schedules thereto and documents incorporated by reference
therein) filed by Weatherford with the Commission since December 31, 1995,
through the date of this Agreement, together with any amendments thereto,
are sometimes collectively referred to as the "Weatherford Commission
Filings". Weatherford has heretofore delivered to, or made accessible to,
Christiana copies of the Weatherford Commission Filings. As of the
respective dates of their filing with the Commission, the Weatherford
Commission Filings complied in all material respects with the applicable
requirements of the Securities Act of 1934 (the "Securities Act"), the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations of the Commission thereunder, and did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
(f) Absence of Certain Charges and Events. Since December 31, 1997,
except as contemplated by this Agreement or as disclosed in the Weatherford
Commission Filings filed with the Commission prior to the date hereof,
there has been no Weatherford MAE.
(g) Tax Matters.
(i) Except as set forth in Section 2.1(g) of the disclosure letter
delivered by Weatherford to Christiana on the date hereof (the
"Weatherford Disclosure Letter"), all returns and reports, including,
without limitation, information and withholding returns and reports
("Tax Returns"), of or relating to any foreign, federal, state or local
tax, assessment or other governmental charge ("Taxes" or a "Tax") that
are required to be filed on or before the Closing Date by or with
respect to Weatherford or any of the Weatherford Subsidiaries, or any
other corporation that is or was a member of an affiliated group (within
the meaning of Section 1504(a) of the Code) of corporations of which
Weatherford was a member for any period ending on or prior to the
Closing Date, have been or will be duly and timely filed, and all Taxes,
including interest and penalties, due and payable pursuant to such Tax
Returns have been paid or, except as set forth in Section 2.1(g) of the
Weatherford Disclosure Letter, adequately provided for in reserves
established by Weatherford, except where the failure to file, pay or
provide for would not have a Weatherford MAE.
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(ii) Weatherford has no present plan or intention after the Merger
to (A) liquidate the Surviving Corporation, (B) merge the Surviving
Corporation with or into another corporation, (C) sell or otherwise
dispose of the stock of the Surviving Corporation, (D) cause or permit
the Surviving Corporation to sell or otherwise dispose of any of the
assets of Christiana or the assets of Sub vested in the Surviving
Corporation except for dispositions made in the ordinary course of
business or transfers of assets to a corporation controlled by the
Surviving Corporation within the meaning of Section 368(a)(2)(C) of the
Code, or (E) reacquire any of the stock issued to the Christiana
stockholders pursuant to the Merger.
(iii) Weatherford is not an investment company as defined in
sec.368(a)(2)(F)(iii) and (iv) of the Code or as defined in the
Investment Company Act of 1940 and the rules and regulations promulgated
thereunder.
(h) Voting Requirements. The affirmative vote of the holders of a
majority of the shares of Weatherford Common Stock present at the special
stockholders' meeting and entitled to vote is the only vote of the holders
and any class or series of the capital stock of Weatherford necessary to
approve this Agreement and the Merger.
(i) Brokers. Except for fees and expenses payable by Weatherford to
Morgan Stanley & Co. Incorporated, no broker, investment banker, or other
Person acting on behalf of Weatherford is or will be entitled to any
broker's, finder's or other similar fee or commission in connection with
the transactions contemplated by this Agreement.
(j) Information Supplied. None of the information supplied or to be
supplied by Weatherford for inclusion or incorporation by reference in (i)
the Registration Statement (as defined in Section 5.1) will, at the time
the Registration Statement is filed with the Commission, and at any time it
is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and (ii) the Proxy Statement (as
defined in Section 2.2(d)) will, at the date the Proxy Statement is first
mailed to Weatherford's stockholders and at the time of the Weatherford
Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy Statement will comply
as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder. For purposes of this
Agreement, the parties agree that the statements made and information in
the Registration Statement and the Proxy Statement relating to the Federal
income tax consequences of the transactions contemplated hereby shall be
deemed to be supplied by Christiana and not by Weatherford or Sub.
2.2 REPRESENTATIONS AND WARRANTIES OF CHRISTIANA AND C2. Each of
Christiana and C2 hereby, jointly and severally, represents and warrants to
Weatherford that:
(a) Organization. Each of Christiana and C2 is a corporation duly
organized, validly existing and in good standing under the laws of the
state of Wisconsin. Logistic is a limited liability company duly organized,
validly existing and in good standing under the laws of the state of
Delaware. Each of Christiana, C2 and Logistic has all requisite corporate
(or equivalent) power and corporate (or equivalent) authority and all
necessary governmental authorizations to own, lease and operate all of its
properties and assets and to carry on its business as now being conducted,
except where the failure to be so organized, existing or in good standing
or to have such governmental authority would not (i) have a material
adverse effect on the financial condition of Christiana or Logistic after
giving effect to the Logistic Sale or (ii) prevent or adversely affect the
ability of Christiana and C2 to perform and comply with their respective
obligations under this Agreement, the Logistic Purchase Agreement or any
other agreement to be executed and delivered in connection with the
transactions contemplated hereby or thereby (a "Christiana MAE"). Except as
set forth in Section 2.2(a) of the disclosure letter delivered by
Christiana to Weatherford on the date hereof (the "Christiana Disclosure
Letter"), each of Christiana,
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Logistic and C2 is duly qualified as a foreign corporation or limited
liability company to do business, and is in good standing, in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be duly qualified does
not and would not have a Christiana MAE. Each of Christiana, Logistic and
C2 is in compliance with all applicable laws, judgments, orders, rules and
regulations, domestic and foreign, except where failure to be in such
compliance would not have a Christiana MAE. Christiana has heretofore
delivered to Weatherford true and complete copies of (i) Christiana's
Articles of Incorporation (the "Christiana Articles") and bylaws, (ii)
Logistic's Certificate of Organization and operating agreement and (iii)
C2's Articles of Incorporation and operating agreement, in each case as in
existence on the date hereof.
(b) Capitalization.
(i) The authorized capital stock of Christiana consists of
12,000,000 shares of Christiana Common Stock, $1.00 par value, and
1,000,000 shares of preferred stock, $10.00 par value ("Christiana
Preferred Stock"). As of July 10, 1998, there were 5,149,330 shares of
Christiana Common Stock issued and outstanding and no shares of
Christiana Common Stock were held as treasury shares. There are no
outstanding shares of Christiana Preferred Stock. No shares of
Christiana Common Stock have been reserved for issuance pursuant to the
stock option plan described in Section 2.2(b)(iii). All issued and
outstanding shares of Christiana Common Stock are validly issued, fully
paid and nonassessable (except as set forth in Wis Stats sec. 180.0622)
and no holder thereof is entitled to preemptive rights. Christiana is
not a party to, and is not aware of, any voting agreement, voting trust
or similar agreement or arrangement relating to any class or series of
its capital stock, or any agreement or arrangement providing for
registration rights with respect to any capital stock or other
securities of Christiana.
(ii) Christiana owns 100% of the membership interests in Logistic.
All issued and outstanding membership interests of Logistic are validly
issued, fully paid and nonassessable and no holder thereof is entitled
to preemptive rights. Logistic is not a party to, any voting agreement,
voting trust or similar agreement or arrangement relating to its
membership interests, or any agreement or arrangement providing for
registration rights with respect to any membership interests or other
interests of Logistic.
(iii) As of the date hereof, there are outstanding options (the
"Christiana Options") to purchase an aggregate of 267,083 shares of
Christiana Common Stock under the 1995 Stock Option Plan (the
"Christiana Option Plan"). All Christiana Options shall be terminated or
exercised prior to the Effective Time. As of the Effective Time, there
will be no options outstanding under the Christiana Option Plan. There
are not now (other than as set forth in this Section 2.2(b)), and at the
Effective Time there will not be, any (A) shares of capital stock or
other equity securities of Christiana issuable pursuant to the exercise
of Christiana Options or (B) outstanding options, warrants, scrip,
rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any class of capital stock of Christiana, or
contracts, understandings or arrangements to which Christiana is a
party, or by which it is or may be bound, to issue additional shares of
its capital stock or options, warrants, scrip or rights to subscribe
for, or securities or rights convertible into or exchangeable for, any
additional shares of its capital stock.
(iv) Section 2.2(b)(iv) of the Christiana Disclosure Letter sets
forth a list of all corporations, partnerships, limited liability
companies and other entities of which Christiana owns directly or
indirectly, an equity interest (such entities, excluding Weatherford and
its subsidiaries, referred to herein as the "Christiana Subsidiaries").
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(c) Authorization and Validity of Agreement. Each of Christiana and C2
has all requisite corporate power and authority to enter into this
Agreement, the Logistic Purchase Agreement and the other agreements and
instruments contemplated to be executed and delivered in connection with
the Merger and the Logistic Sale (the Logistic Purchase Agreement and such
other agreements and instruments contemplated to be executed and delivered
in connection with the Merger and the Logistic Sale being referred to as
the "Other Agreements") and to perform its obligations hereunder and
thereunder. The execution and delivery by Christiana and C2 of this
Agreement and the Other Agreements to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action (subject only, with
respect to the Merger and the Logistic Sale, to approval of this Agreement
and the Logistic Sale by the Christiana stockholders as provided for in
Section 5.3). On or prior to the date hereof the Board of Directors of
Christiana has determined to recommend approval of the Merger and the
Logistic Sale to the stockholders of Christiana, and such determination is
in effect as of the date hereof. This Agreement has been duly executed and
delivered by Christiana and C2 and is the valid and binding obligation of
Christiana and C2 enforceable against it in accordance with its terms. The
Other Agreements, when executed and delivered by Christiana and C2, as
applicable, will constitute valid and binding obligations of Christiana and
C2, enforceable against them in accordance with their respective terms.
(d) No Approvals or Notices Required; No Conflict with Instruments to
which Christiana is a Party. The execution and delivery of this Agreement
and the Other Agreements do not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions hereof
and thereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of or "put"
right with respect to any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of Christiana, Logistic, C2 or any of their subsidiaries under, any
provision of (i) the Christiana Articles or bylaws of Christiana, the
Certificate of Organization or operating agreement of Logistic or the
Articles of Incorporation or bylaws of C2, or any provision of the
comparable organizational documents of its subsidiaries, (ii) except as set
forth in Section 2.2(d) of the Christiana Disclosure Letter, any loan or
credit agreement, note, bond, mortgage, indenture, lease, guaranty or other
financial assurance agreement or other agreement, instrument, permit,
concession, franchise or license applicable to Christiana or its properties
or assets, (iii) except as set forth in Section 2.2(d) of the Christiana
Disclosure Letter, any loan or credit agreement, note, bond, mortgage,
indenture, lease, guaranty or other financial assurance agreement or other
agreement, instrument, permit, concession, franchise or license applicable
to Logistic or any other Christiana Subsidiary, or their respective
properties or assets and (iv) subject to governmental filing and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation or arbitration award applicable
to Christiana, Logistic or C2 or any of their subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not have a Christiana MAE. No
consent, approval, order or authorization of, or registration, declaration
or filing with, any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign, including local
authorities (a "Governmental Entity"), is required by or with respect to
Christiana, Logistic or C2 or any of their subsidiaries in connection with
the execution and delivery of this Agreement by Christiana and C2 or the
consummation by Christiana of the transactions contemplated hereby, except
for (i) the filing of a pre-merger notification and report form by
Christiana under the HSR Act, (ii) the filing with the Commission of (A) a
proxy or information statement relating to Stockholder Approval (such proxy
or information statement as amended or supplemented from time to time, the
"Proxy Statement"), and (B) such reports under Section 13(a) of the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, (iii) the filing of the Certificate of
Merger with the Wisconsin Secretary of State with respect to the Merger as
provided in the WBCL and appropriate documents with the relevant
authorities of other states in which Christiana is qualified to do business
and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations, filings and notices as are set forth in
Section 2.2(d) of the Christiana Disclosure Letter.
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(e) Commission Filings; Financial Statements. Christiana has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been
required to file with the Commission. All reports, registration statements
and other filings (including all notes, exhibits and schedules thereto and
documents incorporated by reference therein) filed by Christiana with the
Commission since December 31, 1995, through the date of this Agreement,
together with any amendments thereto, are sometimes collectively referred
to as the "Christiana Commission Filings." Christiana has heretofore
delivered to Weatherford copies of the Christiana Commission Filings. As of
the respective dates of their filing with the Commission, the Christiana
Commission Filings complied in all material respects with the Securities
Act, the Exchange Act and the rules and regulations of the Commission
thereunder, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which
they were made, not misleading. To the best knowledge of Christiana, all
material contracts of Christiana and its subsidiaries have been included in
the Christiana Commission Filings since the initial registration of its
stock under the Exchange Act, except for those contracts not required to be
filed pursuant to the rules and regulations of the Commission.
Each of the consolidated financial statements (including any related
notes or schedules) included in the Christiana Commission Filings was
prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be noted therein or in the
notes or schedules thereto) and complied with the rules and regulations of
the Commission. Such consolidated financial statements fairly present the
consolidated financial position of Christiana as of the dates thereof and
the results of operations, cash flows and changes in stockholders' equity
for the periods then ended (subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments on a basis
comparable with past periods). As of the date hereof, Christiana has no
liabilities, absolute or contingent, that may reasonably be expected to
have a Christiana MAE, that are not reflected in the Christiana Commission
Filings, except (i) those incurred in the ordinary course of business
consistent with past operations and not relating to the borrowing of money
and (ii) those set forth in Section 2.2(e) of the Christiana Disclosure
Letter.
(f) Conduct of Business in the Ordinary Course; Absence of Certain
Changes and Events. Since December 31, 1995, except as contemplated by this
Agreement, the Logistic Purchase Agreement or as disclosed in the
Christiana Commission Filings or set forth in Section 2.2(f) of the
Christiana Disclosure Letter, Christiana and its subsidiaries have
conducted their respective businesses only in the ordinary and usual course
in accordance with past practice, and there has not been: (i) a Christiana
MAE or any other material adverse change in the financial condition,
results of operations, assets or business of Christiana, taken as a whole;
(ii) to the knowledge of Christiana, any other condition, event or
development that reasonably may be expected to result in any such material
adverse change or a Christiana MAE; (iii) any change by Christiana or
Logistic in its accounting methods, principles or practices; (iv) any
revaluation by Christiana or Logistic of any of its assets, including,
without limitation, writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business
and consistent with past practice; (v) any entry by Christiana or Logistic
into any commitment or transaction that would be material to Christiana or
Logistic; (vi) any declaration, setting aside or payment of any dividends
or distributions in respect of the Christiana Common Stock or any
redemption, purchase or other acquisition of any of its securities; (vii)
any damage, destruction or loss (whether or not covered by insurance)
adversely affecting the properties or business of Christiana or Logistic;
(viii) any increase in indebtedness of borrowed money other than borrowing
under existing credit facilities as disclosed in Section 2.2(f) of the
Christiana Disclosure Letter; (ix) any granting of a security interest or
Lien on any property or assets of Christiana or Logistic, other than (A)
Liens for taxes not due and payable and (B) inchoate mechanics',
warehousemen's and other statutory Liens incurred in the ordinary course of
business (collectively, "Permitted Liens"); or (x) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee benefit plan or any other increase in the
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compensation payable or to become payable to any directors, officers or key
employees of Christiana or Logistic or which Christiana or Logistic would
be responsible.
(g) Litigation. Except as disclosed in the Christiana Commission
Filings or as set forth in Section 2.2(g) of the Christiana Disclosure
Letter, there are no claims, actions, suits, investigations, inquiries or
proceedings, ("Demands"), pending or, to the knowledge of Christiana,
threatened against or affecting (i) Christiana or Logistic or any of their
respective properties at law or in equity, or any of their employee benefit
plans or fiduciaries of such plans, or (ii) C2 or any Christiana or C2
subsidiaries or any of their respective properties at law or in equity, or
any of their respective employee benefit plans or fiduciaries of such
plans, before or by any federal, state, municipal or other governmental
agency or authority, or before any arbitration board or panel (each a
"Governmental Entity"), wherever located (i) that exist today or (ii) that
would otherwise, if adversely determined, have a Christiana MAE. None of
Christiana, Logistic or C2 is subject to any judicial, governmental or
administrative order, writ, judgment, injunction or decree.
(h) Employee Benefit Plans.
(i) Section 2.2(h) of the Christiana Disclosure Letter provides a
description of each of the following which is sponsored, maintained or
contributed to by Christiana or any corporation, trade, business or
entity under common control with Christiana within the meaning of
Section 414(b),(c),(m) or (o) of the Code or Section 4001 of ERISA (a
"Christiana ERISA Affiliate") for the benefit of its employees, or has
been so sponsored, maintained or contributed to within three years prior
to the Closing Date.
(A) each "employee benefit plan," as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), ("Plan"); and
(B) each stock option plan, collective bargaining agreement,
bonus plan or arrangement, incentive award plan or arrangement,
vacation policy, severance pay plan, policy or agreement, deferred
compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment
agreement and each other employee benefit plan, agreement,
arrangement, program, practice or understanding that is not described
in Section 2.2(h)(i)(A) to which Christiana or Logistic is a party or
has any obligation ("Benefit Program or Agreement").
True and complete copies of each of the Plans, Benefit Programs
or Agreements, related trusts, if applicable, and all amendments
thereto, together with (i) the Forms 5500, 990 and 1041, as
applicable, for the three most recent fiscal years, (ii) all current
summary plan descriptions for each such Plan, (iii) the most recent
Internal Revenue Service determination letters for each such Plan, as
applicable, and all correspondence with the Internal Revenue Service
and the Department of Labor relating to such Plans, Benefit Programs
and Agreements have been furnished to Weatherford.
(ii) Except as otherwise set forth in Section 2.2(h) of the
Christiana Disclosure Letter,
(A) None of Christiana or any Christiana ERISA Affiliate
contributes to or has an obligation to contribute to, or has at any
time contributed to or had an obligation to contribute to, a plan
subject to Title IV of ERISA, including, without limitation, a multi
employer plan within the meaning of Section 3(37) of ERISA, nor have
such companies engaged in any transaction described in Sections 406
and 407 of ERISA (unless exempt under Section 408) or Section 4975 of
the Code (unless exempt);
(B) Each Plan and each Benefit Program or Agreement has been
administered, maintained and operated in all material respects in
accordance with the terms thereof and in compliance with its
governing documents and applicable law (including, where applicable,
ERISA and the Code and timely filing of Form 5500s for each year);
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(C) There is no matter pending with respect to any of the Plans
before any governmental agency, and there are no actions, suits or
claims pending (other than routine claims for benefits) or, to the
knowledge of Christiana or C2, threatened against, or with respect
to, any of the Plans or Benefit Programs or Agreements or its assets;
(D) No act, omission or transaction has occurred which would
result in imposition on Christiana or any Christiana ERISA Affiliate
of breach of fiduciary duty liability damages under Section 409 of
ERISA, a civil penalty assessed pursuant to subsections (c), (i) or
(l) of Section 502 of ERISA or a tax imposed pursuant to Chapter 43
of Subtitle D of the Code; and
(E) Except as provided in Section 5.7, the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not require Christiana or any Christiana
ERISA Affiliate to make a larger contribution to, or pay greater
benefits under, any Plan, Benefit Program or Agreement than it
otherwise would or create or give rise to any additional vested
rights or service credits under any Plan or Benefit Program or
Agreement or cause the companies to make accelerated payments.
(iii) Except as set forth in Section 2.2(h) of the Christiana
Disclosure Letter, termination of employment of any employee of
Christiana immediately after consummation of the transactions
contemplated by this Agreement would not result in payments under the
Plans, Benefit Programs or Agreements which, in the aggregate, would
result in imposition of the sanctions imposed under Sections 280G and
4999 of the Code.
(iv) Each Plan may be unilaterally amended or terminated in its
entirety without liability except as to benefits accrued thereunder
prior to such amendment or termination.
(v) Except as set forth in Section 2.2(h) of the Christiana
Disclosure Letter, none of the employees of Christiana or Logistic are
subject to union or collective bargaining agreements.
(vi) None of Christiana or any of the Christiana ERISA Affiliates
has agreed or is obligated to provide retiree medical coverage and each
of such companies has fully complied with all obligations under COBRA
applicable to it.
(i) Taxes.
(i) Except as set forth in Section 2.2(i) of the Christiana
Disclosure Letter, all Tax Returns of or relating to any Tax that are
required to be filed on or before the Closing Date by or with respect to
Christiana or any Christiana Subsidiary, or any other corporation that
is or was a member of an affiliated group (within the meaning of Section
1504(a) of the Code) of corporations of which Christiana was a member
for any period ending on or prior to the Closing Date, have been or will
be duly and timely filed, and all Taxes, including interest and
penalties, due and payable pursuant to such Tax Returns have been or
will be duly and timely paid or adequately provided for in reserves
established by Christiana or any such Christiana Subsidiary, except
where the failure to file, pay or provide for would not have a material
adverse effect on the financial condition, results of operations, or
business of Christiana or otherwise result in a Christiana MAE. All
income Tax Returns of or with respect to Christiana or any Christiana
Subsidiary have been audited by the applicable Governmental Authority,
or the applicable statute of limitations has expired, for all periods up
to and including the tax year ended June 30, 1993. There is no material
claim against Christiana or any Christiana Subsidiary with respect to
any Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect
to Christiana or any Christiana Subsidiary that has not been adequately
provided for in reserves established by Christiana or such Christiana
Subsidiary. The total amounts set up as liabilities for current and
deferred Taxes in the consolidated financial statements included in the
Christiana Commission Filings have been prepared in accordance with
generally accepted accounting principles and are sufficient to cover the
payment of all material Taxes, including any penalties or interest
thereon and whether or not assessed or disputed, that are, or are
hereafter found to be, or to have been, due with respect to the
operations of Christiana or any Christiana Subsidiary through the
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periods covered thereby. Christiana has (and as of the Closing Date will
have) made estimated tax payments for taxable years for which the United
States consolidated federal income Tax return is not yet due required
with respect to Taxes. Except as set forth in Section 2.2(i) of the
Christiana Disclosure Letter, no waiver or extension of any statute of
limitations as to any federal, state, local or foreign Tax matter has
been given by or requested from Christiana or any Christiana Subsidiary.
Except for statutory Liens for current Taxes not yet due, no Liens for
Taxes exist upon the assets of Christiana. Except as set forth in
paragraph 2.2(i) of the Christiana Disclosure Letter, none of Christiana
or any Christiana Subsidiary has filed consolidated income Tax Returns
with any corporation, other than consolidated federal, state or foreign
income Tax returns by Christiana for any taxable period which is not now
closed by the applicable statute of limitations. Except as set forth in
Section 2.2(i) of the Christiana Disclosure Letter, none of Christiana
or any Christiana Subsidiary has any deferred intercompany gain as
defined in Treasury Regulations Section 1.1502-13.
(ii) As of the Closing Date, to Christiana's knowledge, there is no
plan or intention by the stockholders of Christiana to sell, exchange or
otherwise dispose of a number of shares of Weatherford received in the
Merger that would reduce the Christiana stockholders' ownership of
Weatherford shares to a number of shares having a value, as of the date
of the Merger, of less than 50% of the value of all of the formerly
outstanding Christiana Shares as of the same date. The shares of
Weatherford Common Stock held by the Christiana stockholders and
otherwise sold, redeemed or disposed of prior or subsequent to the
Merger will be considered in making this representation.
(iii) Christiana is not under the jurisdiction of a court in a
Title 11 or similar case with the meaning of sec.368(a)(3)(A) of the
Code.
(iv) There is no intercorporate indebtedness existing between
Christiana and Weatherford that was issued, acquired or will be settled
at a discount.
(v) As of the Closing Date, Christiana shall have fully accrued for
all Taxes that may be required to be paid as a result of the Logistic
Sale and the other transactions contemplated hereby. The value of the
interest in Logistic Common Stock to be sold pursuant to the Logistic
Sale has been determined pursuant to an outside appraisal and reflects
an amount equal to or greater than the fair value and fair market value
of such shares.
(j) Environmental Matters. Except as set forth in Section 2.2(j) of
the Christiana Disclosure Letter, (i) the properties, operations and
activities of Christiana and each of its Subsidiaries complies in all
material respects with all applicable Environmental Laws; (ii) none of
Christiana or any of its Christiana Subsidiaries is subject to any
existing, pending or, to the knowledge of Christiana, threatened action,
suit, investigation, inquiry or proceeding by or before any governmental
authority under any Environmental Law; (iii) except where the failure would
have a Christiana MAE, all notices, permits, licenses, or similar
authorizations, if any, required to be obtained or filed by Christiana
under any Environmental Law in connection with any aspect of the business
of Christiana, Logistic or any Christiana Subsidiary, including without
limitation those relating to the treatment, storage, disposal or release of
a hazardous substance or solid waste, have been duly obtained or filed and
will remain valid and in effect after the Merger and the Logistic Sale, and
each of Christiana, Logistic and each other Christiana Subsidiary is in
compliance with the terms and conditions of all such notices, permits,
licenses and similar authorizations; (iv) Christiana and each of its
Subsidiaries has satisfied and are currently in compliance with all
financial responsibility requirements applicable to their operations and
imposed by any governmental authority under any other Environmental Law,
and none of such parties has received any notice of noncompliance with any
such requirements; (v) to Christiana's knowledge, there are no physical or
environmental conditions existing on any property currently owned or
previously owned by Christiana or any entity in which it has or had
ownership interest that could reasonably be expected to give rise to any
on-site or off-site remedial obligations under any Environmental Laws; and
(vi) to Christiana's knowledge, since the effective date of the relevant
requirements of applicable Environmental Laws, all hazardous substances or
solid wastes generated by Christiana or used in connection with their
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properties or operations have been transported only by carriers authorized
under Environmental Laws to transport such substances and wastes, and
disposed of only at treatment, storage, and disposal facilities authorized
under environmental laws to treat, store or dispose of such substances and
wastes, and, to the knowledge of Christiana, such carriers and facilities
have been and are operating in compliance with such authorizations and are
not the subject of any existing, pending, or overtly threatened action,
investigation, or inquiry by any governmental authority in connection with
any Environmental Laws.
For purposes of this Agreement, the term "Environmental Laws" shall
mean any and all laws, statutes, ordinances, rules, regulations, orders or
determinations of any Governmental Authority pertaining to health or the
environment currently in effect in any and all jurisdictions in which the
party in question and its subsidiaries own property or conduct business,
including without limitation, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of
1980 ("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Hazardous & Solid Waste Amendments Act of 1984, as amended,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, the Oil Pollution Act
of 1990 ("OPA"), any state laws pertaining to the handling of oil and gas
exploration and production wastes or the use, maintenance, and closure of
pits and impoundments, and all other environmental conservation or
protection laws. For purposes of this Agreement, the terms "hazardous
substance" and "release" have the meanings specified in RCRA; provided,
however, that to the extent the laws of the state in which the property is
located establish a meaning for "hazardous substance," "release," "solid
waste" or "disposal" that is broader than that specified in either CERCLA
or RCRA, such broader meaning shall apply. For purposes of this Agreement,
the term "Governmental Authority" includes the United States, any foreign
jurisdiction, the state, county, city, and political subdivisions in which
the party in question owns property or conducts business, and any agency,
department, commission, board, bureau or instrumentality of any of them.
(k) Investment Company. Christiana is not an investment company as
defined in the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder.
(l) Severance Payments. Except as set forth in Section 2.2(l) of the
Christiana Disclosure Letter, Christiana will not have any liability or
obligation to pay a severance payment or similar obligation to any of their
respective employees, officers, or directors as a result of the Merger or
the transactions contemplated by this Agreement, nor will any of such
Persons be entitled to an increase in severance payments or other benefits
as a result of the Merger, the Logistic Sale or the transactions
contemplated by this Agreement or the Other Agreements in the event of the
subsequent termination of their employment.
(m) Voting Requirements. Subject to the provisions of Section 5.3(a),
the affirmative vote of the holders of a majority of the outstanding shares
of Christiana Common Stock is the only vote of the holders of any class or
series of the capital stock of Christiana necessary to approve this
Agreement, the Merger, the Logistic Sale and the transactions contemplated
hereby and by the Other Agreements in order to comply with the WBCL,
Christiana's Articles of Incorporation and Bylaws and the rules and
regulations of the New York Stock Exchange (the "NYSE").
(n) Brokers. Except for Prudential Securities Incorporated, whose fees
shall be paid by Christiana, no broker, investment banker, or other Person
acting on behalf of Christiana is or will be entitled to any broker's,
finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement.
(o) Assets and Liabilities at Closing. At the Effective Time:
(i) the assets of Christiana (the "Christiana Assets") shall
consist of (1) at least 3,897,462 shares of Weatherford Common Stock,
which shall be held free and clear of all Liens, (2) cash of at least
$13,000,000, (3) a one-third interest in Logistic, (4) certain tax
benefits, and
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(5) all tax, financial, accounting and other general corporate records,
including records relating to all past operations and subsidiaries
(including partnerships and joint ventures);
(ii) the liabilities of Christiana (the "Christiana Liabilities")
shall consist only of (1) transactional expenses related to the Merger
and the Logistic Sale, (2) all Taxes of Christiana relating to periods
through the Closing Date, including Taxes (other than the Weatherford
Related Taxes) from the Logistic Sale and deferred intercompany Taxes
and (3) all other outstanding and accrued liabilities to which
Christiana may be subject, other than Assumed Liabilities (as defined in
the Logistic Purchase Agreement) and Weatherford Related Taxes;
(iii) all obligations and liabilities (fixed or contingent, known
or unknown) of Christiana shall have been assumed by C2 and Logistic
other than liabilities described in clause (ii); and
(iv) except as set forth in Section 2.2(o) of the Disclosure
Schedule or agreed to in writing by Weatherford prior to the Closing,
Christiana shall have been released from all continuing obligations (i)
relating to Logistic or any other historical business of Christiana or
its subsidiaries and affiliates and (ii) under any and all agreements
relating to the borrowing of funds, including any and all guarantees or
similar arrangements relating thereto.
(p) Compliance with Laws. Christiana, Logistic, C2 and each of their
respective subsidiaries hold all required, necessary or applicable permits,
licenses, variances, exemptions, orders, franchises and approvals of all
Governmental Entities, except where the failure to so hold could not
reasonably be expected to have a Christiana MAE (the "Christiana Permits").
All applications with respect to such permits, licenses, variances,
exemptions, orders, franchises and approvals were complete and correct in
all material respects when made and neither Christiana nor C2 know of any
reason why any of such permits, licenses, variances, exemptions, orders,
franchises and approvals would be subject to cancellation. Christiana,
Logistic, C2 and each of their respective subsidiaries are in compliance
with the terms of the Christiana Permits except where the failure to so
comply could not reasonably be expected to have a Christiana MAE. None of
Christiana, Logistic, C2 or any of their respective subsidiaries has
violated or failed to comply with any statute, law, ordinance, regulation,
rule, permit or order of any Federal, state or local government, domestic
or foreign, or any Governmental Entity, any arbitration award or any
judgment, decree or order of any court or other Governmental Entity,
applicable to Christiana, Logistic, C2 or any of their respective
subsidiaries or their respective business, assets or operations, except for
violations and failures to comply that would not have a Christiana MAE.
(q) Contracts.
(i) Section 2.2(q) to the Christiana Disclosure Letter contains a
complete list of the following contracts, agreements, arrangements and
commitments: (i) all employment or consulting contracts or agreements to
which Christiana or Logistic is contractually obligated; (ii) current
leases, sales contracts and other agreements with respect to any
property, real or personal, of Christiana or Logistic or to which
Christiana or Logistic is contractually obligated; (iii) contracts or
commitments for capital expenditures or acquisitions in excess of
$30,000 to which Christiana or Logistic is obligated; (iv) agreements,
contracts, indentures or other instruments relating to the borrowing of
money, or the guarantee of any obligation for the borrowing of money, to
which Christiana or Logistic or any of their subsidiaries is a party or
any of their respective properties is bound; (v) contracts or agreements
or amendments thereto that would be required to be filed as an exhibit
to an Annual Report on Form 10-K filed by Christiana as of the date
hereof that has not been filed as an exhibit to the Christiana's Annual
Report on Form 10-K for the year ended June 30, 1997, filed by it with
the Commission or any report filed with the Commission under the
Exchange Act since such date; (vi) all corporations, partnerships,
limited liability companies and other entities which Christiana has
owed, directly or indirectly, an equity interest since 1953, (vii) all
material indemnification and guaranty or other similar obligations to
which Christiana or Logistic is bound and which the officers of
Christiana, after reasonable investigation, are aware, (viii) any
outstanding bonds, letters of credit posted or guaranteed by Christiana
or Logistic with respect to any Person, (ix) any covenants not to
compete or other obligations affecting Christiana or Logistic that would
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restrict the Surviving Corporation or Weatherford and its affiliates
from engaging in any business or activity which the officers of
Christiana or Logistic are aware, after reasonable investigation and (x)
contracts, agreements, arrangements or commitments, other than the
foregoing that could reasonably be considered to be material to
Christiana or Logistic.
(ii) True and correct copies of all the instruments described in
Section 2.2(q) of the Christiana Disclosure Letter have been furnished
or made available to Weatherford. Except as noted in the Christiana
Disclosure Letter, all such agreements, arrangements or commitments are
valid and subsisting and each of Christiana, Logistic and their
respective subsidiaries to the extent each is a party, has duly
performed its obligations thereunder in all material respects to the
extent such obligations have accrued, and no breach or default
thereunder by Christiana, Logistic or their respective subsidiaries or,
to the knowledge of Christiana, any other party thereto has occurred
that could impair the ability of Christiana, Logistic or their
respective subsidiaries to enforce any material rights thereunder. There
are no material liabilities of any of the parties to any of the
contracts between Christiana, Logistic or C2 or any of their respective
subsidiaries and third parties arising from any breach of or default in
any provision thereof or which would permit the acceleration of any
obligation of any party thereto or the creation of a Lien upon any asset
of Christiana, Logistic or any of their respective subsidiaries.
(r) Title to Property.
(i) At the Effective Time, Christiana will have good and marketable
title to, or valid leasehold interests in, all its properties and
assets. Christiana has good and valid title to 3,897,462 shares of
Weatherford Common Stock, free and clear of all Liens. Christiana has
good and valid title to 1000 units of Logistic, free and clear of all
Liens, which units represents all of the interest in Logistics.
(ii) Except as set forth in Section 2.2(r)(ii) of the Christiana
Disclosure Letter, each of Christiana and Logistic has complied in all
material respects with the terms of all leases to which it is a party
and under which it is in occupancy, and all such leases are in full
force and effect. Each of Christiana and Logistic enjoys peaceful and
undisturbed possession under all such leases.
(s) Insurance Policies. Section 2.2(s) of the Christiana Disclosure
Letter contains a correct and complete description of all insurance
policies of Christiana covering Christiana, Logistic and their respective
subsidiaries, any employees or other agents of Christiana, Logistic and
their respective subsidiaries or any assets of Christiana and its
subsidiaries. Each such policy is in full force and effect, is with
responsible insurance carriers and is substantially equivalent in coverage
and amount to policies covering companies of the size of Christiana and in
the business in which Christiana and its subsidiaries is engaged, in light
of the risk to which such companies and their employees, businesses,
properties and other assets may be exposed. All retroactive premium
adjustments under any worker's compensation policy of Christiana or any of
its Subsidiaries have been recorded in Christiana's financial statements in
accordance with generally accepted accounting principles and are reflected
in the financial statements contained in the Commission Filings.
(t) Loans. Section 2.2(t) of the Christiana Disclosure Letter sets
forth all existing loans, advances or other extensions of credit (excluding
accounts receivable arising in the ordinary course of business) by
Christiana or its subsidiaries to any party other than intercompany loans,
advances, guaranties or extensions of credit. All items listed in Section
2.2(t) of the Christiana Disclosure Letter will be repaid in full or
assumed by C2 prior to the Effective Time of the Merger. All intercompany
obligations and loans between Christiana and its subsidiaries, including
C2, will be extinguished prior to the Logistic Sale without any ongoing
liability to Christiana or C2 with respect thereto, except as set forth
herein or in the Logistic Purchase Agreement.
(u) No Fraudulent Transfer. Christiana has not within the last twelve
months made any transfer or incurred any obligation with actual intent to
hinder, delay or defraud any entity to which it was or may become indebted
and it has not transferred any material property without receiving
reasonably equivalent
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value for any such transfer obligation. Both immediately prior to and
immediately after the Logistic Sale and the Merger, (i) the fair value of
(x) Christiana's assets at the time of the Merger and (y) Logistic's and
C2's assets after the Logistic Sale and (z) the assets of CST Financial,
Inc. ("CST") Martinique Holdings, Inc. ("MHI") and Christiana Community
Builders, Inc. ("CCB") immediately prior to their liquidation in each case
at a fair valuation exceeds their respective debts and liabilities,
subordinated, contingent or otherwise, (ii) the present fair saleable value
of Christiana's, Logistic's, C2's, CST's, MHI's and CCB's property is
greater than the amount that will be required to pay its probable liability
on their respective debts and other liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and mature,
(iii) Christiana prior to the Logistic Sale and Logistic, C2 after the
Logistic Sale and CST, MHI and CCB prior to their liquidation each
reasonably expect to be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured, and (iv) Christiana before the Logistic Sale and
Logistic and C2 after the Logistic Sale will not have unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted. For all purposes
of clauses of (i) through (iv), the amount of contingent liabilities at any
time shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
(v) Information Supplied. None of the information supplied or to be
supplied by Christiana or C2 for inclusion or incorporation by reference in
(i) the Registration Statement (as defined in Section 5.1) will, at the
time the Registration Statement is filed with the Commission, and at any
time it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the Proxy
Statement will, at the date the Proxy Statement is first mailed to
Christiana's stockholders and at the time of the Christiana Stockholders
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules
and regulations thereunder. For purposes of this Agreement, the parties
agree that the statements made and information in the Registration
Statement and the Proxy Statement relating to the Federal income tax
consequences of the transactions contemplated hereby shall be deemed to be
supplied by Christiana and C2 and not by Weatherford or Sub.
ARTICLE III
COVENANTS OF CHRISTIANA
3.1 CONDUCT OF BUSINESS BY CHRISTIANA PENDING THE MERGER. Christiana
covenants and agrees that, from the date of this Agreement until the Effective
Time, unless Weatherford shall otherwise agree in writing or as otherwise
expressly contemplated by this Agreement or the Logistic Purchase Agreement or
set forth in Section 3.1 of the Christiana Disclosure Letter:
(a) the business of Christiana and the Christiana Subsidiaries shall
be conducted only in, and Christiana and the Christiana Subsidiaries shall
not take any action except in, the ordinary course of business and
consistent with past practice, provided that, Christiana may take the
actions required by Section 3.4 hereof;
(b) Christiana shall not directly or indirectly do any of the
following: (i) issue, sell, pledge, dispose of or encumber any capital
stock of Christiana except upon the exercise of Christiana Options; (ii)
split, combine, or reclassify any outstanding capital stock, or declare,
set aside, or pay any dividend payable in cash, stock, property, or
otherwise with respect to its capital stock whether now or hereafter
outstanding; (iii) redeem, purchase or acquire or offer to acquire any of
its capital stock; (iv) acquire, agree to acquire or make any offer to
acquire for cash or other consideration, any equity interest in or assets
of any corporation, partnership, joint venture, or other entity in an
amount greater than $500,000, provided that,
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Christiana may take the actions required by Section 3.4 hereof; or (v)
enter into any contract, agreement, commitment, or arrangement with respect
to any of the matters set forth in this Section 3.1(b);
(c) Christiana shall not transfer, dispose or otherwise convey any of
the shares of Weatherford Common Stock held by it or grant or permit there
to exist any Lien on such shares;
(d) Christiana shall not enter into any contract regarding its
business having a term greater than 120 days or involving an amount in
excess of $50,000 or commit to do the same and except for a cold storage
facility in Hudsonville, Michigan, no Christiana Subsidiary shall enter
into any contract outside the ordinary course of business;
(e) Christiana shall not become bound by any agreement or obligation
in an amount in excess of $500,000 in the aggregate for all such agreements
and obligations;
(f) Christiana shall not pledge or encumber any of the assets to be
held by Christiana following the Logistic Sale;
(g) Neither Christiana nor any of its Subsidiaries shall enter into
any employment or consulting contracts;
(h) Neither Christiana nor any of its Subsidiaries shall enter into
any contract or agreement that if effective on the date hereof would be
required to be identified as a disclosure pursuant to Section 2.2(q) of the
Christiana Disclosure Letter;
(i) Neither Christiana nor any of its Subsidiaries shall sell, lease,
mortgage, pledge, grant a Lien on or otherwise encumber or otherwise
dispose of any of Christiana's or its Subsidiaries' properties or assets,
except sales of inventory in the ordinary course of business consistent
with past practice and Christiana may liquidate (in a manner acceptable to
Weatherford) CST Financial, Inc., Martinique Holdings, Inc. and Christiana
Community Builders, Inc. and transfer their assets to Logistic without
consideration;
(j) Neither Christiana nor any of its Subsidiaries shall, directly or
indirectly, incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Christiana or
its Subsidiaries, guarantee any debt securities of another Person, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past practice
which obligations in respect of Christiana and its Subsidiaries other than
Logistic shall be released in connection with the Logistic Sale, or make or
permit to remain outstanding any loans, advances or capital contributions
to, or investments in, any other Person, other than to Christiana or any
direct or indirect wholly owned subsidiary of Christiana;
(k) Neither Christiana nor any of its Subsidiaries shall make any
election relating to Taxes except for those elections to be made in
connection with its 1997 Tax Returns that are consistent with the 1996 Tax
Returns;
(l) Neither Christiana nor any of its Subsidiaries shall change any
accounting principle used by it;
(m) Christiana shall use its reasonable efforts (i) to preserve intact
the business organization of Christiana and Logistic except Christiana may
liquidate (in a manner acceptable to Weatherford) CST Financial, Inc.,
Martinique Holdings, Inc. and Christiana Community Builders, Inc. and
transfer their assets to Logistic without consideration, (ii) to maintain
in effect any material authorizations or similar rights of Christiana and
Logistic, (iii) to preserve the goodwill of those having material business
relationships with it; (iv) to maintain and keep each of Christiana's
properties in the same repair and condition as presently exists, except for
deterioration due to ordinary wear and tear and damage due to casualty; and
(v) to maintain in full force and effect insurance comparable in amount and
scope of coverage to that currently maintained by it;
(n) Christiana shall, and shall cause the Christiana Subsidiaries to,
perform their respective obligations under any contracts and agreements to
which it is a party or to which any of its assets is
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subject, except to the extent such failure to perform would not have a
Christiana MAE and except for such obligations as Christiana in good faith
may dispute;
(o) Christiana shall cause there to exist immediately prior to the
Effective Time Christiana Net Cash (including $10,666,677 to be paid by C2
under the Logistic Purchase Agreement) of not less than $13 million;
(p) Neither Christiana nor any of its Subsidiaries shall settle or
compromise any litigation (whether or not commenced prior to the date of
this Agreement) other than settlements or compromises: (i) of litigation
where the amount paid in settlement or compromise does not exceed $500,000,
or if greater, the amount of the reserve therefor reflected in the most
recent SEC Documents and the terms of the settlement would not otherwise
have a Christiana MAE, or (ii) in consultation and cooperation with
Weatherford, and, with respect to any such settlement, with the prior
written consent of Weatherford;
(q) Christiana shall cause the Logistic Purchase Agreement to be
executed and delivered by Christiana and the Logistic Sale to be effected
prior to the Merger immediately prior to the Effective Time;
(r) Christiana shall not authorize any of, or commit or agree to take
any of, or permit any Christiana Subsidiary to take any of, the foregoing
actions to the extent prohibited by the foregoing and shall not, and shall
not permit any of the Christiana Subsidiaries to, take any action that
would, or that reasonably could be expected to, result in any of the
representations and warranties set forth in this Agreement becoming untrue
or any of the conditions to the Merger set forth in Article VI not being
satisfied. Christiana promptly shall advise Weatherford orally and in
writing of any change or event having, or which, insofar as reasonably can
be foreseen, would have, a material adverse effect on Christiana and the
Christiana Subsidiaries, taken as a whole, or cause a Christiana MAE.
(s) Christiana shall cause Logistic to pay to Christiana a
distribution in the amount of $20 million cash prior to the Effective Time
(the "TLC Dividend");
(t) Christiana shall cause Logistic to pay in full the entire
principal amount of the Wiscold Note dated September 1, 1992, in the
principal amount of $3,000,000, together with all accrued interest thereon
(the "Wiscold Note"); and
(u) Except as set forth in Section 2.2(o) of the Disclosure Schedule
or agreed to in writing by Weatherford prior to the Closing, Christiana
shall cause all of its obligations (i) relating to Logistic or any other
historical business of Christiana or its Subsidiaries and (ii) under any
and all agreements relating to the borrowing of funds, including all
guarantees and other similar arrangements relating thereto, to be fully
released or otherwise satisfied in a manner acceptable to Weatherford.
3.2 CASH REQUIREMENTS. Christiana covenants that as of the Effective Time
it shall have cash equal to the sum of (i) $13 million (including $10,666,677 to
be received under the Logistic Purchase Agreement) and (ii) all accrued and
unpaid liabilities and obligations of Christiana. For purposes of this Section
3.2, the unpaid liabilities and obligations of Christiana shall mean the full
undiscounted amount of liabilities for which Christiana shall be responsible,
including any liabilities that will accrue as a result of the Merger, the
Logistic Sale or the transactions contemplated herein, whether or not such
liabilities would be required to be reflected as a liability by generally
accepted accounting principles; provided, however, that such liabilities shall
not include any liabilities for any gain on any Weatherford Common Stock held by
Christiana realized as a result of a sale of such stock by Christiana or a
liquidation or merger of Christiana (other than the Merger) within two years
after the Effective Time, nor any tax liability for income of Weatherford
attributable to Christiana under the equity method of accounting either before
or after the Effective Time (the "Weatherford Related Taxes"). Further, for
purposes of calculating such liabilities, any Taxes (other than the Weatherford
Related Taxes) payable in respect of the Logistic Sale or other transactions
contemplated herein or under the Logistic Purchase Agreement shall be fully
accrued as a liability and any Tax credits, deductions, other Tax benefits of
Christiana shall not be considered or used to offset any such liability. The
provisions of this Section 3.2 shall
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not affect Logistic's and C2's obligations under the Logistic Purchase Agreement
to assume and indemnify Weatherford as set forth therein.
3.3 AFFILIATES' AGREEMENTS. Prior to the Closing Date, Christiana shall
deliver to Weatherford a letter identifying all Persons that are, at the time
this Agreement is submitted for approval to the stockholders of Christiana,
"affiliates" of Christiana for purposes of Rule 145 under the Securities Act
("Affiliates"). Christiana shall deliver or cause to be delivered to Weatherford
an undertaking by each Affiliate in form satisfactory to Weatherford that no
Weatherford Common Stock received or to be received by such Affiliate pursuant
to the Merger will be sold or disposed of except pursuant to an effective
registration statement under the Securities Act or in accordance with the
provisions of Rule 144 or paragraph (d) of Rule 145 under the Securities Act or
another exemption from registration under the Securities Act.
3.4 WEATHERFORD COMMON STOCK PURCHASES. Prior to the date the Proxy
Statement is mailed to the stockholders of Weatherford and Christiana,
Christiana shall purchase, in one transaction or a series of transactions, at
least $10 million of Weatherford Common Stock (the "$10 Million Purchase").
After the Christiana Stockholders Meeting, as defined in Section 5.3, Christiana
shall purchase, in one transaction or a series of transactions, up to an
additional $5 million of Weatherford Common Stock (the "$5 Million Purchase").
Notwithstanding the foregoing, Christiana shall not be required to make any
purchase unless such purchase, when considering the then current price of
Weatherford Common Stock, prior purchases and amounts, if any, remaining under
the $10 Million Purchase and the $5 Million Purchase, will allow the Merger when
completed to qualify as a reorganization within the meaning of Section
368(a)(1)(A) by reason of Section 368(a)(2)(E) of the Code. Christiana may, but
is not required to, waive the foregoing and purchase any other Weatherford
Common Stock. All such purchases shall be made in accordance with applicable
securities laws, including Regulation M and Rule 10b-18 promulgated under the
Exchange Act.
ARTICLE IV
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME
4.1 RESERVATION OF WEATHERFORD STOCK. Weatherford shall reserve for
issuance, out of its authorized but unissued capital stock, such number of
shares of Weatherford Common Stock as may be issuable upon consummation of the
Merger.
4.2 CONDUCT OF WEATHERFORD PENDING THE MERGER. Weatherford covenants and
agrees that, from the date of this Agreement until the Effective Time, unless
Christiana shall otherwise agree in writing or as otherwise expressly
contemplated by this Agreement, it will not take any action that would, or that
could be expected to, result in any of the representations and warranties set
forth in this Agreement becoming untrue or any of the conditions to the merger
set forth in Article VI not being satisfied.
4.3 STOCK EXCHANGE LISTING. Weatherford shall use reasonable efforts to
cause the shares of Weatherford Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Closing Date.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As promptly
as reasonably practicable after the execution of this Agreement, Weatherford and
Christiana shall prepare and file with the Commission preliminary proxy
materials that shall constitute the Proxy Statement of Weatherford and
Christiana and the registration statement with respect to the Weatherford Common
Stock to be issued in connection with the Merger (the "Registration Statement").
As promptly as reasonably practicable after final comments are received from and
cleared by the Commission on the preliminary proxy materials, Weatherford and
Christiana shall file with the Commission a combined joint proxy statement and
registration statement on Form S-4 (or on such other form as shall be
appropriate) relating to the approval and adoption of the Merger and this
Agreement by the stockholders of Weatherford and the stockholders of Christiana
and the issuance by Weatherford of Weatherford Common Stock in connection with
the Merger and shall use their reasonable efforts to cause the Registration
Statement to become effective as soon as practicable. Subject to the terms
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and conditions set forth in Section 6.2 and the fiduciary obligations of the
Board of Directors of Weatherford with respect to such matters, the Proxy
Statement shall contain a statement that the Board of Directors of Weatherford
recommended that the stockholders of Weatherford approve and adopt the Merger
and this Agreement. Subject to the terms and conditions set forth in Section 6.3
and the fiduciary obligations of the Board of Directors of Christiana with
respect to such matters, the Proxy Statement shall contain a statement that the
Board of Directors of Christiana recommended that the stockholders of Christiana
approve and adopt the Merger and this Agreement.
5.2 ACCOUNTANTS LETTER. Christiana shall use its reasonable efforts to
cause Arthur Andersen LLP to deliver a letter pursuant to SAS 72 dated as of the
date of the Proxy Statement and confirmed and updated at the Closing as of the
Closing Date, and addressed to itself and Weatherford, in the form and substance
reasonably satisfactory to Weatherford and customary in the scope and substance
for agreed upon procedures letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to the
Registration Statement and Proxy Statement.
5.3 MEETINGS OF STOCKHOLDERS.
(a) Christiana shall promptly take all action reasonably necessary in
accordance with the WBCL and its Articles of Incorporation and bylaws to
convene a meeting of its stockholders to consider and vote upon the
adoption and approval of the Merger and this Agreement and the Logistic
Sale (the "Christiana Shareholders Meeting"). Christiana shall provide
that, in addition to any vote that may be required by law, the approval of
the Merger and this Agreement and the Logistic Sale shall require approval
of a majority of the votes cast for or against such matters excluding any
shares of Christiana Common Stock held by Lubar & Co. Incorporated and its
affiliates; provided, however, Christiana may, in lieu of such requirement,
obtain an agreement by Lubar & Co. Incorporated and its affiliates to vote
all of its shares of Christiana Common Stock for, against or abstain from
voting with respect to such matters in the same proportion as the shares of
Christiana Common Stock are voted on such matters by the other stockholders
of Christiana. Subject to the terms and conditions set forth in Section 6.3
and the fiduciary obligations of the Board of Directors of Christiana with
respect to such matters, the Board of Directors of Christiana (i) shall
recommend at such meeting that the stockholders of Christiana vote to adopt
and approve the Merger and this Agreement and the Logistic Sale, (ii) shall
use its best efforts to solicit from stockholders of Christiana proxies in
favor of such adoption and approval and (iii) shall take all other action
reasonably necessary to secure a vote of its stockholders in favor of the
adoption and approval of the Merger and this Agreement.
(b) Weatherford shall promptly take all action reasonably necessary in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL") and its Certificate of Incorporation and bylaws to convene a
meeting of its stockholders to consider and vote upon the adoption and
approval of the Merger and this Agreement. Subject to the terms and
conditions set forth in Section 6.2 and the fiduciary obligations of the
Board of Directors of Weatherford with respect to such matters, the Board
of Directors of Weatherford (i) shall recommend at such meeting that the
stockholders of Weatherford vote to adopt and approve the Merger and this
Agreement, (ii) shall use its reasonable efforts to solicit from
stockholders of Weatherford proxies in favor of such adoption and approval
and (iii) shall take all other action reasonably necessary to secure a vote
of its stockholders in favor of the adoption and approval of the Merger and
this Agreement.
(c) Weatherford and Christiana shall coordinate and cooperate with
respect to the timing of such meetings and shall endeavor to hold such
meetings on the same day and as soon as practicable after the date hereof.
5.4 FILINGS; CONSENTS; REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, Christiana and Weatherford shall (i) make all
necessary filings with respect to the Merger and this Agreement under the HSR
Act, the Securities Act, the Exchange Act, and applicable blue sky or similar
securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto; (ii) use reasonable efforts to
obtain all consents, waivers, approvals, authorizations, and orders required in
connection with the authorization, execution, and delivery of this Agreement and
the consumma-
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tion of the Merger; and (iii) use reasonable efforts to take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper, or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement.
5.5 NOTIFICATION OF CERTAIN MATTERS. Christiana shall give prompt notice
to Weatherford, and Weatherford shall give prompt notice to Christiana, orally
and in writing, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate at any time from the date
hereof to the Effective Time; and (ii) any material failure of Christiana or
Weatherford, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
compiled with or satisfied by it hereunder.
5.6 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
those out-of-pocket expenses (which do not include fees for attorneys,
accountants and financial advisors) incurred in connection with (i) the
registration fees for the Weatherford Common Stock under the Securities Act to
be issued in the Merger, (ii) the registration and qualification of the
Weatherford Common Stock under any state securities and blue sky laws, (iii) the
listing of the Weatherford Common Stock on the NYSE, (iv) the HSR filing fee (v)
the investment banking, appraisal, and related expenses of Christiana, (vi) the
cost of any proxy solicitors and (vii) the printing and mailing of the
Registration Statement and the Proxy Statement shall be paid by Christiana;
provided, however, that if this Agreement shall have been terminated pursuant to
Section 7.1 as a result of the willful breach by a party of any of its
representations, warranties, covenants, or agreements set forth in this
Agreement, such breaching party shall pay the direct out-of-pocket costs and
expenses of the other parties in connection with the transactions contemplated
by this Agreement.
5.7 CHRISTIANA'S EMPLOYEE BENEFITS.
(a) Christiana shall take action prior to the Merger and the Logistic
Sale to (i) either cancel all outstanding Christiana Options or accelerate
such Christiana Options and make such Christiana Options terminate prior to
the Effective Time and (ii) and terminate the Christiana Option Plan.
(b) Christiana shall pay to each holder of Christiana Options an
amount of cash necessary to obtain cancellation of all Christiana Options
held by such holders.
(c) Christiana shall cause all employee benefit plans to which it is a
sponsor or has obligations to be terminated or assumed by Logistic or C2
without any continuing obligations on the part of Christiana.
(d) Christiana shall transfer to Logistic or C2 all employees of
Christiana without any liability to the Surviving Corporation. C2 shall be
responsible for all severance and other obligations with respect to such
terminated employees, if any. As of the Effective Time, Christiana shall
have no employees or employee benefit plans or obligations.
5.8 LIQUIDATION OR MERGER OF CHRISTIANA. Weatherford agrees that for a
period of two years following the Effective Date it shall not cause or permit
Christiana to (i) liquidate or dissolve, (ii) sell or transfer any shares of
Weatherford Common Stock held by Christiana or (iii) merge Christiana into any
other entity unless Weatherford receives an opinion of a nationally-recognized
tax counsel or accounting firm that such transaction will not adversely affect
the tax treatment of the Merger; provided, however, this restriction shall not
be deemed to prohibit or restrict (i) a sale or disposition of Christiana's
interest in Logistic to the extent permitted by the Logistic Purchase Agreement
or the operating agreement relating to Logistic, (ii) a change in control of
Weatherford, (iii) a merger, consolidation, share exchange or similar
transaction involving Weatherford or its subsidiaries (other than Christiana) or
(iv) a sale or disposition of any assets of Weatherford or its subsidiaries
(other than Christiana).
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ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the Merger (and the Logistic Sale in the case
of Christiana) shall have been approved and adopted by the requisite vote
of the stockholders of Christiana and Weatherford, as may be required by
law, by the rules of the NYSE, by Section 5.3(a) and by any applicable
provisions of their respective charters or bylaws;
(b) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
(c) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal the
consummation of the Logistic Sale and the Merger;
(d) The Registration Statement and a registration statement under the
Securities Act to be filed by C2 in connection with the Merger shall each
be effective on the Closing Date, and all post-effective amendments thereto
filed shall have been declared effective or shall have been withdrawn; and
no stop-order suspending the effectiveness thereof shall have been issued
and no proceedings for that purpose shall have been initiated or, to the
knowledge of the parties, threatened by the Commission;
(e) There shall have been obtained any and all material permits,
approvals and consents of securities or blue sky commissions of any
jurisdiction, and of any other governmental body or agency, that reasonably
may be deemed necessary so that the consummation of the Merger and the
transactions contemplated thereby will be in compliance with applicable
laws, the failure to comply with which would have a Christiana MAE or a
Weatherford MAE;
(f) The shares of Weatherford Common Stock issuable upon consummation
of the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance;
(g) Weatherford, C2 and Christiana shall have received an opinion,
dated as of the Effective Date, from American Appraisal Associates, Inc. in
form and substance satisfactory to them, in respect of the matters
described in Section 2.2(u); and
(h) All approvals and consents of third Persons (i) the granting of
which is necessary for the consummation of the Merger, the Logistic Sale or
the transactions contemplated in connection therewith and (ii) the
non-receipt of which would have a Christiana MAE or a Weatherford MAE.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD. The obligation of
Weatherford to effect the Merger is, at the option of Weatherford, also subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Christiana contained in
Section 2.2 shall be accurate as of the date of this Agreement and (except
to the extent such representations and warranties speak specifically as of
an earlier date) as of the Closing Date as though such representations and
warranties had been made at and as of that time; all of the terms,
covenants and conditions of this Agreement to be complied with and
performed by Christiana on or before the Closing Date shall have been duly
complied with and performed in all material respects; and a certificate to
the foregoing effect dated the Closing Date and signed by the chief
executive officer and the president of Christiana shall have been delivered
to Weatherford;
(b) There shall not have occurred or exist any fact or condition that
would reasonably result in a Christiana MAE or would constitute a material
fixed or contingent liability to Christiana, and
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Weatherford shall have received a certificate signed by the president of
Christiana dated the Closing Date to such effect;
(c) The Board of Directors of Weatherford shall have received from
Morgan Stanley & Co. Incorporated, financial advisor to Weatherford, a
written opinion, satisfactory in form and substance to the Board of
Directors of Weatherford, to the effect that consideration to be paid by
Weatherford in the Merger is fair to Weatherford from a financial point of
view, which opinion shall not subsequently be withdrawn;
(d) The Christiana Options shall have been cancelled and the
Christiana Plans shall have been terminated or such options shall have been
exercised;
(e) Christiana shall have received, and furnished written copies to
Weatherford of, the Christiana affiliates' agreements pursuant to Section
3.3;
(f) Weatherford shall have received from Foley & Lardner, counsel to
Christiana, an opinion dated the Closing Date covering customary matters
relating to the Agreement and the Merger, including an opinion in form and
substance satisfactory to Weatherford with respect to the matters described
in Section 2.2(a), (b), (c), (d) and (k) (provided that the form of such
opinion shall be agreed upon prior to the filing of the Registration
Statement with the Commission);
(g) Weatherford shall have received from Arthur Andersen LLP a written
opinion, in form and substance satisfactory to Weatherford, dated as of the
date that the Proxy Statement is first mailed to the Stockholders of
Christiana and Weatherford to the effect that (i) the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code by reason of Section
368(a)(2)(E) of the Code, (ii) Weatherford, Sub and Christiana will each be
a party to that reorganization within the meaning of Section 368(b) of the
Code and (iii) Weatherford, Sub and Christiana shall not recognize any gain
or loss for U.S. federal income tax purposes as a result of the Merger
(although Christiana will recognize gain or loss for U.S. federal income
tax purposes as a result of the Logistic Sale), and such opinion shall be
confirmed at the Closing;
(h) Weatherford shall have received from Arthur Andersen LLP a letter,
in form and substance satisfactory to Weatherford, dated as of the Closing
Date, to the effect that the Merger would not adversely affect the ability
of Weatherford to account for any prior or future business combination as a
pooling of interest;
(i) C2 shall have executed and delivered to Christiana and Weatherford
the Logistic Purchase Agreement and agreement among members in form and
substance, including schedules, acceptable to Weatherford;
(j) The Logistic Sale shall have been consummated;
(k) Christiana shall have delivered to Weatherford a pro forma balance
sheet after giving effect to the Logistic Sale, including a full accrual
for Taxes thereon without regard to any tax credits or tax deductions that
Christiana may have in connection with the exercise of any stock options,
reflecting Christiana Net Cash in an amount not less than $13 million;
(l) Except as permitted by Section 3.1, all outstanding Indebtedness
(including guarantees thereof) of Christiana and its Subsidiaries (other
than Logistics) shall have been paid in full or Christiana shall have been
fully released therefrom;
(m) The assets of Christiana shall consist only of cash of at least
$13 million, at least 3,897,462 shares of Weatherford Common Stock, certain
tax benefits and 333.333 units of Logistic representing one-third of the
outstanding interests of Logistic; and
(n) There shall not be pending any litigation involving Christiana or
any of its subsidiaries, that Weatherford, in its sole discretion,
considers to be a material liability for which adequate security has not
been provided.
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6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF CHRISTIANA. The obligation of
Christiana to effect the Merger is, at the option of Christiana, also subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Weatherford and Sub
contained in Section 2.1 shall be accurate as of the date of this Agreement
and (except to the extent such representations and warranties speak
specifically as of an earlier date) as of the Closing Date as though such
representations and warranties had been made at and as of that time; all
the terms, covenants and conditions of this Agreement to be complied with
and performed by Weatherford on or before the Closing Date shall have been
duly complied with and performed in all material respects; and a
certificate to the foregoing effect dated the Closing Date and signed by
the chief executive officer of Weatherford shall have been delivered to
Christiana;
(b) The Board of Directors of Christiana and C2 shall have received
from Prudential Securities Corporation, financial advisor to Christiana and
C2, a written opinion, satisfactory in form and substance to the Board of
Directors of Christiana and C2, to the effect that from a financial point
of view to the Christiana Shareholders the Merger, which includes (i) the
consideration to be received in the Merger and (ii) the purchase price for
Logistic is fair to the Christiana Shareholders, which opinion shall not
subsequently be withdrawn;
(c) Christiana and C2 shall have received from Fulbright & Jaworski
L.L.P. counsel to Weatherford, an opinion dated the Closing Date covering
customary matters relating to this Agreement and the Merger, including an
opinion in form and substance with respect to the matters described in
Section 2.1(a), (b)(iii), (c) and (d)(i), (ii) and (iii);
(d) C2 and Christiana shall have received from Arthur Andersen LLP, a
written opinion, in form and substance satisfactory to Christiana, dated as
of the date that the Proxy Statement is first mailed to stockholders of
Christiana and Weatherford to the effect that (i) the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code by reason of Section
368(a)(2)(E) of the Code; (ii) Weatherford, Sub and Christiana will each be
a party to that reorganization within the meaning of Section 368(b) of the
Code, and (iii) Weatherford, Sub and Christiana shall not recognize any
gain or loss for U.S. federal income tax purposes as a result of the Merger
(although Christiana will recognize gain or loss for U.S. federal income
tax purposes as a result of the Logistic Sale), and such opinion shall be
confirmed at the Closing; and
(e) The Logistic Sale under the Logistic Purchase Agreement shall have
occurred.
ARTICLE VII
MISCELLANEOUS
7.1 TERMINATION. This Agreement may be terminated and the Merger and the
other transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether prior to or after approval by the stockholders of
Weatherford or the stockholders of Christiana:
(a) by mutual written consent of Weatherford and Christiana;
(b) by either Weatherford or Christiana if (i) the Merger has not been
consummated on or before January 31, 1999 (provided that the right to
terminate this Agreement under this clause (i) shall not be available to
any party whose breach of any representation or warranty or failure to
fulfill any covenant or agreement under this Agreement has been the cause
of or resulted in the failure of the Merger to occur on or before such
date); (ii) any court of competent jurisdiction, or some other governmental
body or regulatory authority shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise prohibiting
the Merger; (iii) the stockholders of Christiana shall not approve the
Logistic Sale or the Merger at the Christiana stockholder meeting or at any
adjournment thereof; (iv) the
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stockholders of Weatherford shall not approve the Merger at the Weatherford
stockholder meeting or any adjournment thereof; or (v) in the exercise of
its good faith judgment as to its fiduciary duties to its stockholders
imposed by law, as advised by outside counsel, the Board of Directors of
Christiana or Weatherford determines that such termination is appropriate
in complying with its fiduciary obligations.
(c) by Christiana if (i) Weatherford shall have failed to comply in
any material respect with any of the covenants or agreements contained in
this Agreement to be complied with or performed by Weatherford or Sub at or
prior to such date of termination (provided such breach has not been cured
within 30 days following receipt by Weatherford of written notice from
Christiana of such breach and is existing at the time of termination of
this Agreement); (ii) any representation or warranty of Weatherford
contained in this Agreement shall not be true in all respects when made
(provided such breach has not been cured within 30 days following receipt
by Weatherford of written notice from Christiana of such breach and is
existing at the time of termination of this Agreement) or on and as of the
Effective Time as if made on and as of the Effective Time (except to the
extent it relates to a particular date), except for such failures to be so
true and correct which would not individually or in the aggregate,
reasonably be expected to have a Weatherford MAE, assuming the
effectiveness of the Merger; or (iii) the Board of Directors of Weatherford
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Christiana or shall have resolved to do any
of the foregoing.
(d) by Weatherford if (i) Christiana shall have failed to comply in
any material respect with any of the covenants or agreements contained in
this Agreement to be complied with or performed by it at or prior to such
date of termination (provided such breach has not been cured within 30 days
following receipt by Christiana of written notice from Weatherford of such
breach and is existing at the time of termination of this Agreement); (ii)
any representation or warranty of Christiana contained in this Agreement
shall not be true in all respects when made (provided such breach has not
been cured within 30 days following receipt by Christiana of written notice
from Weatherford of such breach and is existing at the time of termination
of this Agreement) or on and as of the Effective Time as if made on and as
of the Effective Time (except to the extent it relates to a particular
date), except for such failures to be so true and correct which would not
individually or in the aggregate, reasonably be expected to have a
Christiana MAE assuming the effectiveness of the Merger or (iii) the Board
of Directors of Christiana withdraws, modifies or changes its
recommendation of this Agreement or the Merger in a manner adverse to
Weatherford or shall have resolved to do any of the foregoing.
7.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either Weatherford or Christiana as provided in Section 7.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of Weatherford, Sub or Christiana, except (i) with respect to this Section
7.2, Section 5.6 and Section 7.13, and (ii) such termination shall not relieve
any party hereto for any intentional breach prior to such termination by a party
hereto of any of its representations or warranties or of any of its covenants or
agreements set forth in this Agreement.
7.3 WAIVER AND AMENDMENT. Any provision of this Agreement may be waived at
any time by the party that is, or whose stockholders are, entitled to the
benefits thereof. This Agreement may not be amended or supplemented at any time,
except by an instrument in writing signed on behalf of each party hereto,
provided that after this Agreement has been approved and adopted by the
stockholders of Weatherford and Christiana, this Agreement may be amended only
as may be permitted by applicable provisions of the DGCL and the WBCL. The
waiver by any party hereto of any condition or of a breach of another provision
of this Agreement shall not operate or be construed as a waiver of any other
condition or subsequent breach. The waiver by any party hereto of any of the
conditions precedent to its obligations under this Agreement shall not preclude
it from seeking redress for breach of this Agreement other than with respect to
the condition so waived.
7.4 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties of C2 contained herein, which shall survive
without limitation, none of the representations and warranties in this Agreement
shall survive the Effective Time.
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7.5 PUBLIC STATEMENTS. Christiana and Weatherford agree to consult with
each other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby.
7.6 ASSIGNMENT. This Agreement shall inure to the benefit of and will be
binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns.
7.7 NOTICES. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i) delivered
in Person or by courier, (ii) sent by telecopy or facsimile transmission, answer
back requested, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
if to Christiana:
Christiana Companies, Inc.
700 N. Water Street, Suite 1200
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
if to C2:
C2, Inc.
700 N. Water Street, Suite 1200
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
if to Weatherford or Sub:
Weatherford International, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: Curtis W. Huff
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Charles L. Strauss
Facsimile: (713) 651-5246
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or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.7. Such notices shall be
effective, (i) if delivered in Person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
7.8 GOVERNING LAW. All questions arising out of this Agreement and the
rights and obligations created herein, or its validity, existence,
interpretation, performance or breach shall be governed by the laws of the State
of Delaware, without regard to conflict of laws principles.
7.9 ARBITRATION. Any disputes, claims or controversies connected with,
arising out of, or related to, this Agreement and the rights and obligations
created herein, or the breach, validity, existence or termination hereof, shall
be settled by Arbitration to be conducted in accordance with the Commercial
Rules of Arbitration of the American Arbitration Association, except as such
Commercial Rules may be changed by this Section 7.9. The disputes, claims or
controversies shall be decided by three independent arbitrators (that is,
arbitrators having no substantial economic or other material relationship with
the parties), one to be appointed by Christiana, if prior to the Merger, or C2,
if after the Merger, and one to be appointed by Weatherford within fourteen days
following the submission of the claim to the parties hereto and the third to be
appointed by the two so appointed within five days thereafter. Should either
party refuse or neglect to join in the timely appointment of the arbitrators,
the other party shall be entitled to select both arbitrators. Should the two
arbitrators fail timely to appoint a third arbitrator, either party may apply to
the Chief Judge of the United States District Court for the Southern District of
Texas to make such appointment. The arbitrators shall have ninety days after the
selection of the third arbitrator within which to allow discovery, hear evidence
and issue their decision or award and shall in good faith attempt to comply with
such time limits; provided, however, if two of the three arbitrators believe
additional time is necessary to reach a decision, they may notify the parties
and extend the time to reach a decision in thirty day increments, but in no
event to exceed an additional ninety days. Discovery of evidence shall be
conducted expeditiously by the parties, bearing in mind the parties desire to
limit discovery and to expedite the decision or award of the arbitrators at the
most reasonable cost and expense of the parties. Judgment upon an award rendered
pursuant to such Arbitration may be entered in any court having jurisdiction, or
application may be made to such court for a judicial acceptance of the award,
and an order of enforcement, as the case may be. The place of Arbitration shall
be Houston, Texas. The decision of the arbitrators, or a majority thereof, made
in writing, shall be final and binding upon the parties hereto as to the
questions submitted, and each party shall abide by such decision.
Notwithstanding the provisions of this Section 7.9, neither party shall be
prohibited from seeking injunctive relief pending the completion of any
arbitration. The costs and expenses of the arbitration proceeding, including the
fees of the arbitrators and all costs and expenses, including legal fees and
witness fees, incurred by the prevailing party, shall be borne by the losing
party.
Solely for purposes of injunctive relief, orders in aid of arbitration and
entry of the arbitrators' award:
(a) each of the parties hereto irrevocably consents to the
non-exclusive jurisdiction of, and venue in, any state court located in
Harris County, Texas or any federal court sitting in the Southern District
of Texas in any suit, action or proceeding seeking injunctive relief,
orders in aid of arbitration, or entry of an arbitral award arising out of
or relating to this Agreement or any of the other agreements contemplated
hereby and any other court in which a matter that may result in a claim for
indemnification hereunder by a Weatherford Indemnified Party (as defined in
the Logistic Purchase Agreement) may be brought with respect to any claim
for indemnification by a Weatherford Indemnified Party;
(b) each of the parties hereto waives, to the fullest extent permitted
by law, any objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding seeking injunctive relief, orders
in aid of arbitration or entry of an arbitral award arising out of or
relating to this Agreement or any of the other agreements contemplated
hereby brought in any state court located in Harris County, Texas or any
federal court sitting in the Southern District of Texas or any other court
in which a matter that may result in a claim hereunder or for
indemnification under the Logistic Purchase Agreement by a Weatherford
Indemnified Party may be brought with respect to any claim for
indemnification by a
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Weatherford Indemnified Party, and further irrevocably waive any claim that
any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum;
(c) each of the parties hereto irrevocably designates, appoints and
empowers CT Corporation System, Inc. and any successor thereto as its
designee, appointee and agent to receive, accept and acknowledge for and on
its behalf, and in respect of its property, service of any and all legal
process, summons, notices and documents which may be served in any suit,
action or proceeding arising out of or relating to this Agreement or any of
the other agreements contemplated hereby for the purposes of injunctive
relief, orders in aid of arbitration and entry of an arbitral award.
7.10 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provision, covenants and restrictions
of this Agreement shall continue in full force and effect and shall in no way be
affected, impaired or invalidated.
7.11 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
7.12 HEADINGS. The Section headings herein are for convenience only and
shall not affect the construction hereof.
7.13 CONFIDENTIALITY Agreement. The Confidentiality Agreements entered
into between Weatherford and Christiana on December 10, 1997 (the
"Confidentiality Agreements") are hereby incorporated by reference herein and
made a part hereof.
7.14 ENTIRE AGREEMENT: THIRD PARTY BENEFICIARIES. This Agreement, the
Other Agreements and the Confidentiality Agreements constitute the entire
agreement and supersede all other prior agreements and understandings, both oral
and written, among the parties or any of them, with respect to the subject
matter hereof and neither this nor any document delivered in connection with
this Agreement confers upon any Person not a party hereto any rights or remedies
hereunder.
7.15 DISCLOSURE LETTERS.
(a) The Christiana Disclosure Letter, executed by Christiana as of the
date hereof, and delivered to Weatherford on the date hereof, contains all
disclosure required to be made by Christiana under the various terms and
provisions of this Agreement. Each item of disclosure set forth in the
Christiana Disclosure Letter specifically refers to the Article and Section
of the Agreement to which such disclosure responds, and shall not be deemed
to be disclosed with respect to any other Article or Section of the
Agreement.
(b) The Weatherford Disclosure Letter, executed by Weatherford as of
the date hereof, and delivered to Christiana on the date hereof, contains
all disclosure required to be made by Weatherford under the various terms
and provisions of this Agreement. Each item of disclosure set forth in the
Weatherford Disclosure Letter specifically refers to the Article and
Section of the Agreement to which such disclosure responds, and shall not
be deemed to be disclosed with respect to any other Article or Section of
the Agreement.
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IN WITNESS WHEREOF each of the parties caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized, all as of the date
first above written.
WEATHERFORD INTERNATIONAL, INC.
By: /s/ CURTIS W. HUFF
----------------------------------
Name: Curtis W. Huff
---------------------------------
Title: Senior Vice President,
General Counsel and
Secretary
---------------------------------
CHRISTIANA ACQUISITION, INC.
By: /s/ CURTIS W. HUFF
----------------------------------
Name: Curtis W. Huff
---------------------------------
Title: President
---------------------------------
CHRISTIANA COMPANIES, INC.
By: /s/ WILLIAM T. DONOVAN
----------------------------------
Name: William T. Donovan
---------------------------------
Title: President
---------------------------------
C2, INC.
By: /s/ WILLIAM T. DONOVAN
----------------------------------
Name: William T. Donovan
---------------------------------
Title: Chairman
---------------------------------
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APPENDIX B
AGREEMENT*
BY AND AMONG
WEATHERFORD INTERNATIONAL, INC.,
TOTAL LOGISTIC CONTROL, LLC,
CHRISTIANA COMPANIES, INC.,
AND
C2, INC.
DECEMBER 12, 1997
* As amended by Amendment No. 1 to Agreement and Plan of Merger and Logistic
Purchase Agreement dated May 26, 1998 and Amendment No. 2 to Logistic Purchase
Agreement dated October 14, 1998.
<PAGE> 176
AGREEMENT
THIS AGREEMENT ("Agreement") made as of this 12th day of December, 1997, as
amended by Amendment No. 1 dated May 26, 1998 and Amendment No. 2 dated October
14, 1998, by and among WEATHERFORD INTERNATIONAL, INC., a Delaware corporation
(formerly known as EVI, Inc.) ("Weatherford"), TOTAL LOGISTIC CONTROL, LLC, a
Delaware limited liability company ("TLC"), CHRISTIANA COMPANIES, INC., a
Wisconsin corporation ("Christiana") and C2, INC., a Wisconsin corporation
("C2").
W I T N E S S E T H :
WHEREAS, Weatherford, Christiana Acquisition, Inc., a Wisconsin corporation
("Sub"), Christiana and C2 have entered into an Amended and Restated Agreement
and Plan of Merger dated December 12, 1997 (the "Merger Agreement") pursuant to
which Sub, a wholly owned subsidiary of Weatherford, will merge with and into
Christiana and thereby Christiana will become a wholly owned subsidiary of
Weatherford (the "Merger").
WHEREAS, as a condition to the Merger, Christiana will sell 666.667
Membership Units (as defined in Section 1.16 hereof) of TLC to C2 pursuant to
the terms and conditions hereinafter set forth (the "Logistic Sale").
NOW, THEREFORE, in consideration of the mutual covenants of the parties
herein and the mutual benefits derived from this Agreement ("Agreement"), the
parties, intending to be legally bound, hereby agree as follows:
1. Definitions.
1.1 Affiliate. Affiliate means, as to the person specified, any person
controlling, controlled by or under common control with such person, with the
concept of control in such context meaning the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of another, whether through the ownership of voting securities, by
contract or otherwise.
1.2 Assumed Liabilities. Assumed Liabilities means any and all Liabilities
and Environmental Liabilities (except for the Retained Liabilities) to which
Christiana, Weatherford or a Christiana Company may now or at any time in the
future become subject (whether directly or indirectly, including by reason of
Christiana or a Christiana Company owning, controlling or operating any business
or assets of any Person (including any current or past Affiliate)), resulting
from, arising out of or relating to (i) any Christiana Company (other than TLC),
(ii) the business, operations or assets of Christiana or any Christiana Company
on or prior to the Effective Date, (iii) any Christiana Taxes for periods ending
on or before the Effective Date (except Christiana Taxes to be expressly
retained by Christiana pursuant to the Merger Agreement), (iv) any obligation,
matter, fact, circumstance or action or omission by any Person in any way
relating to or arising from the business, operations or assets of Christiana or
a Christiana Company that existed on or prior to the Effective Date; (v) any
product or service provided by Christiana or any Christiana Company prior to the
Effective Date, (vi) the Merger, the Logistic Sale or any of the other
transactions contemplated hereby, (vii) previously conducted operations of
Christiana or any Christiana Company and (viii) C2's interest in TLC. The term
"Assumed Liabilities" shall include, without limitation, the following
Liabilities (other than Retained Liabilities):
(a) Any and all Liabilities and Environmental Liabilities resulting
from, arising out of or relating to (i) the assets, activities, operations,
current or former facilities, actions or omissions of Christiana or any of
its officers, directors, employees, independent contractors or agents
occurring on or before the Effective Date, (ii) the assets, activities,
operations, current or former facilities, actions or omissions of any
Christiana Company or any of its officers, directors, employees,
independent contractors or agents, (iii) any product liability claim,
recall, replacement, returns or customer allowances of or relating to
Christiana or any Christiana Company, or (iv) any contract or permit of
Christiana or any Christiana Company;
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(b) Any and all accounts and notes payable of Christiana or any
Christiana Company, excluding accounts payable which have been accounted
for in the calculation of Christiana Net Cash set forth in the Merger
Agreement;
(c) Any and all Liabilities relating to Christiana or any Christiana
Company employee benefit plans;
(d) Any and all Liabilities and Environmental Liabilities on behalf of
or which arise from or relate to active employees, or retired and inactive
employees, of Christiana or any Christiana Company, including, without
limitation, (i) liability for any salaries, wages, tax equalization
payments, vacation pay, sick leave, personal leave, severance pay, wrongful
dismissal or discrimination claims; (ii) liability for or under any
employee benefit plan, policy or arrangement, including, without
limitation, retirement, pension, medical, dental, profit sharing,
unemployment, supplemental unemployment or disability plan policy or
arrangement; (iii) liability for any payroll taxes, social security or
similar taxes or withholding; (iv) liability arising from claims or
litigation; and (v) liability arising from any injury, death, loss,
disability, occupational disease or claims under any worker's compensation
laws;
(e) Any and all Liabilities and Environmental Liabilities resulting
from, arising out, relating to or occurring on the Properties, including
those properties listed on Schedule 1.2 hereof, the operations on any of
the foregoing, and any off-site Environmental Liabilities related to any of
the foregoing, including without limitation, those under any
indemnification agreement or obligation of Christiana or any Christiana
Company and any documents relating thereto;
(f) Any and all Liabilities of TLC or any of its subsidiaries with
respect to transactions or events occurring or existing on or prior to the
Effective Date;
(g) Any and all litigation and claims for Liabilities of Christiana or
any Christiana Company existing as of the Effective Date;
(h) Any and all Liabilities for Christiana Taxes, arising out of, or
related to, Christiana for taxable periods on or before the Effective Date
(except such Christiana Taxes expressly retained by Christiana pursuant to
the Merger Agreement);
(i) Any misrepresentation or incorrect representation or warranty of
Christiana under the Merger Agreement without regard to any materiality or
knowledge qualification; and
(j) Any and all legal, accounting, consulting and expert fees and
expenses incurred after the date hereof in investigating, preparing,
defending, settling or discharging any claim or action arising under, out
of or in connection with any of the Assumed Liabilities other than those
associated with Weatherford's counsel's evaluation of the Merger and the
Logistic sale.
1.3 Business Day. Business Day means a day on which national banks are
generally open for the transaction of business in Houston, Texas.
1.4 CERCLA. CERCLA means the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. sec. 9601, et seq.
1.5 Christiana. Christiana, for purposes of the assumption indemnification
provisions of this Agreement includes Christiana Companies, Inc. and any and all
predecessors thereto, whether by merger, purchase or acquisition of assets or
otherwise, and any and all predecessors to any such entities.
1.6 Circumstance. Circumstance has the meaning specified in Section 6.2
hereof.
1.7 Effective Date. Effective Date means the time and date the Merger is
made effective.
1.8 Environmental Conditions. Environmental Conditions means any
pollution, contamination, degradation, damage or injury caused by, related to,
arising form or in connection with the generation, handling, use, treatment,
storage, transportation, disposal, discharge, release or emission of any Waste
Materials.
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1.9 Environmental Law or Environmental Laws. Environmental Law or
Environmental Laws means all laws, rules, regulations, statutes, ordinances,
decrees or orders of any governmental entity now or at any time in the future in
effect relating to (i) the control of any potential pollutant or protection of
the air, water or land, (ii) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation, and (iii) exposure to
hazardous, toxic or other substances alleged to be harmful. The term
"Environmental Law" or "Environmental Laws" includes, without limitation, (1)
the terms and conditions of any license, permit, approval or other authorization
by any governmental entity and (2) judicial, administrative or other regulatory
decrees, judgments and orders of any governmental entity. The term
"Environmental Law" or "Environmental Laws" includes, but is not limited to the
following statutes and the regulations promulgated thereunder: the Clean Air
Act, 42 U.S.C. sec. 7401 et seq., The Clean Water Act, 33 U.S.C. sec. 1251 et
seq., the Resource Conservation Recovery Act, 42 U.S.C. sec. 6901 et seq., the
Superfund Amendments and Reauthorization Act, 42 U.S.C. sec. 11011 et seq., the
Toxic Substances Control Act, 15 U.S.C. sec. 2601 et seq., the Water Pollution
Control Act, 33 U.S.C. sec. 1251, et seq., the Safe Drinking Water Act, 42
U.S.C. sec. 300f et seq., CERCLA and any state, county or local regulations
similar thereto.
1.10 Environmental Liabilities. Environmental Liabilities means any and
all liabilities, responsibilities, claims, suits, losses, costs (including
remediation, removal, response, abatement, clean-up, investigative or monitoring
costs and any other related costs and expenses), other causes of action
recognized now or at any later time, damages, settlements, expenses, charges,
assessments, liens, penalties, fines, pre-judgment and post-judgment interest,
attorney fees and other legal fees (i) pursuant to any agreement, order, notice,
requirement, responsibility or directive (including directives embodied in
Environmental Laws), injunction, judgment or similar documents (including
settlements) arising out of or in connection with any Environmental Laws, or
(ii) pursuant to any claim by a governmental entity or other person or entity
for personal injury, property damage, damage to natural resources, remediation
or similar costs or expenses incurred or asserted by such entity or person
pursuant to common law or statute.
1.11 Weatherford Indemnified Parties. Weatherford Indemnified Parties
shall have the meaning set forth in Section 6.1(a) hereof.
1.12 Christiana Company. Christiana Company means any corporation,
partnership, limited liability company, association or other entity, of which
Christiana or any Christiana Company now or at any time in the past owned,
directly or indirectly, an ownership interest in (whether or not such ownership
interest constituted control of the entity and whether or not such interest
represented a passive or active investment), including those companies named on
Schedule 1.12 hereto.
1.13 Christiana Taxes. Christiana Taxes means any and all taxes (other
than Weatherford Related Taxes as defined in the Merger Agreement) to which
Christiana or any Christiana Company may be obligated relating to or arising
from (i) the current or past operations or assets of Christiana or any
Christiana Company through the Effective Date, (ii) the Logistic Sale, (iii) the
Merger, (iv) any tax return filed by any current or past member of Christiana's
consolidated group, (v) any Tax to which Christiana may be alleged to be liable
by reason of being affiliated with any other Person for all periods prior to the
Effective Date, (vi) property taxes with respect to the assets of Christiana or
any Christiana Company for all periods prior to the Effective Date and (vii) any
transfer taxes or value added taxes in connection with the transactions
contemplated by the Logistic Sale and the Merger.
1.14 Liability. Liability means any and all claims, demands, liabilities,
responsibilities, disputes, causes of action and obligations of every nature
whatsoever, liquidated or unliquidated, known or unknown, matured or unmatured,
or fixed or contingent.
1.15 Member. Member means each person who has been admitted to TLC as a
member as provided in the Delaware Limited Liability Company Act (the "DLLCA")
and the Operating Agreement.
1.16 Membership Units. Membership Units means the basis by which a
Member's ownership interest in TLC issued pursuant to the Operating Agreement is
measured.
1.17 Merger. Merger means the merger of Christiana Acquisition, Inc. with
and into Christiana Companies, Inc. as contemplated by the Merger Agreement.
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1.18 Merger Agreement. Merger Agreement means the Amended and Restated
Agreement and Plan of Merger dated December 12, 1997, by and among Weatherford,
Christiana Acquisition, Inc., Christiana Companies, Inc. and C2, Inc.
1.19 Operating Agreement. Operating Agreement shall mean the form of
Operating Agreement attached hereto as Exhibit A.
1.20 Person. Person means an individual, corporation, limited liability
company, partnership, governmental authority or any other entity.
1.21 Properties. Properties means the properties currently or previously
owned or operated by Christiana or any Christiana Company.
1.22 Retained Liabilities. Retained Liabilities shall mean and be limited
solely to (i) those accounts payable relating to Christiana that are reflected
on the Effective Date balance sheet of Christiana, (ii) those accounts payable
reflected on the Effective Date balance sheet of Christiana and agreed to by
Weatherford prior to the Effective Date, (iii) the obligations of Christiana
that arise after the Effective Date (other than obligations relating to matters
existing or occurring on or prior to the Effective Date and indemnification,
warranty and product liability, wrongful death or property claims associated
with actions or omissions prior to the Effective Date or any business conducted
prior to the Effective Date) and (iv) Weatherford Related Taxes (as defined in
the Merger Agreement).
1.23 Taxes. Taxes means all federal, state, local, foreign and other
taxes, charges, fees, duties, levies, imposts, customs or other assessments,
including, without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, profit share, license,
lease, service, service use, value added, withholding, payroll, employment,
excise, estimated, severance, stamp, occupation, premium, property, windfall
profits or other taxes, fees, assessments, customs, duties, levies, imposts, or
charges of any kind whatsoever with any interest, penalties, additions to tax,
fines or other additional amounts imposed thereon or related thereto, and the
term Tax means any one of the foregoing Taxes.
1.24 Waste Materials. Waste Material means any (i) toxic or hazardous
materials or substances; (ii) solid wastes, including asbestos, polychlorinated
biphenyls, mercury, buried contaminants, chemicals, flammable or explosive
materials; (iii) radioactive materials; (iv) petroleum wastes and spills or
releases of petroleum products; and (v) any other chemical, pollutant,
contaminant, substance or waste that is regulated by any governmental entity
under any Environmental Law.
2. Purchase and Sale of Membership Units; Purchase Price.
2.1 Purchase and Sale of Membership Units.
(a) Effective as of the closing, Christiana shall sell, transfer,
assign, convey and deliver, and C2 shall purchase and accept, 666.667
Membership Units.
(b) CHRISTIANA MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO THE MEMBERSHIP UNITS OR THE ASSETS (CURRENT,
FIXED, PERSONAL, REAL, TANGIBLE OR INTANGIBLE) OF TLC AND ITS SUBSIDIARIES,
INCLUDING, BUT NOT LIMITED TO, CONDITION OR WORKMANSHIP THEREOF, OR THE
ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, CAPACITY,
SUITABILITY, UTILITY, SALABILITY, AVAILABILITY, COLLECTIBILITY, OPERATIONS,
CONDITIONS, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, IT BEING
THE EXPRESS AGREEMENT OF C2, TLC AND CHRISTIANA THAT, EXCEPT AS EXPRESSLY
SET FORTH IN THIS AGREEMENT, C2 WILL ACQUIRE THE MEMBERSHIP UNITS AND
INTEREST IN THE ASSETS OF TLC THROUGH SUCH OWNERSHIP INTEREST IN THEIR
PRESENT CONDITION AND STATE OF REPAIR, ON AN "AS IS AND WHERE IS, WITH ALL
FAULTS" BASIS.
2.2 Assumption. Effective as of the closing, as an inducement to Sub to
merge with Christiana, C2 hereby unconditionally assumes and undertakes to pay,
satisfy and discharge when due the Assumed
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Liabilities. Notwithstanding the foregoing, Christiana hereby retains and C2
will have no liability with respect to the Retained Liabilities. In addition,
effective as of the Closing, as a further inducement to Sub to merge with
Christiana, TLC hereby unconditionally assumes and undertakes to pay, satisfy
and discharge when due the Assumed Liabilities to the extent such Assumed
Liabilities relate to any of the historical businesses, operations or assets of
TLC and its subsidiaries. The closing shall occur on or prior to the closing of
the Merger.
2.3 Purchase Price. The aggregate purchase price ("Purchase Price") for
the 666.667 Membership Units shall be (i) $10,666,667, payable on the same date
that funds are paid by Weatherford to the Exchange Agent (as defined in the
Merger Agreement) pursuant to Section 1.8(c) of the Merger Agreement by C2 to
Christiana in the form of a certified or cashier's check, or, at the option of
Christiana, by wire transfer of immediately available funds to an account
designated by Christiana and (ii) the assumption by C2 at the closing of the
Assumed Liabilities.
2.4 ABSOLUTE ASSUMPTION. IT IS THE INTENT OF THE PARTIES THAT THE
LIABILITIES AND ENVIRONMENTAL LIABILITIES ASSUMED BY C2 AND TLC UNDER THIS
AGREEMENT SHALL BE WITHOUT REGARD TO THE CAUSE THEREOF OR THE NEGLIGENCE OF ANY
PERSON, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, ACTIVE OR PASSIVE,
AND WHETHER SUCH LIABILITY OR ENVIRONMENTAL LIABILITY IS BASED ON STRICT
LIABILITY, ABSOLUTE LIABILITY OR ARISING AS AN OBLIGATION OF CONTRIBUTION. C2
AND TLC EACH HEREBY WAIVES AND RELEASES FOR ITSELF AND ON BEHALF OF AFFILIATES
(OTHER THAN CHRISTIANA, WEATHERFORD AND THEIR RESPECTIVE AFFILIATES) ANY CLAIMS,
DEFENSES OR CLAIMS FOR CONTRIBUTION THAT IT HAS OR MAY HAVE AGAINST CHRISTIANA,
WEATHERFORD OR ANY OF THEIR RESPECTIVE AFFILIATES WITH RESPECT TO THE ASSUMED
LIABILITIES.
3. Representations of Christiana.
3.1 Organization. Christiana is a corporation duly organized and validly
existing under the laws of the state of Wisconsin. TLC is a limited liability
company duly organized, validly existing and in good standing under the laws of
the state of Delaware.
3.2 Title. The 666.667 Membership Units being transferred pursuant to this
Agreement without any representation or warranty of any kind, including any
implied representations of the title.
4. Representations of C2 and TLC.
4.1 Organization. TLC is a limited liability company duly organized and
validly existing under the laws of the state of Delaware. C2 is a corporation
duly organized and validly existing under the laws of the state of Wisconsin.
4.2 Corporate Power. Each of C2 and TLC has full power, legal right and
authority to enter into this Agreement, and to carry out the transactions
contemplated hereby. The execution of this Agreement, and full performance
hereunder, has been duly authorized by C2's Board of Directors and TLC's
Members.
4.3 Validity. This Agreement has been duly and validly executed and
delivered by C2 and TLC and is the legal, valid and binding obligation of each
of C2 and TLC, enforceable in accordance with its terms.
5. Operating Agreement; Put and Participation Rights.
5.1 Operating Agreement. At the Closing, C2 and Christiana shall enter
into the Operating Agreement.
5.2 Put. At any time after the fifth anniversary date of the Effective
Date, Christiana shall have the option (but shall not be required) to sell to C2
or TLC, at Christiana's option, and C2 and TLC, as applicable, shall be required
to purchase, all (but not less than all) of Christiana's Membership Units for a
price equal to $7 million. To exercise this option, Christiana shall provide
notice in writing to C2 or TLC, as applicable, of such election. The closing of
any purchase pursuant to this Section 5.2 shall occur within 60 days of notice
to C2 or TLC, as applicable. The price required to be paid by C2 or TLC, as
applicable pursuant to this Section 5.2 shall be paid in cash. The rights
contained in this Section 5.2 shall expire on the date one year after the fifth
anniversary of the Effective Date.
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5.3 Participation Rights.
(a) If (x) there shall be proposed a C2 Change of Control or (y) C2 shall
propose to transfer or sell all of its interest in TLC to an unrelated third
party (a "Third Party") in one or more transactions (a "TLC Disposition"),
Christiana shall have the right, but not the obligation, to participate (a "Tag
Along Right") in such transaction as follows:
(i) In the case of a C2 Change of Control, Christiana shall have a
right to sell its Membership Units to C2 and Logistic as determined as set
forth below for cash at the fair market value of such Membership Units as
may be agreed to by Christiana and C2 or, in the absence of such agreement,
as determined by appraisal, as set forth below; and
(ii) In the case of a TLC Disposition, Christiana shall have the right
to sell its Membership Units to the proposed purchaser of C2's Membership
Units for the same equivalent consideration per equivalent unit in TLC, in
cash, and otherwise on the same terms as C2 sells or transfers its
interests in TLC.
The purchasing entity in the case of a C2 Change of Control shall be
determined by C2 and Logistic; provided, however, that each shall be responsible
for the purchase in the event of a default by the selected purchasing entity.
If circumstances occur which give rise to the Tag Along Right, then C2
shall give written notice ("Tag Along Notice") to Christiana providing a summary
of the terms of the proposed transaction and advising Christiana of its Tag
Along Right. The Tag Along Notice shall be required to be accompanied by the
offer to purchase required by this Section 5.3 by (x) the proposed purchasing
entity in the case of a C2 Change of Control and (y) the proposed purchaser in
the case of a proposed TLC Disposition. Christiana may exercise its Tag Along
Right by delivery of written notice to C2 within fifteen (15) days of its
receipt of the Tag Along Notice. If Christiana gives written notice indicating
that it wishes to exercise its Tag Along Right,
(1) In the case of a C2 Change of Control, Christiana shall be
obligated to sell its Membership Units to C2 or TLC, as the case may be,
and C2 and TLC shall be obligated to purchase for cash at the fair market
value of such Membership Units as may be agreed to by Christiana and C2 or,
in the absence of such agreement, as determined by a mutually acceptable
Third Party appraiser contemporaneous with the closing of the C2 Change of
Control; provided that if the parties cannot agree on an appraiser, each
shall appoint its own appraiser and those appraisers will appoint the Third
Party appraiser; and, provided, further, that the final decision of the
appraisers shall be as agreed by two of the three appraisers; and
(2) In the case of a TLC Disposition, Christiana shall be obligated to
sell its Membership Units, and the proposed purchaser shall be obligated to
purchase, for the same equivalent consideration per equivalent unit in TLC
and otherwise on the same terms as C2 sells or transfers its interests in
TLC with the sale to occur on or prior to the closing of the TLC
Disposition; provided, however, that Christiana shall receive its
equivalent consideration per equivalent unit in TLC in cash.
No transaction which would result in a C2 Change of Control may be effected
unless such transaction is effected in full compliance with the terms of this
Section 5.3.
(b) For the purposes of this Section 5.3, a "C2 Change of Control" shall be
defined to be (x) a transfer, conveyance or other disposition of shares of C2
stock by a member of the Lubar Family, (y) the issuance by C2 of any additional
shares of C2 stock or (z) a merger, consolidation, conversion or share exchange
or other similar transaction involving C2, if, after giving effect to such
transaction described in (x), (y) or (z), the Lubar Family shall cease to
beneficially own (defined to mean both the right to vote and dispose of the full
economic interests in the shares) at least 25% of all of the voting and
ownership interests in C2 or the resulting entity.
(c) For the purposes of this Section 5.3, the "Lubar Family" shall be
defined to be Sheldon B. Lubar, Joan P. Lubar, David J. Lubar, Kristine L.
Thomson, Susan L. Solvang, their spouses, their children, trusts for the benefit
of any of the foregoing and the Lubar Family Foundation.
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6. Indemnification.
6.1 Indemnification Matters.
(a) Indemnification. Each of C2 and TLC, jointly and severally, hereby
agree to indemnify, defend and hold Christiana, Weatherford and their respective
officers, directors, employees, agents and assigns (collectively, the
"Weatherford Indemnified Parties") harmless from and against any and all
Liabilities or Environmental Liabilities (including, without limitation,
reasonable fees and expenses of attorneys, accountants, consultants and experts)
that the Weatherford Indemnified Parties incur, are subject to a claim for, or
are subject to, that are based upon, arising out of, relating to or otherwise in
respect of:
(i) Any breach of any covenant or agreement of C2 or TLC contained in
this Agreement or in any other agreement contemplated hereby;
(ii) The acts or omissions of Christiana or any Christiana Company on
or before the Effective Date;
(iii) The acts or omissions of TLC, any Christiana Company or any of
its Affiliates (other than Christiana or Weatherford) or the conduct of any
business by them on or after the Effective Date (it being understood that
this indemnification shall not apply to acts or omissions by Christiana or
Weatherford after the Effective Date);
(iv) The Assumed Liabilities;
(v) Any and all amounts for which Christiana or Weatherford may be
liable on account of any claims, administrative charges, self-insured
retentions, deductibles, retrospective premiums or fronting provisions in
insurance policies, including as the result of any uninsured period,
insolvent insurance carriers or exhausted policies, arising from claims by
Christiana or any Christiana Company, or the employees of any of the
foregoing, or claims by insurance carriers of Christiana or any Christiana
Company for indemnity arising from or out of claims by or against
Christiana or any Christiana Company for acts or omissions of Christiana or
any Christiana Company, or related to any current or past business of
Christiana or any Christiana Company or any product or service provided by
Christiana or any Christiana Company in whole or part prior to the
Effective Date;
(vi) Any settlements or judgments in any litigation commenced by one
or more insurance carriers against Christiana or Weatherford on account of
claims by any Christiana Company or employees of any Christiana Company
and, if filed prior to the Effective Date, by Christiana or any employee of
Christiana;
(vii) Any Taxes (other than Weatherford Related Taxes) as a result of
the Logistic Sale and any Taxes as a result of the Merger subsequently
being determined to be a taxable transaction for foreign, federal, state or
local law purposes regardless of the theory or reason for the transactions
being subject to Tax;
(viii) The on-site or off-site handling, storage, treatment or
disposal of any Waste Materials generated by Christiana or any Christiana
Company on or prior to the Effective Date or any Christiana Company at any
time;
(ix) Any COBRA Liability with respect to any employees of Christiana
or any Christiana Company prior to the Closing;
(x) Any and all Environmental Conditions, known or unknown, existing
on, at or underlying any of the Properties on or prior to the Effective
Date;
(xi) Any and all Liabilities incurred by Christiana or Weatherford
pursuant to its obligations hereunder in seeking to obtain or obtaining any
consent or approval to assign and transfer any interest in TLC;
(xii) Any acts or omissions of Christiana or any Christiana Company
relating to the ownership or operation of the business of Christiana or any
Christiana Company or the Properties on or prior to the Effective Date;
(xiii) Any Liability relating to any claim or demand by any
stockholder of Christiana or Weatherford with respect to the Merger, the
Logistic Sale or the transactions relating thereto; and
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(xiv) Any Liability relating to any Christiana or any Christiana
Company employee benefit or welfare plans arising out of circumstances
occurring on or prior to the Effective Date.
(b) Allocation of Liability Payment Obligations. To the extent a Liability
exists or a claim for indemnification is made by a Weatherford Indemnified Party
hereunder, such Liability shall be paid and such claim shall be defended and
paid as follows:
(i) If the Liability or claim relates primarily to the historic
assets, liability operations of business TLC (excluding [describe non TLC
historic subs] (the "TLC Historic Business"), TLC shall, as between C2 and
TLC, be primarily responsible for the payment of such Liability and the
defense and payment of such claim. If TLC does not defend or pay such
claim, C2 shall be responsible for the defense and payment of such claim.
(ii) If the Liability or claim relates primarily to a matter other
than the TLC Historic Business, C2 shall, as between C2 and TLC and subject
to the provisions of clause (iii) below, be primarily responsible for the
payment of such Liability and the defense and payment of such claim. If C2
does not defend or pay such claim, TLC shall be responsible for the defense
and payment of such claim.
(iii) If the Liability or claim relates primarily to a matter other
than the TLC Historic Business, the costs of defense and payment of the
Liability shall be paid by Weatherford to the extent and only to the extent
of the Christiana Retained Cash (as defined in the Merger Agreement);
provided that once such Christiana Retained Cash is paid pursuant to the
Merger Agreement, Weatherford shall have no obligation to pay such amounts.
Any such payments shall be subject to Weatherford being provided with
reasonable documentation regarding the payment obligations.
(iv) If TLC pays any amounts relating to an Assumed Liability or an
indemnification claim hereunder, Christiana shall be entitled to receive a
cash payment equal to one-third of any such amount paid when and if (i) TLC
or all or substantially all of its assets are sold, (ii) there is a sale of
Membership Units by C2 or (iii) there is a direct or indirect transfer or
sale of the membership units of TLC held by C2 or of the membership units
of C2. The obligation to pay such amounts shall be payable by C2.
(v) To secure the obligations of C2 hereunder, C2 shall pledge to
Christiana all of C2's interest in TLC, including all rights to
distributions in respect thereof, pursuant to a pledge agreement in such
form and having such terms as Christiana may reasonably request.
(vi) Notwithstanding the foregoing, nothing contained in this
Agreement shall be construed to be an assumption of any obligation or
responsibility by Weatherford of any Assumed Liabilities and its
obligations hereunder shall be personal to TLC and C2 to the extent and
only to the extent Weatherford has agreed to fund the payment of indemnity
claims by it with the Christiana Retained Cash as expressly provided
herein. No third party shall be deemed to have any rights against
Weatherford as result of this Agreement.
(c) Absolute Indemnity. NONE OF THE WEATHERFORD INDEMNIFIED PARTIES WILL
BE OBLIGATED TO INSTITUTE ANY LEGAL PROCEEDINGS IN CONNECTION WITH THE
COLLECTION OR PURSUIT OF ANY INSURANCE IN ORDER TO EXERCISE AN INDEMNIFICATION
REMEDY UNDER THIS SECTION VI. UNLESS OTHERWISE SPECIFICALLY EXPRESSED, THIS
INDEMNITY OBLIGATION SHALL APPLY WITHOUT REGARD TO WHETHER THE LIABILITY OR
ENVIRONMENTAL LIABILITY WAS CAUSED BY THE ORDINARY OR GROSS NEGLIGENCE OF ANY OF
THE WEATHERFORD INDEMNIFIED PARTIES (WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR
CONCURRENT OR ACTIVE OR PASSIVE), OR WHETHER THE LIABILITY OR ENVIRONMENTAL
LIABILITY IS BASED ON STRICT LIABILITY, ABSOLUTE LIABILITY OR ARISES AS AN
OBLIGATION OF CONTRIBU-
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TION OR INDEMNITY. EACH OF C2 AND TLC ACKNOWLEDGES THAT IT IS AWARE OF VARIOUS
THEORIES KNOWN AS THE "EXPRESS NEGLIGENCE" DOCTRINE AND OTHER SIMILAR DOCTRINES
AND THEORIES THAT MAY LIMIT INDEMNIFICATION AND AGREES AND STIPULATES THAT THE
PROVISIONS OF THIS AGREEMENT REFLECT THE EXPRESS INTENT OF THE PARTIES THAT THE
INDEMNIFICATION TO BE PROVIDED BY TLC AND C2 APPLY NOTWITHSTANDING THE FACT THAT
THE LIABILITY OR ENVIRONMENTAL LIABILITY (I) MAY NOT CURRENTLY BE KNOWN BY IT OR
MANIFEST ITSELF IN ANY REGARD, (II) MAY ARISE UNDER A STATUTE OR THEORY THAT MAY
NOT CURRENTLY EXIST OR BE KNOWN TO TLC, (III) MAY ARISE AS A RESULT OF A
NEGLIGENT ACT OR OMISSION BY ANY OF THE WEATHERFORD INDEMNIFIED PARTIES (WHETHER
SUCH CONDUCT BE SOLE, JOINT OR CONCURRENT OR ACTIVE OR PASSIVE) OR (IV) MAY
CONSTITUTE A VIOLATION OF ANY APPLICABLE CIVIL OR CRIMINAL LAW OR REGULATION.
6.2 Notice of Circumstance. After receipt by a Weatherford Indemnified
Party of notice, or a Weatherford Indemnified Party's actual discovery, of any
action, proceeding, claim, demand or potential claim which could give rise to a
right to indemnification pursuant to any provision of this Agreement (any of
which is individually referred to a as a "Circumstance"), the Weatherford
Indemnified Party shall give TLC and C2 (collectively the "TLC Parties") written
notice describing the Circumstances in reasonable detail; provided, however,
that no delay by a Weatherford Indemnified Party in notifying the TLC Parties
shall relieve the TLC Parties from any Liability or Environmental Liability
hereunder unless (and then solely to the extent) the TLC Parties' position is
actually adversely prejudiced. In the event the TLC Parties notifies the
Weatherford Indemnified Party within 15 days after such notice that the TLC
Parties is assuming the defense thereof, (i) the TLC Parties will defend the
Weatherford Indemnified Parties against the Circumstances with counsel of its
choice, provided such counsel is reasonably satisfactory to Weatherford, (ii)
the Weatherford Indemnified Parties may retain separate co-counsel at its or
their sole cost or expense (except that the TLC Parties will be responsible for
the fees and expenses for the separate co-counsel to the extent Weatherford
concludes reasonably that the counsel the TLC Parties has selected has a
conflict of interest), (iii) the Weatherford Indemnified Parties will not
consent to the entry of any judgment or enter into any settlement with respect
to the Circumstances without the written consent of the TLC Parties, and (iv)
the TLC Parties will not consent to the entry of any judgment with respect to
the Circumstances, or enter into any settlement which (x) requires any payments
by or continuing obligations of a Weatherford Indemnified Party, (y) requires a
Weatherford Indemnified Party to admit any facts or liability that could
reasonably be expected to adversely affect a Weatherford Indemnified Party in
any other matter or (z) does not include a provision whereby the plaintiff or
claimant in the matter released the Weatherford Indemnified Parties from all
Liability with respect thereto, without the written consent of Weatherford. In
the event the TLC Parties does not notify Weatherford within 15 days after
Weatherford has given notice of the Circumstance that the TLC Parties is
assuming the defense thereof, the Weatherford Indemnified Parties may defend
against, or enter into any settlement with respect to, the Circumstance in any
manner the Weatherford Indemnified Parties reasonably may deem appropriate, at
the TLC Parties' sole cost. The foregoing provisions shall be subject to the
provisions of Section 6.1(b).
6.3 Insurance. The TLC Parties shall not be obligated to indemnify the
Weatherford Indemnified Parties for amounts which shall have been covered and
paid by insurance of the Weatherford Indemnified Parties, provided, however,
insurance shall not include deductibles or self-insured retentions.
6.4 Scope of Indemnification. INDEMNIFICATION UNDER THIS SECTION VI SHALL
BE IN ADDITION TO ANY REMEDIES CHRISTIANA, WEATHERFORD OR ANY WEATHERFORD
INDEMNIFIED PARTY MAY HAVE AT LAW OR EQUITY. THERE SHALL BE NO TIME LIMIT AS TO
C2'S OR TLC'S INDEMNIFICATION OBLIGATIONS HEREUNDER.
6.5 Indemnity for Certain Environmental Liabilities. It is the intention
of the parties that the indemnity provided herein with respect to Environmental
Liabilities under CERCLA and corresponding provisions of state law is an
agreement expressly not barred by 42 U.S.C. sec. 9607(e)(i) and corresponding
provisions of state law.
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6.6 C2 and TLC Covenants. To assure the performance of the obligations of
C2 and TLC under this Agreement, C2 and TLC each hereby covenants and agrees
that it will not, and will cause its subsidiaries to not, merge, convert into
another entity, engage in a share or interest exchange for a majority of its
units or shares, liquidate or transfer, assign or otherwise convey or allocate,
directly or indirectly, in one or more transactions, whether or not related, a
majority of C2's or TLC's assets (determined in good faith by a board or similar
managing body's resolution prior to the transaction on a fair value and
consolidated basis) to any Person unless the acquiring Person expressly assumes
the obligations of C2 or TLC, as the case may be, hereunder, (ii) executes and
delivers to Christiana and Weatherford an agreement agreeing to be bound by each
and every provision of this Agreement as if it were C2 or TLC, as the case may
be,and (iii) has a net worth on a pro forma basis after giving effect to the
acquisition or business combination equal to or greater than that of C2 or TLC,
as the case may be, on a consolidated basis.
7. Miscellaneous.
7.1 Waiver and Amendment. Any provision of this Agreement may be waived at
any time by the party that is entitled to the benefits thereof. This Agreement
may not be amended or supplemented at any time, except by an instrument in
writing signed on behalf of each party hereto, provided that this Agreement may
be amended only as may be permitted by the laws that govern Weatherford, TLC,
Christiana and C2. The waiver by any party hereto of any condition or of a
breach of another provision of this Agreement shall not operate or be construed
as a waiver of any other condition or subsequent breach. The waiver by any party
hereto of any of the conditions precedent to its obligations under this
Agreement shall not preclude it from seeking redress for breach of this
Agreement other than with respect to the condition so waived.
7.2 Arbitration. Any disputes, claims or controversies connected with,
arising out of, or related to, this Agreement and the rights and obligations
created herein, or the breach, validity, existence or termination hereof, shall
be settled by Arbitration to be conducted in accordance with the Commercial
Rules of Arbitration of the American Arbitration Association, except as such
Commercial Rules may be changed by this Section 7.2. The disputes, claims or
controversies shall be decided by three independent arbitrators (that is,
arbitrators having no substantial economic or other material relationship with
the parties), one to be appointed by TLC and C2 and one to be appointed by
Weatherford within fourteen days following the submission of the claim to the
parties hereto and the third to be appointed by the two so appointed within five
days. Should either party refuse or neglect to join in the timely appointment of
the arbitrators, the other party shall be entitled to select both arbitrators.
Should the two arbitrators fail timely to appoint a third arbitrator, either
party may apply to the Chief Judge of the United States District Court for the
Southern District of Texas to make such appointment. The arbitrators shall have
ninety days after the selection of the third arbitrator within which to allow
discovery, hear evidence and issue their decision or award and shall in good
faith attempt to comply with such time limits; provided, however, if two of the
three arbitrators believe additional time is necessary to reach a decision, they
may notify the parties and extend the time to reach a decision in thirty day
increments, but in no event to exceed an additional ninety days. Discovery of
evidence shall be conducted expeditiously by the Parties, bearing in mind the
parties desire to limit discovery and to expedite the decision or award of the
arbitrators at the most reasonable cost and expense of the parties. Judgment
upon an award rendered pursuant to such Arbitration may be entered in any court
having jurisdiction, or application may be made to such court for a judicial
acceptance of the award, and an order of enforcement, as the case may be. The
place of Arbitration shall be Houston, Texas. The decision of the arbitrators,
or a majority thereof, made in writing, shall be final and binding upon the
parties hereto as to the questions submitted, and each party shall abide by such
decision. Notwithstanding the provisions of this Section 7.2, neither party
shall be prohibited from seeking injunctive relief pending the completion of any
arbitration. The costs and expenses of the arbitration proceeding, including the
fees of the arbitrators and all costs and expenses, including legal fees and
witness fees, incurred by the prevailing party, shall be borne by the losing
party.
Solely for purposes of injunctive relief, orders in aid of arbitration and entry
of the arbitrator's award:
(a) each of the parties hereto irrevocably consents to the non-exclusive
jurisdiction of, and venue in, any state court located in Harris County, Texas
or any federal court sitting in the Southern District of Texas in any
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suit, action or proceeding seeking injunctive relief, arising out of or relating
to this Agreement or any of the other agreements contemplated hereby and any
other court in which a matter that may result in a claim for indemnification
hereunder by a Weatherford Indemnified Party may be brought with respect to any
claim for indemnification by a Weatherford Indemnified Party;
(b) each of the parties hereto waives, to the fullest extent permitted by
law, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding seeking injunctive relief, orders in aid of
arbitration or entry of an arbitration arising out of or relating to this
Agreement or any of the other agreements contemplated hereby brought in any
state court located in Harris County, Texas or any federal court sitting in the
Southern District of Texas or any other court in which a matter that may result
in a claim for indemnification hereunder by a Weatherford Indemnified Party may
be brought with respect to any claim for indemnification by a Weatherford
Indemnified Party, and further irrevocably waive any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum; and
(c) each of the parties hereto irrevocably designates, appoints and
empowers CT Corporation System, Inc. and any successor thereto as its designee,
appointee and agent to receive, accept and acknowledge for and on its behalf,
and in respect of its property, service of any and all legal process, summons,
notices and documents which may be served in any suit, action or proceeding
arising out of or relating to this Agreement or any of the other agreements
contemplated hereby.
7.3 Assignment. This Agreement shall inure to the benefit of and will be
binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns. Nothing in this Agreement, express or implied,
is intended to or shall confer upon any person other than TLC, C2, Christiana,
Weatherford, and the Weatherford Indemnified Parties any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
7.4 Notices. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i) delivered
in Person or by courier, (ii) sent by telecopy or facsimile transmission, answer
back requested, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
if to Weatherford:
Weatherford International, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: Curtis W. Huff
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Charles L. Strauss
Facsimile: (713) 651-5246
if to TLC:
Total Logistic Control, LLC
700 N. Water Street
Suite 1200
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
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with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
if to Christiana:
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: Curtis W. Huff
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Charles L. Strauss
Facsimile: (713) 651-5246
if to C2:
700 N. Water Street
Suite 1200
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.4. Such notices shall be
effective, (i) if delivered in Person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
7.5 Governing Law. All questions arising out of this Agreement and the
rights and obligations created herein, or its validity, existence,
interpretation, performance or breach shall by governed by the laws of the State
of Texas without regard to conflict of laws principles.
7.6 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by applicable law.
7.7 Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
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7.8 Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.
7.9 Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all other prior agreements and understandings, both oral and written,
among the parties or any of them, with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WEATHERFORD INTERNATIONAL, INC.
("Weatherford")
By: /s/ BERNARD J. DUROC-DANNER
----------------------------------
Title: President
---------------------------------
TOTAL LOGISTIC CONTROL, LLC
("TLC")
By: /s/ WILLIAM T. DONOVAN
----------------------------------
Title: Vice President
---------------------------------
CHRISTIANA COMPANIES, INC.
("Christiana")
By: /s/ WILLIAM T. DONOVAN
----------------------------------
Title: President
---------------------------------
C2, INC.
("C2")
By: /s/ WILLIAM T. DONOVAN
----------------------------------
Title: President
---------------------------------
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APPENDIX C
TOTAL LOGISTIC CONTROL, LLC
FIRST AMENDED AND RESTATED
OPERATING AGREEMENT
, 1998
<PAGE> 190
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE I FORMATION................................................. 4
1.01 Definitions................................................. 4
1.02 Formation; Name............................................. 4
1.03 Purposes.................................................... 4
1.04 Registered and Principal Offices............................ 4
1.05 Term........................................................ 4
1.06 Foreign Qualification....................................... 5
1.07 No State Law Partnership.................................... 5
1.08 Partnership Classification.................................. 5
ARTICLE II MEMBERS.................................................. 5
2.01 Members..................................................... 5
2.02 Admission of Additional Members............................. 5
ARTICLE III CAPITAL CONTRIBUTIONS................................... 5
3.01 Capital Contributions by Members............................ 5
3.02 Purchase of Units by C2, Inc................................ 5
3.03 Loans to the Company........................................ 5
3.04 Withdrawal and Return of Contributions...................... 6
3.05 Interest on Contributions................................... 6
3.06 Limitation on Member's Deficit Make-up...................... 6
3.07 Capital Accounts............................................ 6
3.08 Units....................................................... 6
ARTICLE IV ALLOCATIONS.............................................. 6
4.01 Profits and Losses.......................................... 6
4.02 Tax Allocations............................................. 6
4.03 Construction................................................ 7
ARTICLE V DISTRIBUTIONS............................................. 7
5.01 Current Tax Distributions................................... 7
5.02 Other Distributions......................................... 7
5.03 Amounts Withheld............................................ 7
5.04 Distribution Restrictions................................... 7
ARTICLE VI MANAGEMENT............................................... 8
6.01 Voting and Decisions........................................ 8
6.02 Restriction on Transactions................................. 8
6.03 Regular Meetings............................................ 8
6.04 Special Meetings............................................ 8
6.05 Quorum...................................................... 9
6.06 Notice...................................................... 9
6.07 Manner of Acting............................................ 9
6.08 Vacancies................................................... 9
6.09 Presumption of Assent....................................... 9
6.10 Resignation of Manager...................................... 9
6.11 Action Without Meeting...................................... 9
6.12 Telephonic Meetings......................................... 10
6.13 Reliance by Third Parties................................... 10
6.14 Filing of Documents......................................... 10
6.15 Limitation on Liability; Indemnification.................... 10
6.16 Delegation to Members or Representatives of Members......... 10
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C>
6.17 Time Devoted to Business.................................... 11
6.18 Compensation of Members and Officers........................ 12
ARTICLE VII ASSIGNMENT, TRANSFER AND REPURCHASE OF MEMBER'S UNITS AND
DISASSOCIATION..................................................... 12
7.01 Assignment and Transfer..................................... 12
7.02 Disassociation.............................................. 13
7.03 Restraining Order........................................... 13
ARTICLE VIII DISSOLUTION AND WINDING UP.............................. 13
8.01 Dissolution................................................. 13
8.02 Winding Up and Liquidation.................................. 14
8.03 Compliance With Timing Requirements of Regulations.......... 14
ARTICLE IX BOOKS, REPORTS, ACCOUNTING, AND TAX ELECTIONS............. 14
9.01 Books and Records........................................... 14
9.02 Fiscal Year and Method of Accounting........................ 14
9.03 Reports and Statements...................................... 15
9.04 Tax Elections............................................... 15
9.05 Tax Matters Partner......................................... 15
ARTICLE X MISCELLANEOUS.............................................. 15
10.01 Amendments.................................................. 15
10.02 Bank Accounts............................................... 15
10.03 Binding Effect.............................................. 15
10.04 Rules of Construction....................................... 15
10.05 Choice of Law and Severability.............................. 16
10.06 Counterparts................................................ 16
10.07 Entire Agreement............................................ 16
10.08 Last Day for Performance Other Than a Business Day.......... 16
10.09 Notices..................................................... 16
10.10 Title to Property; No Partition............................. 16
ARTICLE XI GLOSSARY.................................................. 17
</TABLE>
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TOTAL LOGISTIC CONTROL, LLC
FIRST AMENDED AND RESTATED
OPERATING AGREEMENT
THIS FIRST AMENDED AND RESTATED OPERATING AGREEMENT (this "Operating
Agreement") is effective as of the [ ] day of [ ], 1998, between
Christiana Companies, Inc., a Wisconsin corporation, and C2, Inc., a Wisconsin
corporation (individually, "Member", and collectively, the "Members").
WITNESSETH:
WHEREAS, Christiana Companies, Inc. has formed a limited liability company
known as Total Logistic Control, LLC (the "Company"), by causing the filing of a
Certificate of Organization (the "Certificate") pursuant to the Act;
WHEREAS, C2, Inc. desires to acquire an interest in the Company and
Christiana Companies, Inc. desires to sell a portion of its interest to C2, Inc.
pursuant to the terms and conditions of that certain Agreement by and among
Weatherford International, Inc., a Delaware corporation, Christiana Acquisition
Co., a Wisconsin corporation, Christiana Companies, Inc., a Wisconsin
corporation, and C2, Inc., a Wisconsin corporation, dated December 12, 1997, as
amended by Amendment No. 1 dated May 26, 1998 and Amendment No. 2 dated October
, 1998 (the "Purchase Agreement").
WHEREAS, the parties hereto desire to set forth in full all of the terms
and conditions of their agreements and understandings in this Operating
Agreement;
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, hereby agree as follows:
ARTICLE I
FORMATION
1.01 Definitions. Capitalized terms used in this Operating Agreement shall
have the meanings set forth in the text of this Operating Agreement in the
Glossary contained in Article XI.
1.02 Formation; Name. Christiana Companies, Inc. formed the Company as a
limited liability company pursuant to the Act by causing, on June 13, 1997, the
Certificate to be filed with the Delaware Secretary of State, which shall
constitute notice that the Company is a limited liability company. The Company's
name shall be Total Logistic Control, LLC.
1.03 Purposes. The purposes of the Company shall be to engage in any and
all general business activities permissible under the Act.
1.04 Registered and Principal Offices. The registered office of the
Company shall initially be located at 1209 Orange Street, Wilmington (County of
New Castle), Delaware, 19801. The registered agent of the Company shall be the
Corporation Trust Company, whose address is the same as that of the registered
office. The principal office of the Company shall be located at 777 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202. The Board of Managers may
establish additional offices or may relocate the principal or registered
offices.
1.05 Term. The Company's term officially began on June 13, 1997, and shall
continue until terminated by operation of law or by some provision of this
Operating Agreement.
1.06 Foreign Qualification. Prior to the Company's conducting business in
any jurisdiction other than Delaware, the Board of Managers shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of the Board of Managers, with all requirements
necessary to qualify the Company as a foreign limited liability company in that
jurisdiction. Each Member shall execute, acknowledge, swear to, and deliver all
certificates and other instruments conforming with this Operating Agreement that
are necessary or appropriate to qualify, continue, and terminate the Company as
a foreign limited liability company in all such jurisdictions in which the
Company may conduct business.
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1.07 No State Law Partnership. The Members intend that the Company be
operated in a manner consistent with its treatment as a partnership for federal
and state income tax purposes and not be operated or treated as a "partnership"
(including, without limitation, a limited partnership or joint venture) for any
other purpose, including, but not limited to, Section 303 of the Federal
Bankruptcy Code, and this Operating Agreement shall not be construed to suggest
otherwise. No Member shall take any action inconsistent with the express intent
of the parties hereto as set forth herein.
1.08 Partnership Classification. The Members hereby agree that the Company
shall not be operated or treated as an "association" taxed as a corporation
under the Code and that no election shall be made under the Treasury Regulations
by the Members, the Members or any officer to treat the Company as an
"association" taxable as a corporation without the prior unanimous written
consent of the Members.
ARTICLE II
MEMBERS
2.01 Members. The names and business addresses of the Members of the
Company are set forth on Exhibit A hereto.
2.02 Admission of Additional Members. Additional members may be admitted
to the Company only with Member Approval.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.01 Capital Contributions by Members.
(a) Initial Capital Contributions. The initial capital contribution
made by Christiana Companies, Inc. to the Company in exchange for its 100%
percentage interest in the Company is set forth on Exhibit C to this
Operating Agreement of Total Logistic Control, LLC dated June 13, 1997.
Christiana Companies, Inc.'s 100% percentage interest is hereby restated as
1,000 Units in the Company.
(b) Additional Capital Contributions. No additional capital
contributions to the Company shall be required. Additional capital
contributions to the Company may be made with Manager Approval. No
additional Units in the Company may be issued without prior Member
Approval.
3.02 Purchase of Units by C2, Inc. Pursuant to the terms and conditions of
the Purchase Agreement, C2, Inc. purchased 666.667 of the Units in the Company
held by Christiana Companies, Inc. Immediately following such purchase, each
Member holds the number of Units in the Company set forth on Exhibit A hereto.
3.03 Loans to the Company. Except as set forth in this Operating
Agreement, no Member shall make a loan to the Company without Manager Approval.
3.04 Withdrawal and Return of Contributions. No Member shall be entitled
to withdraw or to the return of its capital contributions. No Member shall have
the right to demand and receive property other than cash in return for its
contributions, except that upon dissolution, the Members shall be entitled to
share in the distribution of the remaining assets of the Company in accordance
with Article VIII of this Operating Agreement.
3.05 Interest on Contributions. Capital contributions to the Company shall
not earn interest.
3.06 Limitation on Member's Deficit Make-up. The Members shall have no
obligation to restore any deficit in their Capital Accounts.
3.07 Capital Accounts.
(a) Maintenance of Capital Accounts. A separate Capital Account shall
be maintained and adjusted for each Member on the books and records of the
Company in accordance with the Code and
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the Treasury Regulations. The initial balance of each Member's Capital
Account shall be the amount of its initial contribution to the Company.
(b) Transfers. In the event any interest in the Company is transferred
in accordance with the terms of this Operating Agreement, the transferee
shall succeed to the Capital Account of the transferor to the extent it
relates to the transferred interest.
(c) Revaluation. In the event the Values of Company assets are
adjusted pursuant to the definition of the term "Value" in Article XI
hereof, the Capital Accounts of all Members shall be adjusted
simultaneously to reflect the aggregate net adjustment as if the Company
recognized gain or loss equal to the amount of such aggregate net
adjustment, and such adjustment shall be allocated to the Members in
accordance with Article IV hereof.
(d) Interpretation. The manner in which Capital Accounts are to be
maintained pursuant to this Section 3.07 is intended to and shall be
construed so as to comply with the requirements of Section 704(b) of the
Code and the Treasury Regulations promulgated thereunder.
3.08 Units. The membership interests in the Company shall be divided into
Units. Except as set forth herein, each Unit shall have identical preferences,
limitations, and other relative rights.
ARTICLE IV
ALLOCATIONS
4.01 Profits and Losses. Except as otherwise provided in Section 4.02
hereof, Profits and Losses shall be allocated among the Members in proportion to
the number of Units held by such Members.
4.02 Tax Allocations.
(a) Capital Contributions. In accordance with section 704(c) of the
Code and the Treasury Regulations under that section, income, gain, loss,
and deduction with respect to any capital contribution shall, solely for
tax purposes, be allocated among the Members so as to take account of any
variation between the adjusted basis of the capital contribution for
federal income tax purposes and its initial Value.
(b) Adjustment of Value. If the Value of any Company asset is
adjusted, subsequent allocations of income, gain, loss, and deduction with
respect to the asset shall take account of any variation between the
asset's adjusted basis for federal income tax purposes and its Value as so
adjusted in the same manner as under section 704(c) of the Code and the
Treasury Regulations under that section.
(c) Elections. Any elections or other decisions relating to the
allocations shall be made by the Board of Managers in any manner that
reasonably reflects the purpose and intent of this Operating Agreement.
Allocations pursuant to this Section 4.02 are solely for purposes of
national, state and local taxes and shall not affect, or in any way be
taken into account in computing, any Capital Account or share of Profits
and Losses, other items, or Distributions pursuant to any provision of this
Operating Agreement.
(d) Determination of Allocable Amounts. For purposes of determining
the Profits and Losses, or any other items of income, gain, loss, or
deduction allocable to any fiscal period, Profits and Losses, and any other
such items shall be determined on a daily, monthly, or other basis, as
determined by the Board of Managers using any permissible method under
section 706 of the Code and the Treasury Regulations under that section.
(e) Income Tax Consequences. The Members are aware of the income tax
consequences of the allocations made by this Article IV and agree to be
bound by the provisions of this Article IV in reporting their shares of
income, gain, loss, and deductions for income tax purposes.
4.03 Construction. The provisions of this Article IV (and other related
provisions in this Operating Agreement) pertaining to the allocation of items of
Company income, gain, loss, deductions, and credits shall be interpreted
consistently with the Treasury Regulations, and to the extent unintentionally
inconsistent with such Treasury Regulations, shall be deemed to be modified to
the extent necessary to make such provisions consistent with the Treasury
Regulations.
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ARTICLE V
DISTRIBUTIONS
5.01 Current Tax Distributions. To the extent permitted by law and
consistent with the Company's obligations to its creditors, the Company shall
make distributions ("Tax Distributions") in accordance with this Section 5.01 on
or before April 15, June 15, September 15 and December 15 of each year. The
aggregate amount of the Tax Distribution made with respect to a given date shall
be the product of (1) the Company's estimated federal taxable income (computed
without taking into account any asset change in value due to the Purchase
Agreement, for the calendar quarter that includes such date, multiplied by (2)
the sum of (i) the highest corporate federal income tax rate as stated in the
Internal Revenue Code, plus (ii) the highest corporate Wisconsin income tax rate
as stated in Wisconsin law, minus (iii) the product of (i) and (ii). The
aggregate amount of each Tax Distribution shall be distributed to the Members in
proportion to the number of Units held by such Members.
5.02 Other Distributions. At such times and in such form as may be
determined by Member Approval, distributions (in addition to the distributions
described in Sections 5.01 and 5.03) shall be made to the Members in proportion
to the number of Units held by each such Member.
5.03 Amounts Withheld. All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any payment or
distribution to the Members shall be treated as amounts distributed to the
Members pursuant to this Article V for all purposes under this Operating
Agreement.
5.04 Distribution Restrictions. The Company shall make no distribution if,
and to the extent, that after such distribution, the Company would not be able
to pay its debts as they become due in the usual course of business, or the fair
value of the Company's total assets would be less than the sum of its total
liabilities.
ARTICLE VI
MANAGEMENT
6.01 Voting and Decisions. Subject to the provisions of Section 6.02, the
management of the Company shall be vested in a Board of Managers. The initial
Board of Managers shall consist of six Managers. Each Manager shall be elected
by the vote or written consent of the Members owning at least a majority of the
Units in the Company provided, however, that Christiana Companies, Inc. and C2,
Inc. shall at all times each be entitled to elect, without the consent of any
other Member, a number of Managers that is proportionate to the number of Units
in the Company held by Christiana Companies, Inc. and C2, Inc., respectively.
6.02 Restriction on Transactions. The following actions shall require
Member Approval:
(a) The authorization or issuance of additional Units except for the
issuance of up to 101 Units to Company management for management incentive
options with five year cliff vesting;
(b) The authorization or payment of any distribution with respect to
Units, except for payment of any distribution that is necessary for C2,
Inc. to fulfill its obligation with respect to Section 5.2 of the Purchase
Agreement;
(c) The direct or indirect purchase or acquisition by the Company or
any Subsidiary of the Company of Units;
(d) The approval of any merger, consolidation or other similar
transaction involving the Company or any subsidiary of the Company or sale
of all or substantially all of the operating assets of the Company or any
subsidiary of the Company in one or more transactions;
(e) The creation of any new direct or indirect Subsidiary of the
Company;
(f) The making of any tax election;
(g) The liquidation or dissolution of the Company or any Subsidiary of
the Company;
(h) Any transaction between the Company or any Subsidiary of the
Company and any affiliate of a Member (other than a transaction between the
Company and a Subsidiary of the Company);
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(i) The payment of any compensation to any Member or any affiliate of
a Member or the entering into any employee benefit plan or compensatory
arrangement with or for the benefit of any Member or affiliate of any
Member except as permitted under Section 6.18;
(j) Any amendment to this Operating Agreement or the Certificate; and
(k) Any other matter for which Member Approval is required under the
Act.
6.03 Regular Meetings. A regular meeting of the Managers shall be held
without other notice other than this Operating Agreement at such time and place
as the Board of Managers shall determine. The Board of Managers may provide, by
resolution, the time and place, either within or without the State of Delaware,
for the holding of additional regular meetings without other notice than such
resolution. An annual meeting of Members shall be held without notice other than
this Operating Agreement immediately following the annual meeting of Managers.
6.04 Special Meetings. Special meetings of the Board of Managers or
Members may be called at the request of any two Managers or any Member. The
person or persons authorized to call special meetings of the Board of Managers
may fix any place, either within our without the State of Delaware, as the place
for holding any special meeting of the Board of Managers called by them.
6.05 Quorum.
(a) Managers. A majority of the number of Managers shall constitute a
quorum for the transaction of business at any meeting of the Board of
Managers, but if less than such majority is present at a meeting, a
majority of the Board of Managers or Members present may adjourn the
meeting from time to time without further notice.
(b) Members. All Members shall be required to be present to constitute
a quorum for the transaction of business of a meeting of the Members. A
Member may not unreasonably fail to attend a meeting of Members where such
failure would cause irreparable damage to the Company, its business or its
assets.
6.06 Notice. Notice of any special meeting shall be given at least five
business days prior thereto by written notice delivered personally or mailed to
each Manager at his business address, or by telegram; provided, however,
telephonic meetings may be called on only two business days' notice. If mailed,
such notice shall be deemed to be delivered when deposited in the United States
mail, so addressed, with postage thereon prepaid. If notice is given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Any Manager or Member may waive notice of
any meeting. The attendance of a Manager or Member at a meeting shall constitute
a waiver of notice of such meeting, except where a Manager or Member attends a
meeting for the express 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 regular or special meeting of the
Managers need be specified in the notice or waiver of notice of such meeting.
6.07 Manner of Acting. The act of the majority of the Managers present at
a meeting at which a quorum is present shall be the act of the Board of Managers
("Manager Approval").
6.08 Vacancies. Subject to the provisions of Section 6.01 hereof, any
vacancy occurring in the Board of Managers shall be filled by the affirmative
vote of a majority of the remaining Managers through less than a quorum of the
Board of Managers. A Manager elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office.
6.09 Presumption of Assent. A Manager of the Company who is present at a
meeting of the Board of Managers at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless such
Manager's dissent shall be entered into the minutes of the meeting or unless
such Manager shall file his or her written dissent to such action with the
person acting as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the secretary of the Company
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a Manager who voted in favor of such action.
6.10 Resignation of Manager. A Manager may resign from his or her position
as a Manager at any time by notice to the Board of Managers. Such resignation
shall become effective as set forth in such notice.
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6.11 Action Without Meeting. Any action required or permitted by this
Operating Agreement or by law to be taken at a meeting of the Board of Managers
or by the Members may be taken without a meeting if a written consent or
consents, describing the action so taken, is signed by all of the Managers or
Members, respectively, entitled to vote with respect to the subject matter
thereof and delivered to the Company for inclusion in the Company's records.
6.12 Telephonic Meetings. Except as herein provided and notwithstanding
any place set forth in the notice of the meeting or this Operating Agreement,
Members, Board of Managers and any committees thereof may participate in regular
or special meetings by, or through the use of, any means of communication by
which (a) all participants may simultaneously hear each other, such as by
conference telephone, or (b) all communication is immediately transmitted to
each participant, and each participant can immediately send messages to all
other participants. If a meeting is conducted by such means, then at the
commencement of such meeting, the presiding person shall inform the
participating Managers and Members that a meeting is taking place at which
official business may be transacted. Any participants in a meeting by such means
shall be deemed present in person at such meeting. Notwithstanding the
foregoing, no action may be taken at any meeting held by such means on any
particular matter, which the presiding person determines, in his or her sole
discretion, to be inappropriate under the circumstances for action at a meeting
held by such means. Such determination shall be made and announced in advance of
such meeting.
6.13 Reliance by Third Parties. Any person dealing with the Company, other
than a Member, may rely on the authority of the Board of Managers and any
officer of the Company in taking any action that is in the name of the Company
without inquiry into the provisions of this Operating Agreement or compliance
therewith. Every instrument purporting to be the action of the Company and
executed by the Board of Managers or any officer of the Company shall be
conclusive evidence in favor of any person relying thereon or claiming
thereunder that, at the time of delivery thereof, this Operating Agreement was
in full force and effect and that the execution and delivery of that instrument
is duly authorized by the Company.
6.14 Filing of Documents. The Board of Managers shall file or cause to be
filed all certificates or documents as may be determined by the Board of
Managers to be necessary or appropriate for the formation, continuation,
qualification, and operation of a limited liability company in the State of
Delaware and any other state in which the Company may elect to do business. To
the extent that the Board of Managers determines the action to be necessary or
appropriate, the Board of Managers shall do all things to maintain the Company
as a limited liability company under the laws of the State of Delaware and any
other state in which the Company may elect to do business.
6.15 Limitation on Liability; Indemnification. No Manager, Member or
officer of the Company shall be liable, responsible, or accountable in damages
or otherwise to the Members or the Company for any act or omission in connection
with the business of the Company if the officer acted (i) in good faith and in a
manner he or she reasonably believed to be within the scope of the authority
granted to him or her by this Operating Agreement and (ii) in the best
interests, or not opposed to the best interests, of the Company; provided that
the Manager or officer shall not be relieved from liability for any claim, issue
or matter as to which the officer shall have been finally adjudicated to have
committed fraud or willful misconduct. Subject to this limitation in the case of
such adjudication of liability, the Company shall indemnify the Managers, to the
fullest extent permitted under the Act, against any losses, judgements,
liabilities, and expenses (including, without limitation, reasonable attorney's
fees) incurred by reason of any act or omission in connection with the business
of the Company.
6.16 Delegation to Members or Representatives of Members. The Board of
Managers may, from time to time, fill the offices of president, vice president,
secretary and treasurer. The Board of Managers may appoint such other officers
and assistant officers as they deem necessary. Unless the Board of Managers
decide otherwise, if the title is one commonly used for officers of a business
corporation, the assignment of such title shall constitute the delegation of the
authority and duties that are normally associated with that office, as set forth
below, subject to any specific delegation of authority and duties made pursuant
to the first sentence of this Section 6.16. Any number of titles may be held by
the same person. Any delegation pursuant to this
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Section 6.16 may be revoked at any time by the Board of Managers. Any person so
delegated under this Section 6.16 shall not be considered a "manager" as defined
in Section 18.101(10) of the Act.
(a) President. The President shall be the principal executive officer
of the Company and, subject to the direction of the Board of Managers,
shall in general supervise and control the day-to-day operations of the
Company. The President shall preside at all meetings of the Board of
Managers. He or she shall have authority, subject to the terms of this
Operating Agreement and such rules as may be prescribed by the Board of
Managers, to appoint such agents and employees of the Company as he or she
shall deem necessary, to prescribe their powers, duties and compensation,
and to delegate authority to them. Such agents and employees shall hold
office at the discretion of the President. He or she shall have authority
to sign, execute, and acknowledge, on behalf of the Company, all deeds,
mortgages, bonds, stock certificates, contracts, leases, reports, and all
other documents or instruments necessary or proper to be executed in the
course of the Company's regular business, or which shall be authorized by
resolution of the Board of Managers or Members; and except as otherwise
provided by the Board of Managers, he or she may authorize any Vice
President or other officer or agent of the Corporation to sign, execute,
and acknowledge such documents or instruments in his or her place and
stead. In general, he or she shall perform all duties incident to the
office of the President and such other duties as may be prescribed by the
Board of Managers from time to time.
(b) The Vice President. In the absence of the President or in the
event of the President's death, inability or refusal to act, or in the
event for any reason it shall be impracticable for the President to act
personally, the Vice President (or in the event there be more than one vice
President, the Vice Presidents in the order designated by the Board of
Managers, or in the absence of any designation, then in the order of their
election or appointment) shall perform the duties of the President, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the President. Any Vice President shall perform such
other duties and have such authority as from time to time may be delegated
or assigned to him or her by the President or by the Board of Managers. The
execution of any instrument of the Company by any Vice President shall be
conclusive evidence, as to third parties, of his or her authority to act in
the stead of the President.
(c) The Secretary. The Secretary shall (i) keep minutes of the
meetings of the Members and the Board of Managers (and of committees
thereof) in one or more books provided for that purpose (including records
of actions taken by the Members and the Board of Managers); (ii) see that
all notices are duly given in accordance with the provisions of this
Operating Agreement or as required by the Act; (iii) be custodian of the
corporate records; (iv) maintain a record of the Members of the Company, in
a form that conforms to the requirements of the Act; and (v) in general
perform all duties incidental to the office of Secretary and have such
other duties and exercise such other authority as from time to time may be
delegated or assigned by the President.
(d) The Treasurer. The Treasurer shall (i) have charge and custody of
and be responsible for all funds and securities of the Company; (ii)
maintain appropriate accounting records; (iii) receive and give receipt for
monies due and payable to the Company from any source whatsoever, and
deposit all such monies in the name of the Company in such banks, trust
companies, or other depositories as shall be selected in accordance with
the provisions of this Operating Agreement; and (iv) in general perform all
of the duties incident to the office of Treasurer and have such other
duties and exercise such other authority as from time to time may be
delegated or assigned by the President.
6.17 Time Devoted to Business. The Members and the Managers shall not be
required to devote their full time and efforts to the Company, but only so much
of their time and efforts as is reasonably necessary to perform their duties and
responsibilities to the Company.
6.18 Compensation of Members and Officers. The Board of Managers may
authorize the Company to pay the officers (other than those affiliated with
Lubar & Co., Incorporated) any reasonable fees or other compensation for their
services. C2 shall be paid an annual management fee of $250,000.
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ARTICLE VII
ASSIGNMENT, TRANSFER AND REPURCHASE OF MEMBER'S UNITS AND DISASSOCIATION
7.01 Assignment and Transfer.
(a) General Restrictions on Transfers. Except as otherwise provided
herein, a Member may not Transfer any Unit without the prior written
consent of the Board of Managers. Any Transfer, attempted Transfer, or
purported Transfer in violation of this Operating Agreement's terms and
conditions shall be null and void. Notwithstanding the foregoing, C2, Inc.
may pledge and assign its interest to Christiana and Christiana may effect
a Transfer of C2, Inc.'s Units pursuant to any action taken with respect to
any security interest granted to it by C2, Inc. Christiana may also
transfer its Units without consent of the Board of Managers if the
transferee is an affiliate of Christiana or C2, Inc. and such party agrees
in writing to be bound by the provisions of this Operating Agreement. At
any time after the fifth anniversary of the date of this Operating
Agreement, Christiana may transfer any or all of its Units in the Company
to any person without the prior consent of the Board of Managers, provided,
however, that in order to effect any such Transfer, Christiana must provide
C2, Inc. with a copy of the terms of the proposed transfer (the "Transfer
Notice"). C2, Inc. shall have a right of first refusal to purchase such
Units for the same price and on the same terms set forth in the Transfer
Notice. Such right shall be exercised by C2, Inc. sending an appropriate
notice to Christiana within 60 days after receipt of the Transfer Notice.
The closing shall then be held 30 days after C2, Inc. sends its notice to
Christiana.
(b) Involuntary Transfer.
(i) Notice of Involuntary Transfer. In the event of an Involuntary
Transfer of a Unit, the Transferor or the Involuntary Transferee shall
immediately deliver a Notice of Involuntary Transfer to the Company.
During the 90-day period beginning on the earlier of (i) the date of
receipt by the Company of the Notice of Involuntary Transfer or (ii) the
date that the Company provides a notice to the Involuntary Transferee
and the Members that the Company is aware of the Involuntary Transfer,
the Company shall have the option to purchase the Units that are subject
to the Involuntary Transfer. The purchase price shall be an amount equal
to the book value attributable to those Units, as determined by the
Company's accountants, calculated as of the last day of the calendar
quarter immediately preceding the date of the Involuntary Transfer. The
purchase price shall be payable pursuant to the terms of payment set
forth in the applicable provisions of Section 7.01(e) below.
Notwithstanding the foregoing, in the case of a Member that is an
entity, the option described above in this Section 7.01(b) shall not
apply with respect to an Involuntary Transfer of Units resulting from a
merger of such Member into another entity if the proportionate interest
owned by each person who owns, directly or indirectly, an ownership
interest in such other entity immediately after the merger is
substantially the same as the proportionate interest owned, directly or
indirectly, by such person in the Member immediately before the merger.
(ii) Acceptance of Offer. The Company shall exercise any such
option by delivering a written notice to the Transferor (if the
Transferor is still in existence) and the Involuntary Transferee within
such 90-day period, which notice shall specify a closing date, occurring
within 30 days after the end of such 90-day period, for the purchase by
the Company.
(iii) Status of Involuntary Transferee. Regardless of whether the
Company exercises such option or closes such purchase, the Involuntary
Transferee shall not be considered to be a Member, for any period of
time, as a result of the Involuntary Transfer (and the rights of the
Involuntary Transferee shall be as described in Section 7.01(c)), unless
all the Nontransferring Members have delivered (within such 90-day
period) their written consent, which consent may be withheld in the sole
and absolute discretion of the Nontransferring Members, to treating the
Involuntary Transferee as a Member.
(c) Effect of Transfers. Until an Involuntary Transferee is considered
a Member, if ever, pursuant to the applicable provisions of this Article
VII, the Units transferred to an Involuntary Transferee shall be considered
in all respects as Units held by the Transferor for purposes of this
Operating Agreement except for those provisions relating to the economic
rights associated with such Units, the nonmanage-
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ment provisions of which will apply to the Involuntary Transferee as though
the Involuntary Transferee held the Units. Except as otherwise provided in
this Operating Agreement, any actions that a Member takes or would be
entitled to take with respect to Units, including, without limitation,
votes, consents, offers, sales, purchases, options, or other deeds taken
pursuant to this Operating Agreement, shall be taken by the Member for its
Involuntary Transferees with respect to the Units held by those Involuntary
Transferees. This Section 7.01(c) shall constitute an irrevocable and
absolute proxy and power of attorney granted by each Involuntary Transferee
to its Transferor to (1) take such actions on behalf of the Involuntary
Transferee without any further deed than the taking of the action by the
Member, and (2) sign any document or instrument evidencing such action for
or on behalf of the Involuntary Transferee relating to the Units held by
the Involuntary Transferee.
(d) Time and Place of Closing. Except as otherwise agreed by the
Company, the closing of any Involuntary Transfer (or purchase by the
Company) pursuant to this Article VII shall occur at the Company's
principal office on such day as the Company shall select pursuant to the
provisions of this Article VII. The Company shall notify the Transferor and
the Involuntary Transferee in writing of the exact date and time of closing
at least 10 days before the closing date.
(e) Transfer and Payment of Purchase Price. At the closing, the
Transferor shall deliver the Units that are subject to the Involuntary
Transfer (or purchase or redemption by the Company) free and clear of any
liens, security interests, encumbrances, charges, or other restrictions
(other than those created pursuant to this Operating Agreement), together
with all such instruments or documents of conveyance as shall be reasonably
required. If not otherwise provided pursuant to this Section 7.01 and the
Notice of Involuntary Transfer, or otherwise agreed, the price for any
Units to be purchased or redeemed by the Company shall be paid by certified
or bank cashier's check.
7.02 Disassociation. A person ceases to be a Member of the Company upon
the occurrence of, and at the time of, any event of disassociation defined under
the Act.
7.03 Restraining Order. In the event that any Member shall at any time
Transfer or attempt to Transfer its Units in violation of the provisions of this
Operating Agreement and any rights hereby granted, then the other Members and
the Company shall, in addition to all rights and remedies at law and in equity,
be entitled to a decree or order restraining and enjoining such Transfer, and
the offending Member shall not plead in defense thereto that there would be an
adequate remedy at law; it being hereby expressly acknowledged and agreed that
damages at law will be an inadequate remedy for a breach or threatened breach of
the violation of the provisions concerning transfer set forth in this Operating
Agreement.
ARTICLE VIII
DISSOLUTION AND WINDING UP
8.01 Dissolution. The Company shall be dissolved upon the happening of any
of the following:
(a) By Member Approval to dissolve the Company;
(b) The Company being adjudicated insolvent or bankrupt; or
(c) Entry of a decree of judicial dissolution.
8.02 Winding Up and Liquidation. Upon a dissolution of the Company, the
Members shall by Member Approval select a liquidator (the "Liquidator"). The
Liquidator shall liquidate as much of the Company's assets in its discretion,
and shall do so as promptly as is consistent with obtaining fair value for them,
and shall apply and distribute the assets of the Company in accordance with the
following:
(a) First, to the payment and discharge of all of the Company's debts
and liabilities to creditors of the Company regardless of whether they are
Members, including, without limitation, the unpaid principal balance (and
any interest thereon) of any loan made by a Member; and
(b) Second, to the Members in accordance with their Capital Accounts,
after giving effect to all contributions, distributions and allocations for
all periods.
8.03 Compliance With Timing Requirements of Regulations. In the event the
Company is "liquidated" within the meaning of Section 1.704-1(b)(2)(ii)(g) of
the Treasury Regulations, distributions shall be made pursuant to this Article
IX by the end of the fiscal year in which such liquidation occurs, or if later,
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within ninety (90) days of such liquidation. Distributions pursuant to the
preceding sentence may be distributed to a trust established for the benefit of
the Members for the purposes of liquidating Company assets, collecting amounts
owed to the Company, and paying any contingent or unforeseen liabilities or
obligations of the Company or of the Members arising out of or in connection
with the Company. The assets of any such trust shall be distributed to the
Members from time to time, in the reasonable discretion of the Members in the
same proportions as the amount distributed to such trust by the Company would
otherwise have been distributed to the Members pursuant to this Operating
Agreement; provided, however, such trust may only be created if the Company has
received an opinion from counsel, which is generally recognized as being capable
and qualified in the area of federal income taxation, that such trust will not
be classified as an association which would be taxed as a corporation for
federal income tax purposes.
ARTICLE IX
BOOKS, REPORTS, ACCOUNTING, AND TAX ELECTIONS
9.01 Books and Records. The Company shall maintain or cause to be
maintained at the Company's principal place of business, complete and accurate
books and records with respect to all Company business and transactions. Such
books and records shall be at all times during normal business hours open to
inspection by any Member. At a minimum, the Company shall keep the following
books and records at the principal place of business of the Company: (a) a list
of the full name(s) and last known business address(es) of each current and
former Member in alphabetical order, setting forth the date on which such person
became a Member and the date, if applicable, on which the person ceased to be a
Member; (b) a copy of the Articles of Organization and all certificates of
amendment, together with executed copies of any powers of attorney pursuant to
which any certificate has been executed; (c) a copy of this Operating Agreement
and all amendments thereto, including any prior Operating Agreements no longer
in effect; (d) copies of the Company's federal, state, and local income tax
returns and reports for the seven (7) most recent years; (e) copies of any
effective written Company agreements and of any financial statements of the
Company for the seven (7) most recent years; (f) all such other records as may
be required by law; and (g) full and true books of account.
9.02 Fiscal Year and Method of Accounting. The Company's fiscal year for
both tax and financial reporting purposes shall be the calendar year. The method
of accounting for both tax and financial reporting purposes shall be the cash
method, unless otherwise required for tax purposes or if the Board of Managers
determine that there would be a significant advantage to the Company if
different methods were followed.
9.03 Reports and Statements.
(a) Annual Tax Reports. Within ninety (90) days of the end of each
fiscal year of the Company, the Company shall deliver to the Members such
information as shall be necessary for the preparation by the Members of
their federal, state, and local income and other tax returns.
(b) Annual Financial Reports. Within ninety (90) days after the end of
each fiscal year of the Company, the Company shall deliver to the Members
unaudited financial statements of the Company for the just completed fiscal
year, prepared at the expense of the Company, which financial statements
shall set forth, as of the end of and for the preceding fiscal year, the
following:
(1) A profit and loss statement and a balance sheet of the Company;
(2) Members' equity and changes in financial position; and
(3) The balances in the Capital Accounts of each Member.
9.04 Tax Elections.
(a) General. The Members shall have the sole authority through Member
Approval to make or revoke any elections on behalf of the Company for tax
purposes.
(b) Section 754 Election. In the event of a transfer of all or part of
the interest of a Member in the Company, at the request of the transferee,
the Board of Managers may, in its sole discretion, cause the Company to
elect, pursuant to Code Section 754, or the corresponding provision of
subsequent law, to adjust the basis of the Company property as provided by
Code Sections 734 and 743 provided, however, such election shall be made
effective as of the Closing of the transactions contemplated by the
Purchase Agreement.
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9.05 Tax Matters Partner. is designated as the "tax matters
partner" of the Company, as provided in regulations pursuant to Code Section
6231 and to perform such duties as are required or appropriate thereunder.
ARTICLE X
MISCELLANEOUS
10.01 Amendments. Except as provided in Section 10.05 hereof, amendments
to this Operating Agreement shall be undertaken and effective only with Member
Approval.
10.02 Bank Accounts. Company funds shall be deposited in the name of the
Company in accounts designated by the Board of Managers and withdrawals shall be
made only by persons duly authorized by the Board of Managers.
10.03 Binding Effect. Except as provided to the contrary, the terms and
provisions of this Operating Agreement shall be binding upon and shall inure to
the benefit of all the Members, their personal representatives, heirs,
successors, and assigns.
10.04 Rules of Construction. The captions in this Operating Agreement are
inserted only as a matter of convenience and in no way affect the terms or
intent of any provision of this Operating Agreement. All defined phrases,
pronouns, and other variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular, or plural, as the actual identity of the
organization, person, or persons may require. No provision of this Operating
Agreement shall be construed against any party hereto by reason of the extent to
which such party or its counsel participated in the drafting hereof.
10.05 Choice of Law and Severability. This Operating Agreement shall be
construed in accordance with the internal laws of Delaware. If any provision of
this Operating Agreement shall be contrary to the internal laws of Delaware or
any other applicable law, at the present time or in the future, such provision
shall be deemed null and void, but shall not affect the legality of the
remaining provisions of this Operating Agreement. This Operating Agreement shall
be deemed to be modified and amended so as to be in compliance with applicable
law and this Operating Agreement shall then be construed in such a way as will
best serve the intention of the parties at the time of the execution of this
Operating Agreement.
10.06 Counterparts. This Operating Agreement may be executed in one or
more counterparts. Each such counterpart shall be considered an original and all
of such counterparts shall constitute a single agreement binding all the parties
as if all had signed a single document.
10.07 Entire Agreement. This Operating Agreement constitutes the entire
agreement among the Members regarding the terms and operations of the Company,
except for any amendments to this Operating Agreement adopted in accordance with
Section 10.01 hereof. This Operating Agreement and the other agreements referred
to in the preceding sentence supersede all prior and contemporaneous agreements,
statements, understandings, and representations of the parties regarding the
terms and operations of the Company, except as provided in the preceding
sentence.
10.08 Last Day for Performance Other Than a Business Day. In the event
that the last day for performance of an act or the exercise of a right hereunder
falls on a day other than a Business Day, then the last day for such performance
or exercise shall be the first Business Day immediately following the otherwise
last day for such performance or such exercise.
10.09 Notices. All notices, requests, consents, or other communications
provided for in or to be given under this Operating Agreement shall be in
writing, may be delivered in person, by facsimile transmission (fax), by
overnight air courier or by mail, and shall be deemed to have been duly given
and to have become effective (i) upon receipt if delivered in person or by fax,
(ii) one day after having been delivered to an overnight air courier, or (iii)
three days after having been deposited in the mails as certified or registered
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matter, all fees prepaid, directed to the parties or their assignees at the
following addresses (or at such other address as shall be given in writing by a
party hereto):
If to the Company, to the Board of Managers at:
Total Logistic Control, LLC
700 North Water Street
Suite 1200
Milwaukee, Wisconsin 53202
Attention: William T. Donovan
(414) 291-9000
If to a Member, to the intended recipient at the Member's most recent
address as reflected in the Company's records.
10.10 Title to Property; No Partition.
All real and personal property owned by the Company shall be owned by it as
an entity and no Member shall have any ownership interest in such property in
its individual right or name, and each Member's Units represented thereby shall
be personal property.
ARTICLE XI
GLOSSARY
In this Operating Agreement, the following terms shall have the meanings
indicated below, and any derivations of these terms shall have correlative
meanings:
"Act" means the Delaware Limited Liability Company Act in its form as of
the date of this Operating Agreement.
"Affiliate" means any of the following persons or entities: (i) any person
directly or indirectly controlling, controlled by, or under common control with
the person in question; (ii) any person owning any interest in the person in
question; (iii) any officer, director, employee, or partner of the person in
question; and (iv) if the person in question or any partner of the person in
question is an officer, director, or partner, any company for which such person
in question or any partner of the person in question acts in any such capacity.
"Board of Managers" means the management body of the Company acting on
behalf of the Members pursuant to Section 6.01.
"Business Day" means a day other than a Saturday, Sunday, or a legal
holiday on which federally chartered banks in the United States of America are
generally closed for business.
"Capital Account" means the separate account maintained for each Member
pursuant to Section 3.06 hereof.
"Christiana" means Christiana Companies, Inc. and its permitted successors
and assigns.
"Code" means the Internal Revenue Code of 1986, and any successor
provisions or codes thereto.
"Company" means Total Logistic Control, LLC.
"Depreciation" means, for each fiscal year or other period, an amount equal
to the depreciation, amortization, or other cost recovery deduction allowable
with respect to an asset for such year or other period, except that if the Value
of an asset differs from its adjusted basis for federal income tax purposes at
the beginning of such year or other period, Depreciation shall be an amount
which bears the same ratio to such beginning Value as the federal income tax
depreciation, amortization, or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis.
"Involuntary Transfer" means a Transfer of a Unit due to the bankruptcy of
a Member under applicable federal law.
"Involuntary Transferee" means any person receiving an interest in Units
due to the bankruptcy of a Member under applicable federal law pursuant to
Section 7.01(b).
"Liquidator" means the person selected as such by the Member pursuant to
Section 8.02 hereof.
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"Manager" means an individual serving on the Board of Managers.
"Manager Approval" means an act of a majority of the Board of Managers
pursuant to Section 6.07.
"Member" means the parties executing this Operating Agreement or any Member
admitted pursuant to Section 2.02 or any Transferee permitted to become a Member
pursuant to Section 7.01.
"Member Approval" means the unanimous vote or written consent of the
Members.
"Nontransferring Members" means, with respect to a Transfer of Units, all
persons (other than the Transferor) who are Members immediately prior to such
Transfer.
"Notice of Involuntary Transfer" means the written notice to be sent by a
Transferor or an Involuntary Transferee to the Company pursuant to Article VII
describing the event giving rise to the Involuntary Transfer; the date upon
which the Transfer occurred; the reason or reasons for the Transfer; the name,
address and capacity of the Involuntary Transferee; and the number of Units
involved.
"Profits and Losses" means, for each fiscal year or other period, an amount
equal to the Company's taxable income or loss for such year or period,
determined in accordance with Code Section 703(a) (for this purpose, all items
of income, gain, loss, or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
i. Any income of the Company that is exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or loss;
ii. Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant
to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not
otherwise taken into account in computing Profits or Losses pursuant to
this definition, shall be subtracted from such taxable income or loss;
iii. Gain or loss resulting from any disposition of Company property
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from its Value;
iv. In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year or
other period hereof; and
v. Notwithstanding any other provision of this definition, any items,
which are specially allocated pursuant to Section 4.02 hereof shall not be
taken into account in computing Profits or Losses.
"Sale" (or "Sell") means a sale, transfer, financing, refinancing,
condemnation, or other disposition by the Company of all or any portion of its
assets.
"Subsidiary" means any corporation, partnership, limited partnership,
association, limited liability company or other business entity.
"Tax Matters Partner" means the person designated in Section 9.05 as
provided in regulations pursuant to Code Section 6231.
"Transfer" means, with respect to a Unit, to voluntarily sell, give,
assign, bequeath, pledge or otherwise encumber, divest, dispose of, or transfer
direct ownership of all, any part of, or any interest in the Unit, but does not
include a change in control of any Member or any affiliate thereof.
"Transferor" means a Member who Transfers, or proposes to Transfer, any of
its Units pursuant to the terms of Article VII.
"Treasury Regulations" means the Federal Income Tax Regulations promulgated
under the Code, as such Regulations may be amended from time to time. All
references herein to specific sections of the Treasury Regulations shall be
deemed also to refer to any corresponding provisions of succeeding Treasury
Regulations, and any References to Temporary Regulations shall be deemed also to
refer to any corresponding provisions of final Treasury Regulations.
"Unit" or "Units" means the basis by which a Member's ownership interest in
the Company issued pursuant to Section 3.01(a) or (b) is measured.
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"Value" means, with respect to any asset, the assets adjusted basis for
federal income tax purposes, except as follows:
(a) The initial Value of any asset contributed by a Member to the Company
shall be the gross fair market value of such asset, as determined by the
Members;
vi. The Values of all Company assets shall be adjusted to equal their
respective gross fair market values, as determined by the Members as of the
following times: (A) the acquisition of any additional interest in the
Company by any new or existing Member in exchange for more than a de
minimis capital contribution; (B) the distribution by the Company to a
Member of more than a de minimis amount of Company property, unless all
Members receive simultaneous distributions of undivided interests in the
distributed property in proportion to their interests in the Company; and
(C) the termination of the Company for federal income tax purposes pursuant
to Code Section 708(b)(1)(B); and
vii. If the Value of an asset has been determined or adjusted pursuant
to (i) or (ii) above, such Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
IN WITNESS WHEREOF, the undersigned have caused this Operating Agreement to
be executed as of the day and year first above written.
CHRISTIANA COMPANIES, INC.
By:
------------------------------------
William T. Donovan, President
C2, INC.
By:
------------------------------------
Name:
------------------------------------
Title:
------------------------------------
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EXHIBIT A
<TABLE>
<CAPTION>
MEMBER UNITS
------ -------
<S> <C>
C2, Inc..................................................... 666.667
700 North Water Street
Suite 1200
Milwaukee, Wisconsin 53202
Christiana Companies, Inc................................... 333.333
5 Post Oak Park
Suite 1760
Houston, Texas 77027
</TABLE>
C-17
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APPENDIX D
MORGAN STANLEY
MORGAN STANLEY & CO.
INCORPORATED
TEXAS COMMERCE TOWER
600 TRAVIS, SUITE 3700
HOUSTON, TX 77002-2993
(713) 512-4400
October 9, 1998
Board of Directors
Weatherford International, Inc.
5 Post Oak Park
Suite 1760
Houston, TX 77027-3415
Gentlemen:
We understand that Weatherford International, Inc., previously known as
EVI, Inc. ("Weatherford"), Christiana Acquisition, Inc., a wholly owned
subsidiary of Weatherford ("Sub"), Christiana Companies, Inc. ("Christiana"),
and C2, Inc., ("C2"), propose to enter into an Amendment, substantially similar
to the draft dated October 7, 1998 (the "Amendment") to the Agreement and Plan
of Merger dated December 12, 1997, as amended (together with the Amendment, the
"Amended Merger Agreement"), which provides, among other things, for the merger
(the "Merger") of Sub with and into Christiana. Pursuant to the Merger,
Christiana will become a wholly owned subsidiary of Weatherford and each issued
and outstanding share of common stock, par value $1.00 per share, of Christiana
(the "Christiana Common Stock"), other than shares held directly or indirectly
by Christiana, will be converted into the right to receive (i) shares of common
stock, par value $1.00 per share, of Weatherford (the "Weatherford Common
Stock") equal to the number of shares of Weatherford Common Stock held by
Christiana at the time of the Merger divided by the number of outstanding shares
of Christiana Common Stock, and (ii) a certain cash amount per share equal to
the amount of cash held by Christiana in excess of its accrued unpaid taxes, the
value of certain tax benefits and fixed liabilities at the time of the Merger
divided by the number of outstanding shares of Christiana Common Stock, all
subject to adjustment as described in the Amended Merger Agreement.
We further understand that in a separate but related transaction,
Weatherford, Christiana, C2 and Total Logistic Control, LLC ("Logistic"), have
entered into an Agreement, dated December 12, 1997, as amended (the "Logistic
Agreement" and together with the Amended Merger Agreement, the "Agreements"),
which provides, among other things, as a condition to the Merger, for the sale
by Christiana to C2 of 667 Membership Units (two-thirds of the outstanding
interest) in Logistic for $10,666,667 in cash and the assumption by C2 of
certain Assumed Liabilities (as defined in the Logistic Agreement) (the
"Logistic Sale"). In addition, the Logistic Agreement also provides for the
indemnification by C2 and Logistic of Weatherford and Christiana and certain
other parties in certain circumstances. The terms and conditions of the Merger
and the Logistic Sale are more fully set forth in the Agreements.
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You have asked for our opinion as to whether the consideration to be paid
by Weatherford pursuant to the Amended Merger Agreement is fair from a financial
point of view to Weatherford.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of Weatherford and Christiana;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning Weatherford, Christiana and
Logistic prepared by the managements of Weatherford, Christiana and
Logistic, respectively;
(iii) analyzed certain financial projections concerning Weatherford,
Christiana and Logistic prepared by the managements of Weatherford,
Christiana and Logistic, respectively;
(iv) discussed the past and current operations and financial condition
and the prospects of Weatherford, Christiana and Logistic with senior
executives of Weatherford, Christiana and Logistic, respectively;
(v) analyzed the pro forma impact of the Merger on Weatherford's
earnings per share;
(vi) reviewed the reported prices and trading activity for Weatherford
Common Stock and Christiana Common Stock;
(vii) reviewed the Agreements and certain related documents;
(viii) reviewed a draft letter dated as of October 7, 1998
substantially similar to the letter to be provided to the Boards of
Directors of Weatherford and Christiana by Arthur Andersen LLP, regarding
the tax treatment of the Merger;
(ix) discussed and reviewed with Weatherford and Fulbright & Jaworksi
L.L.P. the results of their legal and environmental due diligence; and
(x) performed other such analyses and considered such other factors as
we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial projections, we have assumed that
they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of the future financial performances of
Weatherford, Christiana and Logistic. We have not made any independent valuation
or appraisal of the assets or liabilities of Weatherford, Christiana or
Logistic, except, that we have received the draft letter of Arthur Andersen LLP
referred to as item (viii) above and the verbal report concerning certain legal
and environmental due diligence analyses performed by Weatherford and Fulbright
& Jaworski L.L.P. referred to as item (ix) above and we have relied, without
independent verification, upon such items for purposes of this opinion. In
addition, we have assumed the Logistic Sale will be consummated prior to or
simultaneously with the Merger in accordance with the terms set forth in the
Logistic Agreement including any terms and conditions relating to
indemnification and that the Merger will be consummated in accordance with the
terms set forth in the Amended Merger Agreement including that all material
conditions to closing have been satisfied and not waived. We have also assumed
that the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended. In arriving at our
opinion, we were not authorized to consider, and did not consider, any
alternative transaction or transaction structure. Our opinion is necessarily
based on economic, market and other conditions as in effect on, and the
information made available to us as of, the date hereof.
It is understood that this letter is for the information of the Board of
Directors of Weatherford and may not be used for any other purpose without our
prior written consent, provided however that we consent to the inclusion of our
opinion in any filing made by Weatherford with the Securities and Exchange
Commission in connection with the Merger. In addition, we provide no advice or
opinion as to how holders of Weatherford Common Stock should vote at the
shareholders' meeting held in connection with the Merger.
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<PAGE> 209
We have been engaged solely to provide this opinion to the Board of
Directors of Weatherford in connection with this transaction and have received a
fee for our services. In the past, Morgan Stanley & Co. Incorporated and its
affiliates have provided financial advisory and financing services for
Weatherford and have received fees for the rendering of these services.
Based on and subject to the foregoing, we are of the opinion on the date
hereof that the consideration to be paid by Weatherford pursuant to the Amended
Merger Agreement is fair from a financial point of view to Weatherford.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ STEPHEN M. TRAUBER
Stephen M. Trauber
Principal
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<PAGE> 210
APPENDIX E
PRUDENTIAL SECURITIES
INCORPORATED
One New York Plaza, 18th
Floor
New York, NY 10292-2018
Tel 212 778-4114 Fax 212
778-3243
[PRUDENTIAL SECURITIES LOGO] norm.chaleff.ccmail.prusec.com
PRIVATE AND CONFIDENTIAL
October 12, 1998
Independent Committee of the Board of Directors
Christiana Companies, Inc.
Suite 1200
700 N. Water Street
Milwaukee, Wisconsin 53202
Board of Directors
Christiana Companies, Inc.
Suite 1200
700 N. Water Street
Milwaukee, Wisconsin 53202
Gentlemen:
We understand that Christiana Companies, Inc., a Wisconsin corporation (the
"Company" or "CST"), Weatherford International, Inc. (formerly known as EVI,
Inc.), a Delaware corporation ("Weatherford"), Christiana Acquisition Inc., a
Wisconsin corporation and a wholly-owned subsidiary of Weatherford (the
"Acquisition Sub"), and C2, Inc., a Wisconsin corporation ("C2") and a wholly
owned subsidiary of Lubar & Co. Incorporated ("Lubar"), have proposed to enter
into an Amended and Restated Agreement and Plan of Merger (the "Agreement").
Pursuant to the Agreement, the Acquisition Sub shall merge with and into CST
(the "Merger"). In the Merger, each outstanding share of CST common stock, par
value $1.00 per share (the "CST Common Stock"), will be converted into the right
to receive a number of shares of Weatherford common stock, par value $.01 per
share (the "Weatherford Common Stock") equal to the number of shares of
Weatherford Common Stock held by CST at the effective time of the merger (the
"Effective Time") divided by the number of shares of CST Common Stock
outstanding immediately prior to the Effective Time and a cash payment (the
"Cash Payment") determined pursuant to the provisions of section 1.7(e) of the
Agreement. The Agreement is conditioned upon, among other matters, the sale by
CST of two-thirds of its interest in Total Logistic Control, LLC, a Delaware
limited liability company and a wholly-owned subsidiary of CST ("TLC"), to C2
for $10,666,667 in cash (the "Acquisition"), pursuant to an Acquisition
Agreement, dated as of December 12, 1997, as amended on May 26, 1998(as so
amended, the "Acquisition Agreement"). Pursuant to the Agreement, CST is
required to purchase shares of Weatherford Common Stock in the open market (a)
prior to the date the Company's proxy statement in connection with the special
stockholders meeting to be convened to consider the Merger is mailed to the
Company's stockholders for an aggregate cost of $10,000,000 and, (b) after
approval by the Company's stockholders of the Merger, if necessary to qualify
the merger as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, an additional number of shares of
Weatherford's Common Stock for an aggregate cost of $5,000,000. In addition, we
understand that C2 and Sheldon Lubar, a stockholder of CST, have entered into an
agreement dated December 22, 1997 and as amended on January 30, 1998 (as so
amended, the "C2 Agreement") pursuant to which C2 has agreed that, at the
election of each and any stockholder of CST, such stockholder may purchase from
C2 a number of shares of C2 common stock, par value $1.00 per share (the "C2
Common Stock"), representing at least the same proportionate ownership interest
in C2 as such stockholder held in CST immediately prior to the effective time of
the Merger at the same price as the C2 Common Stock will be acquired by Lubar
and its affiliates, (the "C2 Optional Purchase" and together with the
Acquisition and the Merger, the "Transaction").
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PRUDENTIAL SECURITIES INCORPORATED
[PRUDENTIAL SECURITIES LOGO]
You have requested our opinion as to the fairness of the Transaction from a
financial point of view to the stockholders of the Company.
In conducting our analysis and arriving at the opinion expressed herein, we
have reviewed such materials and considered such financial and other factors as
we deemed relevant under the circumstances, including:
(i) The C2 Agreement, the Acquisition Agreement, a draft dated October
10, 1998, of the Agreement and a draft dated October 10, 1998 of Amendment
No. 2 to the Acquisition Agreement ("Amendment No. 2");
(ii) certain publicly-available historical financial and operating
data concerning the Company, including, but not limited to, (a) the Annual
Report to Shareholders and Annual Report on Form 10-K for the fiscal year
ended June 30, 1998, (b) the Joint Proxy Statement for the Special Meeting
of Shareholders held on August 17, 1998; and certain financial pro-forma
financial data prepared by CST management;
(iii) certain publicly-available historical financial and operating
data for Weatherford including, but not limited to, (a) the Annual Report
on Form 10-K for the fiscal year ended December 31, 1997, (b) the Quarterly
Report on Form 10-Q for the quarter ended June 30, 1998, (c) the Current
Report on Form 8-K dated March 4, 1998 and (d) the Joint Proxy Statement
for the Special Meeting of Shareholders held on August 17, 1998;
(iv) certain information relating to TLC, including historical
financial data for the fiscal years ended June 30, 1993 through June 30,
1998, provided by the management of TLC;
(v) certain information relating to TLC, including financial forecasts
for the fiscal years ending June 30, 1999 through June 30, 2002, prepared
by the management of TLC;
(vi) the financial terms of certain recent transactions we deemed
relevant to our inquiry;
(vii) the historical stock prices and trading volumes of CST Common
Stock and Weatherford Common Stock; and
(viii) such other financial studies, analyses and investigations that
we deemed appropriate.
We have assumed, with your consent, that the draft of the Agreement and the
draft of Amendment No. 2 which we reviewed (both as referred to above) will
conform in all material respects to the definitive forms of the Agreement and
Amendment No. 2.
We have met with members of the senior management of the Company and TLC to
discuss (i) the prospects for the Company's business, (ii) their estimates of
the future financial performance of the Company, (iii) the financial impact of
the Merger on CST and (iv) such other matters that we deemed relevant. We have
also visited selected CST and TLC facilities.
In connection with our review and analysis and in arriving at our opinion,
we have relied upon the accuracy and completeness of the financial and other
information provided to us by the Company and by TLC, and have not undertaken
any independent verification of such information or any independent valuation or
appraisal of any of the assets or liabilities of the Company or TLC. With
respect to the financial forecasts provided to us by the Company for the Company
and by TLC for TLC, we have assumed that such forecasts (and the assumptions and
bases therefor) have been reasonably prepared and represent the respective
management's best currently available estimate as to the future financial
performance of the Company and TLC. Our opinion assumes that: (i) the Merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended; (ii) neither CST nor the Acquisition
Sub will recognize any gain or loss for federal income tax purposes as a result
of the receipt by Weatherford of CST
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<PAGE> 212
PRUDENTIAL SECURITIES INCORPORATED
[PRUDENTIAL SECURITIES LOGO]
Common Stock in exchange for Weatherford Common Stock in the Merger; and (iii)
the holders of CST Common Stock will not recognize any gain or loss for federal
income tax purposes as a result of the receipt of Weatherford Common Stock as
partial consideration for their CST Common Stock in the Merger. Prudential
Securities has assumed that such taxes are the only relevant taxes for purposes
of the Prudential Securities Opinion other than taxes that may be applicable to
the Cash Consideration as set forth in such opinion.
For purposes of our opinion, we have assumed that the stockholders of CST
at the effective time of the Merger will be legally entitled to compel
performance by C2 of the C2 Agreement in accordance with its terms in a legal
proceeding brought by such stockholders and we have further assumed that the C2
Agreement will not be amended or modified.
Our engagement by the Company was limited to reviewing the financial terms
of the transactions described herein, and, accordingly, our opinion does not
address, nor should it be construed to address, the relative merits of the
Transaction or alternative business strategies that may be available to the
Company. In addition, this opinion does not in any manner address the prices at
which Weatherford Common Stock or C2 Common Stock will trade following
consummation of the Merger or the liquidity of the market that may exist for the
C2 Common Stock. Further, our opinion is necessarily based on economic,
financial and market conditions as they exist and can only be evaluated as of
the date hereof. For purposes of rendering this opinion, we have assumed that
the Company will not consummate the Transaction under circumstances where the
closing price of Weatherford Common Stock is less than $13.00 per share on the
closing date of the Merger.
As you know, we have been retained by the Company to render this opinion in
connection with the Merger and will receive a fee for such services, the
majority of which fee is contingent upon the consummation of the Merger. In the
ordinary course of business we may actively trade the shares of CST Common Stock
and Weatherford Common Stock for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
This letter and the opinion expressed herein are for the use of the
Independent Committee of the Board of Directors and the Board of Directors of
the Company. This opinion does not constitute a recommendation to the
stockholders of the Company as to how such stockholders should vote in
connection with the Merger or as to any other action such stockholders should
take regarding the Merger. This opinion may not be reproduced, summarized,
excerpted from or otherwise publicly referred to or disclosed in any manner,
without our prior written consent; except that the Company may include this
opinion in its entirety (a) in any proxy statement, or information statement
relating to the Merger sent to the Company's stockholders or (b) in a
registration statement filed under the Securities Act of 1933 with respect to
the C2 Common Stock to be issued pursuant to the C2 Optional Purchase.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Transaction is fair to the stockholders of the Company from
a financial point of view.
Very truly yours,
/s/ PRUDENTIAL SECURITIES INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
E-3
<PAGE> 213
APPENDIX G
AMERICAN APPRAISAL
ASSOCIATES LOGO
<TABLE>
<S> <C> <C> <C> <C>
UNITED STATES INTERNATIONAL
Arcadia Los Angeles Argentina Morocco
Atlanta Milwaukee American Appraisal Associates(R) Brazil Peru
Boston Minneapolis 411 East Wisconsin Avenue Canada Philippines
Buffalo New Orleans Suite 1900 China Poland
Charlotte New York P.O. Box 664 Czech Republic Portugal
Chicago Philadelphia Milwaukee, Wisconsin 53201-0664 England Russia
Cincinnati Pittsburgh Telephone (414) 271-7240 Hong Kong Spain
Dallas Princeton Hungary Taiwan
Denver Rolling Meadows Italy Thailand
Detroit St. Louis Japan Venezuela
Houston San Francisco Mexico
Irvine Tampa
</TABLE>
December 1, 1997
Boards of Directors
Christiana Companies, Inc.
EVI, Inc. and
C2, Inc.
This letter is furnished at the request of Christiana Companies, Inc.
("CST") regarding the proposed restructuring (the "Restructuring") of Total
Logistic Control, LLC ("TLC").
OVERVIEW
We understand that CST currently holds 100% of the member interests of TLC
(the "TLC Member Interest"). Pursuant to the Restructuring, CST intends to sell
two-thirds ( 2/3) of its TLC Member Interest to a new company, C2, Inc. ("C2").
We also understand that as part of the Restructuring, CST has a put exercisable
after five years from the Restructuring (the "Put") to sell its remaining
one-third TLC Member Interests to C2.
As part of the Restructuring, TLC intends to enter into a $65.0 million
revolving line of credit (the "Revolver" or "the Financing") with a group of
banks led by Firstar Bank Milwaukee, N.A. (Firstar Bank Milwaukee, N.A. and the
banks collectively referred to herein as "the Banks"). We understand that the
Financing will be used to refinance (the "Refinancing") existing debt of TLC,
and as part of the Restructuring, TLC will pay a $20.0 million dividend (the
"Dividend") to CST and repay a $3.0 million subordinated note to CST (the
"Subordinated Note"), thereby drawing an additional $23.0 million on the
Revolver over and above the amount needed for the Refinancing.
We understand that there will be a number of other transactions involving
CST as well as CST and EVI, Inc. ("EVI") which are not a part of this Opinion.
The transactions contemplated as a result of the Restructuring, the
Revolver, the Dividend, the Refinancing, the repayment of the Subordinated Note
and the Financing and the payment of related fees and expenses are collectively
referred to as the "Transaction".
SOLVENCY TESTS AND DEFINITIONS
In connection with the Transaction, you have requested that we render a
written opinion (the "Opinion") addressed to the Board of Directors of CST and
EVI and C2, as to whether, assuming the Transaction has been consummated
substantially as proposed after, and giving effect to, the consummation of the
Transaction:
(a) The fair value of the aggregate assets of TLC will exceed its
respective total liabilities (including, without limitation, subordinated,
unmatured, unliquidated, disputed and contingent liabilities);
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<PAGE> 214
(b) The present fair saleable value of the aggregate assets of TLC
will be greater than its respective probable liabilities on its debts as
such debts become absolute and matured;
(c) TLC will be able to pay its respective debts and other
liabilities, including contingent liabilities and other commitments, as
they mature; and
(d) TLC will not have unreasonably small capital for the business in
which it is engaged, as managements of TLC and CST have indicated such
business is now conducted and proposed to be conducted following the
consummation of the Transaction.
For purposes of the Opinion, the following terms will have meanings set
forth below:
(1) "Fair value" means the amount at which the aggregate assets would
change hands between a willing buyer and a willing seller, within a
commercially reasonable period of time, each having reasonable knowledge of
the relevant facts, neither being under any compulsion to act, with equity
to both;
(2) "Present fair saleable value" means the amount that may be
realized if the aggregate assets are sold with reasonable promptness in an
arm's-length transaction under present conditions in a current market for
the sale of assets of a comparable business enterprise;
(3) "Contingent liabilities" of TLC means the maximum estimated amount
of contingent liabilities which contingent liabilities have been identified
to us by responsible officers and employees of TLC and CST, their
respective accountants and financial advisors, and such other experts as we
deemed necessary to consult, and valued by AAA after consultation with
responsible officers and employees of TLC and CST, and/or such industry,
economic and other experts as we deemed necessary to consult (the valuation
of contingent liabilities to be computed in light of all of the facts and
circumstances existing at the time of such valuation as an amount that can
reasonably be expected to become an actual or matured liability), which
contingent liabilities may not meet the criteria for accrual under
Statement of Financial Accounting Standards No. 5 and therefore may not be
recorded as liabilities under Generally Accepting Accounting Principles
("GAAP");
(4) "Able to pay its debts as they mature" means that assuming the
Transaction has been consummated as proposed (and taking into consideration
additional borrowing capacity under TLC's Revolver) during the period
covered July 1, 1997 through June 30, 2002 covered by the financial
projections faxed to American Appraisal Associates, Inc. on November 17,
1997 and prepared by CST and TLC management (the "Financial Projections"),
TLC will have positive cash flow after paying its scheduled anticipated
indebtedness; the realization of current assets in the ordinary course of
business will be sufficient to pay recurring current debt, short-term debt,
long-term debt service and other contractual obligations, including
contingent liabilities, as such obligations mature; and the cash flow will
be sufficient to provide cash necessary to repay TLC's long-term
indebtedness as such debt matures; and
(5) "Will not have unreasonably small capital with which to conduct
its business" means that TLC will not lack sufficient capital for the needs
and anticipated needs for capital of its business, including contingent
liabilities, as management of TLC and CST have indicated it is, and
proposed to be, conducted following the consummation of the Transaction.
No representation is made herein as to the sufficiency of the above
definitions for any purpose; such definitions are used solely for setting forth
the scope of our Opinion.
VALUATION METHODOLOGY
In rendering our Opinion, we have valued the aggregate assets of TLC, on a
going concern basis, immediately after, and giving effect to the Transaction and
the associated indebtedness incurred or remaining outstanding in connection
therewith. The valuation included the aggregate assets of the business of TLC or
total invested capital as represented by the total net working capital, tangible
plant, property and equipment, and intangible assets of the business enterprise.
We believe that this is a reasonable basis to value TLC.
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Nothing has come to our attention that causes us to believe that TLC, after the
Transaction, is not a going concern.
The determination of fair value and present fair saleable value was based
on the generally accepted valuation principles used in the market and discounted
cash flow approaches, described as follows:
Market Approach -- Based on correlation of (a) current stock market
prices of publicly held companies whose businesses are similar to that of
TLC and premiums paid over market price by acquirors of total or
controlling ownership in such businesses; and (b) acquisition prices paid
for total ownership positions in business whose lines of business are
similar to that of TLC.
Discounted Cash Flow Approach -- Based on the present value of TLC's
future debt-free operating cash flow as estimated by the management of TLC
contained in the Financial Projections. The present value is determined by
discounting the projected operating cash flow at a rate of return that
reflects the financial and business risks of TLC.
Our Opinion of fair value and present fair saleable value is subject to the
following conditions:
(i) Any sale of TLC, including the underlying assets thereof, will be
completed as the sale of an ongoing business entity;
(ii) A "commercially reasonable period" of time means at least twelve
months for a willing buyer and a willing seller to agree on price and
terms, plus the time necessary to complete the sale of TLC;
(iii) "Reasonable promptness" means a period of time of nine to twelve
months for a willing buyer and a willing seller to agree on price and
terms, plus the time necessary to complete the sale of TLC; and
(iv) In determining the fair value and present fair saleable value of
the assets of TLC, any taxes or transaction costs which may be owed by TLC
as a result of the Transaction, other than those specifically identified in
the Financial Projections were not considered.
While we believe that TLC would be marketable as a separate business
enterprise, we have not been requested to identify, and have not identified,
potential purchasers or to ascertain the actual prices and terms of which TLC
can currently be sold. Furthermore, because the sale of any business enterprise
involves numerous assumptions and uncertainties, not all of which can be
quantified or ascertained prior to engaging in an actual selling effort, we
express no opinion as to whether TLC could actually be sold for amounts we
believe to be equivalent to the fair value and present fair saleable values.
FINANCIAL RESULTS AND PROJECTIONS
In connection with the analysis underlying the Opinion, we were provided
historical and projected operating results (the Financial Projections as
previously defined). In addition to this information, we were provided other
operating data and information all of which has been accepted, without
independent verification, as representing a fair statement of historical and
projected results of TLC, in the opinion of the managements of TLC and CST.
However, in the course of our investigation, nothing has led us to believe that
our acceptance and reliance on such operating data and information was
unreasonable.
Although we have not independently verified the accuracy and completeness
of the Financial Projections and forecasts, or any of the assumptions,
estimates, or judgments referred to therein, or the basis therefore, and
although no assurances can be given that such Financial Projections and
forecasts can be realized or that actual results will not vary materially from
those projected, nothing has come to our attention during the course of our
engagement which led us to believe that any information reviewed by us or
presented to us in connection with our rendering of the Opinion is unreasonable
in any material respect or that it was unreasonable for us to utilize and rely
upon the financial projections, financial statements, assumptions, description
of the business and liabilities, estimates and judgments of the management of
TLC and CST, and their respective counsel, accountants and financial advisors.
Our Opinion is necessarily based on business,
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economic, market and other conditions as they currently exist and as they can be
evaluated by us at the date of this Opinion.
CONTINGENT LIABILITIES
In determining the amount that would be required to pay the total
liabilities of TLC as such liabilities become absolute and mature for purposes
of Opinion (b) below, we have applied valuation techniques, including present
value analysis, using appropriate rates over appropriate periods, to the amounts
that will be required from time to time to pay such liabilities and contingent
liabilities as they become absolute and mature based on their scheduled
maturities.
In the course of our investigation of identified contingent liabilities,
the areas brought to our attention by the management of TLC included, but were
not limited to: (i) the adequacy of the corporate safety and insurance program;
(ii) lawsuits or claims filed and or pending against TLC; (iii) environmental
matters; (iv) customer concentration; and (v) liabilities of TLC in connection
with the Agreement and Plan of Merger by and among EVI, Christiana Acquisition
Co., C2 and CST, anticipated to be dated and signed on December 4, 1997 (the
"Merger Agreement"), and the Proposed Agreement among EVI, CST, TLC, and C2
regarding the purchase of TLC Member Interests anticipated to be dated and
signed on December 4, 1997 (the "TLC Acquisition Agreement").
We have determined that reserves for the contingent liabilities have been
made in the pro forma consolidated balance sheet as of September 30, 1997 (the
"Pro Forma Balance Sheet") prepared and furnished to us by the management of
TLC, and provisions for the ongoing expenses related to these issues have been
included with the projection of income and expenses presented in the Financial
Projections, and are considered in our valuation study as ongoing business
operating expenses. We have taken these identified contingent liabilities into
account in rendering our Opinion and have concluded that such liabilities and
ongoing expenses do not require any qualification of our Opinion. Our conclusion
is based on, among other things: (i) our review of various acquisition
transactions, including leveraged transactions and significant debt-financed
recapitalization transactions, involving corporations engaged in businesses
similar to those of TLC; (ii) the opinion of the managements of TLC and CST that
the issues concerning various lawsuits, claims and other identified contingent
liabilities will not have a material adverse effect on the financial position of
TLC; and (iii) our discussions with the managements of TLC and CST, their
accountants, consultants and counsel concerning, and our investigation of, the
various lawsuits, claims and other contingent liabilities identified to us.
We have assumed that as of the effective date of the closing of the
Transaction, the total identified liabilities of TLC will be only those
liabilities set forth in its respective Pro Forma Balance Sheet and incorporated
in the Financial Projections that were prepared by TLC and CST and furnished to
us by the managements of TLC and CST and their financial advisors. In the course
of our investigation, nothing came to our attention which caused us to believe
such assumptions to be unreasonable. The Pro Forma Balance Sheet is the
unaudited Pro Forma Opening Balance Sheet for TLC as of September 30, 1997
reflecting the closing of the Transaction, as reflected in the Financial
Projections and adjusted to give effect to (a) the planned financing of the
Transaction; and (b) the application of the proceeds of the financing and
restated by us to reflect the fair value and present fair saleable value of TLC.
TLC's and CST's management have represented to us, and we have relied on
the representations of the managements of TLC and CST that no adverse changes
have occurred since their preparation which would materially impact the content
of TLC's Pro Forma Balance Sheet and Financial Projections. Nothing has come to
our attention which would lead us to believe our reliance on such
representations to be unreasonable.
OPINION CONDITIONS AND ASSUMPTIONS
We have assumed, without independent verification, that the Pro Forma
Balance Sheet and Financial Projections provided to us have been reasonably
prepared and reflect the best currently available estimates, after the
consummation of the Transaction, of the future financial results and conditions
of TLC, and that there has been no material adverse change in the assets,
financial condition, business or prospects of TLC,
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since the date of the most recent financial statements made available to us.
Nothing has come to our attention which would lead us to believe that the
foregoing assumption is unreasonable. Further our Opinion is subject to the
following assumptions:
(i) The Transaction is consummated as described herein;
(ii) Pursuant to the terms and conditions of the various financing
documents, the operating cash flow of TLC will be made available and used
to satisfy its obligations as they mature;
(iii) Our opinion of TLC's ability to be able to pay its debts and
other liabilities including contingent liabilities and other commitments,
as they mature, is limited to the period of time of the Financial
Projections;
(iv) Any indebtedness of TLC is permitted to be refinanced in
conformity with common business practice to the extent consistent with
covenants in the various Financing documents;
OPINION DUE DILIGENCE
In connection with our Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
(i) Reviewed the Transaction documents including but not limited to
the following: (a) draft of the Credit Agreement among Total Logistic
Control, LLC, as Borrower and Firstar Bank Milwaukee, N.A., as Agent for
the Banks; (b) the Merger Agreement; and (c) the TLC Acquisition Agreement.
(ii) Reviewed the Financial Projections prepared by CST and TLC and
inquired of managements of CST and TLC as to the foundation for any such
projections and the basic assumptions made in the preparation of the
Financial Projections relating to the type of business, geographic markets,
economic conditions, and capital facilities and working capital
requirements;
(iii) Reviewed audited and unaudited historical financial statements
of TLC including income statements, balance sheets and cash flow statements
as provided by management of and their accounting firm:
(iv) Discussed historical and projected operating results and industry
data, including the impact of future trends on the industry and TLC, as
well as the effects of Financing and the Transaction with management of CST
and TLC;
(v) Reviewed internal financial analyses and other internally
generated data with CST and TLC including asset valuations of TLC, if any;
(vi) Inquired of management of CST and TLC as to estimated levels of
cash and working capital to be required by TLC after the Transaction;
(vii) Reviewed certain publicly available economic, financial and
market information as it relates to the business operations of TLC;
(viii) Reviewed information regarding businesses similar to TLC and
investigated the financial terms and post-transaction performance of recent
acquisitions;
(ix) Discussed all of the foregoing information, where appropriate,
with management of CST and TLC and their respective employees and agents;
(x) Met with members of the senior management of CST and TLC, to
discuss the business, properties, past history, results of operations and
prospects of TLC, including discussions of the competitive environment in
which TLC will operate;
(xi) Held discussions with representatives of CST's and TLC's
independent accounting firm, financial advisors and counsel to discuss
certain matters; and
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(xii) Conducted such other studies, analyses and investigations as we
deemed relevant or necessary for purposes of the Opinion.
OPINION
Based on the foregoing, and in reliance thereon, it is our opinion as of
this date that, assuming the Transaction has been consummated as proposed,
immediately after giving effect to, the consummation of the Transaction:
(a) The fair value of the aggregate assets of TLC exceed its
respective total liabilities (including, without limitation, subordinated,
unmatured, unliquidated, disputed and contingent liabilities);
(b) The present fair saleable value of the aggregate assets of TLC is
greater than its respective probable liabilities on its debts as such debts
become absolute and matured;
(c) TLC is able to pay its respective debts and other liabilities,
including contingent liabilities and other commitments, as they mature; and
(d) TLC does not have unreasonably small capital for the business in
which it is engaged, as managements of TLC and CST have indicated such
business is now conducted and proposed to be conducted following the
consummation of the Transaction.
It is understood that this Opinion is solely for the information of the
above mentioned addressees, their successors, assignees, participants, title
companies delivering policies or commitments with respect to the Financing and
transferees, and is not to be quoted, or referred to, in whole or in part, in
any written document other than a reference in (i) the filing and disclosure of
the Opinion with the Securities and Exchange Commission (the "SEC") and any
state securities commission or blue sky authority, or other governmental
authority or agency if such filing or disclosure is required pursuant to the
rules and regulations thereof, or required by applicable law in the opinion of
TLC's counsel; (ii) the use or disclosure of the Opinion upon the demand, order
or request of any court, administrative or governmental agency or regulatory
body (whether or not such demand, order or request has the force of law) or as
may be required or appropriate in response to any summons, subpoena, or
discovery requests; (iii) the attachment of this Opinion as an exhibit to the
Transaction documents governing the Financing; (iv) the disclosure of this
Opinion in connection with (A) the Transaction; (B) the prospective sale,
assignment, participation or any other disposition by the Banks or any right of
interest in the Financing; (C) an audit of TLC by an independent public
accountant or any administrative agency or regulation body; or (D) the exercise
of any right or remedy, defense or claim by TLC in any litigation, or any
governmental proceeding or investigation to which TLC is subject or purported to
be subject; (v) the disclosure of the Opinion as may be requested, required or
ordered in, or to protect TLC's interest in, any litigation, governmental
proceeding or investigation to which any of such persons or entities is subject
or purported to be subject; or (vi) the disclosure of the Opinion as otherwise
required by, or reasonably determined by TLC to be required by any law, order,
regulation or ruling to TLC.
Very truly yours,
AMERICAN APPRAISAL ASSOCIATES, INC.
/s/ NANCY M. CZAPLINSKI
Nancy M. Czaplinski
Assistant Vice President
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APPENDIX H
DISSENTERS' RIGHTS PROVISIONS OF THE
WISCONSIN BUSINESS CORPORATION LAW
180.1301 DEFINITIONS. In sec.sec. 180.1301 to 180.1331:
(1) "Beneficial shareholder" means a person who is a beneficial owner of
shares held by a nominee as the shareholder.
(1m) "Business combination" has the meaning given in sec. 180.1130(3).
(2) "Corporation" means the issuer corporation or, if the corporate action
giving rise to dissenters' rights under sec. 180.1302 is a merger or share
exchange that has been effectuated, the surviving domestic corporation or
foreign corporation of the merger or the acquiring domestic corporation or
foreign corporation of the share exchange.
(3) "Dissenter" means a shareholder or beneficial shareholder who is
entitled to dissent from corporate action under sec. 180.1302 and who exercises
that right when and in the manner required by sec.sec. 180.1320 to 180.1328.
(4) "Fair value", with respect to a dissenter's shares other than in a
business combination, means the value of the shares immediately before the
effectuation of the corporate action to which the dissenter objects, excluding
any appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable. "Fair value", with respect to a dissenter's
shares in a business combination, means market value, as defined in
sec. 180.1130(9)(a)1. to 4.
(5) "Interest" means interest from the effectuation date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all of the circumstances.
(6) "Issuer corporation" means a domestic corporation that is the issuer of
the shares held by a dissenter before the corporate action.
180.1302 RIGHT TO DISSENT. (1) Except as provided in sub. (4) and
sec. 180.1008(3), a shareholder or beneficial shareholder may dissent from, and
obtain payment of the fair value of his or her shares in the event of, any of
the following corporate actions:
(a) Consummation of a plan of merger to which the issuer corporation
is a party if any of the following applies:
1. Shareholder approval is required for the merger by sec. 180.1103
or by the articles of incorporation.
2. The issuer corporation is a subsidiary that is merged with its
parent under sec. 180.1104.
(b) Consummation of a plan of share exchange if the issuer
corporation's shares will be acquired, and the shareholder or the
shareholder holding shares on behalf of the beneficial shareholder is
entitled to vote on the plan.
(c) Consummation of a sale or exchange of all, or substantially all,
of the property of the issuer corporation other than in the usual and
regular course of business, including a sale in dissolution, but not
including any of the following:
1. A sale pursuant to court order.
2. A sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the
shareholders within one year after the date of sale.
(d) Except as provided in sub. (2), any other corporate action taken
pursuant to a shareholder vote to the extent that the articles of
incorporation, bylaws or a resolution of the board of directors provides
that the voting or nonvoting shareholder or beneficial shareholder may
dissent and obtain payment for his or her shares.
(2) Except as provided in sub. (4) and sec. 180.1008(3), the articles
of incorporation may allow a shareholder or beneficial shareholder to
dissent from an amendment of the articles of incorporation and
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obtain payment of the fair value of his or her shares if the amendment
materially and adversely affects rights in respect of a dissenter's shares
because it does any of the following:
(a) Alters or abolishes a preferential right of the shares.
(b) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares.
(c) Alters or abolishes a preemptive right of the holder of shares to
acquire shares or other securities.
(d) Excludes or limits the right of the shares to vote on any matter
or to cumulate votes, other than a limitation by dilution through issuance
of shares or other securities with similar voting rights.
(e) Reduces the number of shares owned by the shareholder or
beneficial shareholder to a fraction of a share if the fractional share so
created is to be acquired for cash under sec. 180.0604.
(3) Notwithstanding sub.(1)(a) to (c), if the issuer corporation is a
statutory close corporation under sec.sec. 180.1801 to 180.1837, a shareholder
of the statutory close corporation may dissent from a corporate action and
obtain payment of the fair value of his or her shares, to the extent permitted
under sub. (1)(d) or (2) or sec. 180.1803, 180.1813(1)(d) or (2)(b), 180.1815(3)
or 180.1829(1)(c).
(4) Except in a business combination or unless the articles of
incorporation provide otherwise, subs. (1) and (2) do not apply to the holders
of shares of any class or series if the shares of the class or series are
registered on a national securities exchange or quoted on the national
association of securities dealers, inc., automated quotations system on the
record date fixed to determine the shareholders entitled to notice of a
shareholders meeting at which shareholders are to vote on the proposed corporate
action.
(5) Except as provided in sec. 180.1833, a shareholder or beneficial
shareholder entitled to dissent and obtain payment for his or her shares under
sec.sec. 180.1301 to 180.1331 may not challenge the corporate action creating
his or her entitlement unless the action is unlawful or fraudulent with respect
to the shareholder, beneficial shareholder or issuer corporation.
180.1303 DISSENT BY SHAREHOLDERS AND BENEFICIAL SHAREHOLDERS. (1) A shareholder
may assert dissenters' rights as to fewer than all of the shares registered in
his or her name only if the shareholder dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he or she asserts
dissenters' rights. The rights of a shareholder who under this subsection
asserts dissenters' rights as to fewer than all of the shares registered in his
or her name are determined as if the shares as to which he or she dissents and
his or her other shares were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his or her behalf only if the beneficial shareholder does all of the
following:
(a) Submits to the corporation the shareholder's written consent to
the dissent not later than the time that the beneficial shareholder asserts
dissenters' rights.
(b) Submits the consent under par.(a) with respect to all shares of
which he or she is the beneficial shareholder.
180.1320 NOTICE OF DISSENTERS' RIGHTS. (1) If proposed corporate action
creating dissenters' rights under sec. 180.1302 is submitted to a vote at a
shareholders' meeting, the meeting notice shall state that shareholders and
beneficial shareholders are or may be entitled to assert dissenters' rights
under sec.sec. 180.1301 to 180.1331 and shall be accompanied by a copy of those
sections.
(2) If corporate action creating dissenters' rights under sec. 180.1302 is
authorized without a vote of shareholders, the corporation shall notify, in
writing and in accordance with sec. 180.0141, all shareholders entitled to
assert dissenters' rights that the action was authorized and send them the
dissenters' notice described in sec. 180.1322.
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180.1321 NOTICE OF INTENT TO DEMAND PAYMENT. (1) If proposed corporate action
creating dissenters' rights under sec. 180.1302 is submitted to a vote at a
shareholders' meeting, a shareholder or beneficial shareholder who wishes to
assert dissenters' rights shall do all of the following:
(a) Deliver to the Issuer corporation before the vote is taken written
notice that complies with sec. 180.0141 of the shareholder's or beneficial
shareholder's intent to demand payment for his or her shares if the
proposed action is effectuated.
(b) Not vote his or her shares in favor of the proposed action.
(2) A shareholder or beneficial shareholder who fails to satisfy sub.(1) is
not entitled to payment for his or her shares under sec.sec. 180.1301 to
180.1331.
180.1322 DISSENTERS' NOTICE. (1) If proposed corporate action creating
dissenters' rights under sec. 180.1302 is authorized at a shareholders' meeting,
the corporation shall deliver a written dissenters' notice to all shareholders
and beneficial shareholders who satisfied sec. 180.1321.
(2) The dissenters' notice shall be sent no later than 10 days after the
corporate action is authorized at a shareholders' meeting or without a vote of
shareholders, whichever is applicable. The dissenters' notice shall comply with
sec. 180.0141 and shall include or have attached all of the following:
(a) A statement indicating where the shareholder or beneficial
shareholder must send the payment demand and where and when certificates
for certificated shares must be deposited.
(b) For holders of uncertificated shares, an explanation of the extent
to which transfer of the shares will be restricted after the payment demand
is received.
(c) A form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and that requires the shareholder or beneficial
shareholder asserting dissenters' rights to certify whether he or she
acquired beneficial ownership of the shares before that date.
(d) A date by which the corporation must receive the payment demand,
which may not be fewer than 30 days nor more than 60 days after the date on
which the dissenters' notice is delivered.
(3) A copy of sec.sec. 180.1301 to 180.1331.
180.1323 DUTY TO DEMAND PAYMENT. (1) A shareholder or beneficial shareholder
who is sent a dissenters' notice described in sec. 180.1322, or a beneficial
shareholder whose shares are held by a nominee who is sent a dissenters' notice
described in sec. 180.1322, must demand payment in writing and certify whether
he or she acquired beneficial ownership of the shares before the date specified
in the dissenters' notice under sec. 180.1322(2)(c). A shareholder or beneficial
shareholder with certificated shares must also deposit his or her certificates
in accordance with the terms of the notice.
(2) A shareholder or beneficial shareholder with certificated shares who
demands payment and deposits his or her share certificates under sub. (1)
retains all other rights of a shareholder or beneficial shareholder until these
rights are canceled or modified by the effectuation of the corporate action.
(3) A shareholder or beneficial shareholder with certificated or
uncertificated shares who does not demand payment by the date set in the
dissenters' notice, or a shareholder or beneficial shareholder with certificated
shares who does not deposit his or her share certificates where required and by
the date set in the dissenters' notice, is not entitled to payments for his or
her shares under sec.sec. 180.1301 to 180.1331.
180.1324 RESTRICTIONS ON UNCERTIFICATED SHARES. (1) The issuer corporation may
restrict the transfer of uncertificated shares from the date that the demand for
payment for those shares is received until the corporate action is effectuated
or the restrictions released under sec. 180.1326.
(2) The shareholder or beneficial shareholder who asserts dissenters'
rights as to uncertificated shares retains all of the rights of a shareholder or
beneficial shareholder, other than those restricted under sub. (1), until these
rights are canceled or modified by the effectuation of the corporate action.
180.1325 PAYMENT. (1) Except as provided in sec. 180.1327, as soon as the
corporate action is effectuated or upon receipt of a payment demand, whichever
is later, the corporation shall pay each shareholder or beneficial
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shareholder who has complied with sec. 180.1323 the amount that the corporation
estimates to be the fair value of his or her shares, plus accrued interest.
(2) The payment shall be accompanied by all of the following:
(a) the corporation's latest available financial statements, audited
and including footnote disclosure if available, but including not less than
a balance sheet as of the end of a fiscal year ending not more than 16
months before the date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year and the latest
available interim financial statements, if any.
(b) A statement of the corporation's estimate of the fair value of the
shares.
(c) An explanation of how the interest was calculated.
(d) A statement of the dissenter's right to demand payment under
sec. 180.1328 if the dissenter is dissatisfied with the payment.
(e) A copy of sec.sec. 180.1301 to 180.1331.
180.1326 FAILURE TO TAKE ACTION. (1) If an issuer corporation does not
effectuate the corporate action within 60 days after the date set under
sec. 180.1322 for demanding payment, the issuer corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the issuer corporation effectuates the corporate action, the
corporation shall deliver a new dissenters' notice under sec. 180.1322 and
repeat the payment demand procedure.
180.1327 AFTER-ACQUIRED SHARES. (1) A corporation may elect to withhold payment
required by sec. 180.1325 from a dissenter unless the dissenter was the
beneficial owner of the shares before the date specified in the dissenters'
notice under sec. 180.1322 (2)(c) as the date of the first announcement to news
media or to shareholders of the terms of the proposed corporate action.
(2) To the extent that the corporation elects to withhold payment under
sub. (1) after effectuating the corporate action, it shall estimate the fair
value of the shares, plus accrued interest, and shall pay this amount to each
dissenter who agrees to accept it in full satisfaction of his or her demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenter's right to demand payment under sec. 180.1328 if the
dissenter is dissatisfied with the offer.
180.1328 PROCEDURE IF DISSENTER DISSATISFIED WITH PAYMENT OR OFFER. (1) A
dissenter may, in the manner provided in sub. (2), notify the corporation of the
dissenter's estimate of the fair value of his or her shares and amount of
interest due, and demand payment of his or her estimate, less any payment
received under sec. 180.1325, or reject the offer under sec. 180.1327 and demand
payment of the fair value of his or her shares and interest due, if any of the
following applies:
(a) The dissenter believes that the amount paid under sec. 180.1325 or
offered under sec. 180.1327 is less than the fair value of his or her
shares or that the interest due is incorrectly calculated.
(b) The corporation fails to make payment under sec. 180.1325 within
60 days after the date set under sec. 180.1322 for demanding payment.
(c) The issuer corporation, having failed to effectuate the corporate
action, does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within 60 days after the date
set under sec. 180.1322 for demanding payment.
(2) A dissenter waives his or her right to demand payment under this
section unless the dissenter notifies the corporation of his or her demand under
sub. (1) in writing within 30 days after the corporation made or offered payment
for his or her shares. The notice shall comply with sec. 180.0141.
180.1330 COURT ACTION. (1) If a demand for payment under sec. 180.1328 remains
unsettled, the corporation shall bring a special proceeding within 60 days after
receiving the payment demand under sec. 180.1328 and petition the court to
determine the fair value of the shares and accrued interest. If the corporation
does not bring the special proceeding within the 60-day period, it shall pay
each dissenter whose demand remains unsettled the amount demanded.
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(2) The corporation shall bring the special proceeding in the circuit court
for the county where its principal office or, if none in this state, its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall bring the special proceeding
in the county in this state in which was located the registered office of the
issuer corporation that merged with or whose shares were acquired by the foreign
corporation.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the special proceeding.
Each party to the special proceeding shall be served with a copy of the petition
as provided in sec. 801.14.
(4) The jurisdiction of the court in which the special proceeding is
brought under sub. (2) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. An appraiser has the power described in the order
appointing him or her or in any amendment to the order. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the special proceeding is entitled to
judgment for any of the following:
(a) The amount, if any, by which the court finds the fair value of his
or her shares, plus interest, exceeds the amount paid by the corporation.
(b) The fair value, plus accrued interest, of his or her shares
acquired on or after the date specified in the dissenter's notice under
sec. 180.1322 (2)(c), for which the corporation elected to withhold payment
under sec. 180.1327.
180.1331 COURT COSTS AND COUNSEL FEES. (1) (a) Notwithstanding sec.sec. 814.01
to 814.04, the court in a special proceeding brought under sec. 180.1330 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court and shall assess the costs against
the corporation, except as provided in par. (b).
(b) Notwithstanding sec.sec. 814.01 and 814.04, the court may assess costs
against all or some of the dissenters, in amounts that the court finds to be
equitable, to the extent that the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment under sec. 180.1328.
(2) The parties shall bear their own expenses of the proceeding, except
that, notwithstanding sec.sec. 814.01 to 814.04, the court may also assess the
fees and expenses of counsel and experts for the respective parties, in amounts
that the court finds to be equitable, as follows:
(a) Against the corporation and in favor of any dissenter if the court
finds that the corporation did not substantially comply with
sec.sec. 180.1320 to 180.1328.
(b) Against the corporation or against a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith
with respect to the rights provided by this chapter.
(3) Notwithstanding sec.sec. 814.01 to 814.04, if the court finds that the
services of counsel and experts for any dissenter were of substantial benefit to
other dissenters similarly situated, the court may award to these counsel and
experts reasonable fees to be paid out of the amounts awarded the dissenters who
were benefited.
H-5
<PAGE> 224
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except under certain
circumstances, including a breach of the director's duty of loyalty, acts or
omissions of the director not in good faith or which involve intentional
misconduct or a knowing violation of law, the approval of an improper payment of
a dividend or an improper purchase by the corporation of stock or any
transaction from which the director derived an improper personal benefit. The
Registrant's Amended and Restated Certificate of Incorporation, as amended,
provides that the Registrant's directors are not liable to the Registrant or its
stockholders for monetary damages for breach of their fiduciary duty, subject to
the described exceptions specified by Delaware law.
Section 145 of the Delaware General Corporation Law grants to the
Registrant the power to indemnify each officer and director of the Registrant
against liabilities and expenses incurred by reason of the fact that he is or
was an officer or director of the Registrant if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Registrant and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Amended and Restated
By-laws of the Registrant provide for indemnification of each officer and
director of the Registrant to the fullest extent permitted by Delaware law.
Messrs. David J. Butters and Robert B. Millard, employees of Lehman Brothers
Inc. ("Lehman"), constitute two of the eight members of the Board of Directors
of the Registrant. Under the restated certificates of incorporation, as amended
to date, of Lehman and its parent, Lehman Brothers Holdings Inc. ("Holdings"),
both Delaware corporations, Messrs. Butters and Millard, in their capacity as
directors of the Registrant, are to be indemnified by Lehman and Holdings to the
fullest extent permitted by Delaware law. Messrs. Butters and Millard are
serving as directors of the Registrant at the request of Lehman and Holdings.
Section 145 of the Delaware General Corporation Law also empowers the
Registrant to purchase and maintain insurance on behalf of any person who is or
was an officer or director of the Registrant against liability asserted against
or incurred by him in any such capacity, whether or not the Registrant would
have the power to indemnify such officer or director against such liability
under the provisions of Section 145. The Registrant has purchased and maintains
a directors' and officers' liability policy for such purposes. Messrs. Butters
and Millard are insured against certain liabilities which they may incur in
their capacity as directors pursuant to insurance maintained by Holdings.
Under the terms of the Agreement dated December 12, 1997, as amended, by
and among the Registrant, Christiana Companies, Inc. ("Christiana"), Total
Logistic Control, LLC ("Logistic") and C2, Inc., Logistic and C2 have agreed to
indemnify the directors and officers of the Registrant for any liability
relating to any claim or damage by any stockholder of Christiana or Weatherford
with respect to the Merger or the Logistic Sale or the transactions relating
thereto, including any claims and liabilities arising under the securities laws
and claims with respect to the Joint Proxy Statement/Prospectus.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of March 4, 1998,
by and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.1 to
Amendment No. 1 to Form 8-K on Form 8-K/A, File 1-13086,
filed March 9, 1998).
2.2 -- Amendment No. 1 dated as of April 17, 1998, to the
Agreement and Plan of Merger dated as of March 4, 1998,
by and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.2 to Form
8-K, File 1-13086, filed April 21, 1998).
</TABLE>
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<PAGE> 225
<TABLE>
<C> <S>
2.3 -- Amendment No. 2 dated as of April 22, 1998, to the
Agreement and Plan of Merger dated as of March 4, 1998,
as amended by and between EVI, Inc. and Weatherford
Enterra, Inc. (incorporated by reference to Exhibit No.
2.3 to Form 8-K, File 1-13086, filed April 23, 1998).
2.4 -- Share Purchase Agreement made and entered into as of
January 30, 1998, by and among the shareholders of Nika
Enterprises Ltd., an Alberta corporation, listed on the
signature pages thereto and EVI Oil Tools Canada Ltd., an
Alberta corporation (incorporated by reference to Exhibit
No. 2.1 to the Form 8-K, File 1-13086, filed March 3,
1998).
2.5 -- Agreement and Plan of Merger dated as of December 12,
1997, by and among EVI, Inc., Christiana Acquisition,
Inc., Christiana Companies, Inc. and C2, Inc.
(incorporated by reference to Exhibit No. 2.1 to Form
8-K, File 1-13086, filed December 31, 1997).
2.6 -- Agreement dated as of December 12, 1997, by and among
EVI, Inc., Christiana Companies, Inc., Total Logistic
Control LLC and C2, Inc. (incorporated by reference to
Exhibit No. 2.2 to Form 8-K, File 1-13086, filed December
31, 1997).
2.7 -- Letter Agreement dated December 12, 1997, by and among
EVI, Inc., Christiana Acquisition, Inc., Christiana
Companies, Inc. and C2, Inc. (incorporated by reference
to Exhibit No. 2.3 to Form 8-K, File 1-13086, filed
December 31, 1997).
2.8 -- Amended and Restated Arrangement Agreement by and between
Taro Industries Limited, and EVI, Inc. and 756745 Alberta
Ltd. And 759572 Alberta Ltd. dated as of December 5, 1997
(incorporated by reference to Exhibit No. 2.4 to Form
8-K, File 1-13086, filed December 31, 1997).
2.9 -- Stock Purchase Agreement dated as of October 9, 1997,
between EVI, Inc. and PACCAR Inc (incorporated by
reference to Exhibit No. 2.1 to Form 8-K, File 1-13086,
filed October 21, 1997).
2.10 -- Stock Purchase Agreement dated as of October 9, 1997,
among certain shareholders of BMW Monarch (Lloydminster)
Ltd., the shareholders of BMW Pump Inc., the shareholder
of Makelki Holdings Ltd., the shareholder of 589979
Alberta Ltd., the shareholders of 600969 Alberta Ltd.,
the shareholders of 391862 Alberta Ltd. and EVI, Inc.
(incorporated by reference to Exhibit No. 2.2 to Form
8-K, File 1-13086, filed October 21, 1997).
2.11 -- Agreement and Plan of Merger dated as of July 16, 1997,
as amended, by and among XLS Holding, Inc., EVI, Inc. and
GPXL, Inc. (incorporated by reference to Exhibit No. 2.1
to Form 8-K, File 1-13086, filed August 26, 1997).
2.12 -- Stock Purchase Agreement dated as of February 21, 1997,
among Seigo Arai, Kanematsu USA Inc. and Energy Ventures,
Inc. (incorporated by reference to Exhibit No. 2.1 to
Form 8-K, File 1-13086, filed March 17, 1997).
2.13 -- Agreement and Plan of Merger dated as of December 5,
1996, among Energy Ventures, Inc., GulfMark Acquisition
Co., GulfMark International, Inc. and New GulfMark
International, Inc. (incorporated by reference to Exhibit
No. 2.2 to Form 8-K, File 1-13086, filed December 26,
1996).
2.14 -- Agreement and Plan of Distribution dated as of December
5, 1996, by and among GulfMark International, Inc., New
GulfMark International, Inc. and Energy Ventures, Inc.
(incorporated by reference to Exhibit No. 2.3 to Form
8-K, File 1-13086, filed December 26, 1996).
</TABLE>
II-2
<PAGE> 226
<TABLE>
<C> <S>
2.15 -- First Amendment to Agreement and Plan of Merger dated as of March 27, 1997, by and
among Energy Ventures, Inc., GulfMark Acquisition Co., GulfMark International, Inc. and
GulfMark Offshore, Inc. (incorporated by reference to Exhibit No. 2.3 to the
Registration Statement on Form S-4 (Reg. No. 333-24133)).
2.16 -- Stock Purchase Agreement dated as of September 14, 1996, by and among Parker Drilling
Company and Energy Ventures, Inc. (incorporated by reference to Exhibit 2.1 to Form
8-K, File 1-13086, filed October 3, 1996).
2.17 -- Agreement and Plan of Merger dated as of June 20, 1996 between Energy Ventures, Inc.,
TCA Acquisition, Inc. and Tubular Corporation of America (incorporated by reference to
Exhibit No. 2.1 to Form 8-K, File 1-13086, filed June 24, 1996).
2.18 -- Amendment No. 1 dated as of May 26, 1998, to the Agreement and Plan of Merger dated as
of December 12, 1997 and to the Agreement dated as of December 12, 1997, by and among
EVI, Inc., Christiana Acquisition, Inc., Christiana Companies, Inc., C2, Inc. and Total
Logistic Control, LLC.
*2.19 -- Amended and Restated Agreement and Plan of Merger among Weatherford International,
Inc., Christiana Acquisition, Inc., Christiana Companies, Inc. and C2, Inc. dated as of
October 14, 1998.
**2.20 -- Amendment No. 2 to the Agreement by and among Weatherford International, Inc., Total
Logistic Control, LLC, Christiana Companies, Inc. and C2, Inc. dated as of October 12,
1998.
3.1 -- Amended and Restated Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit No. 3.1 to Form 8-K, File 1-13086, filed June 2, 1998).
3.2 -- Amended and Restated By-laws of the Registrant, as amended (incorporated by reference
to Exhibit No. 3.2 to Form 8-K, File 1-13086, filed June 2, 1998).
*3.3 -- Certificate of Amendment to Amended and Restated Certificate of Incorporation of the
Registrant.
4.1 -- See Exhibit Nos. 3.1, 3.2 and 3.3 for provisions of the Amended and Restated
Certificate of Incorporation and Amended and Restated By-laws of the Registrant
defining the rights of the holders of Common Stock.
4.2 -- Amended and Restated Credit Agreement dated as of May 27, 1998, among EVI Weatherford,
Inc., EVI Oil Tools Canada Ltd., Chase Bank of Texas, National Association, as U.S.
Administrative Agent, The Bank of Nova Scotia, as Documentation Agent and Canadian
Agent, ABN AMRO Bank, N.V., as Syndication Agent, and the other Lenders defined
therein, including the forms of Notes (incorporated by reference to Exhibit No. 4.1 to
the Form 8-K, File 1-13086, filed June 16, 1998).
4.3 -- Indenture dated March 15, 1994, among Energy Ventures, Inc., as Issuer, the Subsidiary
Guarantors party thereto, as Guarantors, and Chemical Bank, as Trustee (incorporated by
reference to Form 8-K, File 1-13086, filed April 5, 1994).
4.4 -- Specimen 10 1/4% Senior Note due 2004 of Energy Ventures, Inc. (incorporated by
reference to Form 8-K, File 1-13086, filed April 5, 1994).
4.5 -- First Supplemental Indenture by and among Energy Ventures, Inc., Prideco and Chemical
Bank, as trustee, dated June 30, 1995 (incorporated by reference to Exhibit No. 4.4 to
the Registration Statement on Form S-3 (Reg. No. 33-61933)).
4.6 -- Second Supplemental Indenture by and among Energy Ventures, Inc., EVI Arrow, Inc., EVI
Watson, Inc. and The Chase Manhattan Bank, as trustee, dated effective as of December
6, 1996 (incorporated by reference to Exhibit 4.6 to Form 10-K, File 1-13086, filed
March 20, 1997).
</TABLE>
II-3
<PAGE> 227
<TABLE>
<C> <S>
4.7 -- Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997 (incorporated by
reference to Exhibit 99.2 to Form 8-K, File 1-13086,
filed October 27, 1997).
4.8 -- Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997
(incorporated by reference to Exhibit 99.3 to Form 8-K,
File 1-13086, filed October 27, 1997).
4.9 -- Fifth Supplemental Indenture by and between EVI, Inc. and
The Chase Manhattan Bank dated as of December 12, 1997
(including the Form of Note and Form of Exchange Note)
(incorporated by reference to Exhibit 4.1 to Form 8-K,
File 1-13086, filed December 31, 1997).
4.10 -- Indenture dated as of October 15, 1997, between EVI, Inc.
and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit No. 4.13 to the Registration
Statement on Form S-3 (Reg. No. 333-45207)).
4.11 -- First Supplemental Indenture dated as of October 28,
1997, between EVI, Inc. and The Chase Manhattan Bank, as
Trustee (including Form of Debenture) (incorporated by
reference to Exhibit 4.2 to Form 8-K, File 1-13086, filed
November 5, 1997).
4.12 -- Registration Rights Agreement dated November 3, 1997, by
and among EVI, Inc., Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation,
Credit Suisse First Boston Corporation, Lehman Brothers
Inc., Prudential Securities Incorporated and Schroder &
Co. Inc. (incorporated by reference to Exhibit 4.3 to
Form 8-K, File 1-13086, filed November 5, 1997).
4.13 -- Indenture dated May 17, 1996, between Weatherford
Enterra, Inc. and Bank of Montreal Trust Company, as
Trustee (incorporated by reference to Exhibit 4.1 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K,
File No. 1-7867, dated May 28, 1996).
4.14 -- First Supplemental Indenture dated and effective as of
May 27, 1998, by and among EVI Weatherford, Inc., the
successor by merger to Weatherford Enterra, Inc., and
Bank of Montreal Trust Company, as Trustee (incorporated
by reference to Exhibit No. 4.1 to Form 8-K, File
1-13086, filed June 2, 1998).
4.15 -- Form of Weatherford Enterra, Inc.'s 7 1/4% Notes Due May
15, 2006 (incorporated by reference to Exhibit 4.2 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K,
File No. 1-7867, dated May 28, 1996).
**5.1 -- Opinion of Fulbright & Jaworski L.L.P., regarding
legality of securities.
**8.1 -- Opinion of Arthur Andersen LLP, regarding certain tax
matters.
**23.1 -- Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit No. 5.1).
**23.2 -- Consent of Arthur Andersen LLP, with respect to the Tax
Opinion (included in Exhibit No. 8.1).
*23.3 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford International, Inc.
*23.4 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford Enterra, Inc.
*23.5 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Christiana Companies, Inc.
*23.6 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of GulfMark Retained Assets.
</TABLE>
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<PAGE> 228
<TABLE>
<C> <S>
*23.7 -- Consent of Ernst & Young LLP, with respect to the consolidated financial statements of
Trico Industries, Inc.
*23.8 -- Consent of Arthur Andersen LLP, with respect to the combined financial statements of
BMW Monarch (Lloydminster) Ltd. and BMW Pump, Inc.
*23.9 -- Consent of Morgan Stanley & Co. Incorporated with respect to their fairness opinion
(included in the Morgan Stanley Opinion attached as Appendix D to the Joint Proxy
Statement/Prospectus).
*23.10 -- Consent of Prudential Securities Incorporated with respect to their fairness opinion
(included in the Prudential Securities Opinion attached as Appendix E to the Joint
Proxy Statement/Prospectus).
*23.11 -- Consent of American Appraisal Associates, Inc. with respect to their appraisal opinion.
*24.1 -- Powers of Attorney (included on signature page).
*99.1 -- Proxy card for use at Special Meeting of Stockholders of Weatherford International,
Inc.
*99.2 -- Proxy card for use at Special Meeting of Shareholders of Christiana Companies, Inc.
**99.3 -- Form of Letter of Transmittal for use by shareholders of Christiana Companies, Inc.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant
has not filed with this Registration Statement certain instruments defining the
rights of holders of long-term debt of the Registrant and its subsidiaries
because the total amount of securities authorized under any of such instruments
does not exceed 10% of the total assets of the Registrant and its subsidiaries
on a consolidated basis. The Registrant agrees to furnish a copy of any such
agreements to the Securities and Exchange Commission upon request.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) Prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter
II-5
<PAGE> 229
within the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called for by the
applicable registration form with respect to reofferings by persons who may
be deemed underwriters, in addition to the information called for by the
other Items of the applicable form; and
(2) Every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Securities Act, and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
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<PAGE> 230
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas, on October 14, 1998.
WEATHERFORD INTERNATIONAL, INC.
By: /s/ BERNARD J. DUROC-DANNER
----------------------------------
Bernard J. Duroc-Danner
President, Chief Executive
Officer,
Chairman of the Board and Director
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Bernard J. Duroc-Danner and James G.
Kiley, or any of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
and all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting said attorney-in-fact and agent,
and any of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or any of them, or his
or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BERNARD J. DUROC-DANNER President, Chief Executive October 14, 1998
- ----------------------------------------------------- Officer, Chairman of the
Bernard J. Duroc-Danner Board and Director
(Principal Executive
Officer)
/s/ JAMES G. KILEY Senior Vice President and October 14, 1998
- ----------------------------------------------------- Chief Financial Officer
James G. Kiley (Principal Financial
Officer)
/s/ FRANCES R. POWELL Vice President, Accounting October 14, 1998
- ----------------------------------------------------- and Controller (Principal
Frances R. Powell Accounting Officer)
Director
- -----------------------------------------------------
David J. Butters
/s/ SHELDON B. LUBAR Director October 14, 1998
- -----------------------------------------------------
Sheldon B. Lubar
/s/ ROBERT B. MILLARD Director October 14, 1998
- -----------------------------------------------------
Robert B. Millard
/s/ ROBERT A. RAYNE Director October 8, 1998
- -----------------------------------------------------
Robert A. Rayne
</TABLE>
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<PAGE> 231
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ PHILIP BURGUIERES Director October 14, 1998
- -----------------------------------------------------
Philip Burguieres
/s/ WILLIAM E. MACAULAY Director October 14, 1998
- -----------------------------------------------------
William E. Macaulay
/s/ ROBERT K. MOSES, JR. Director October 14, 1998
- -----------------------------------------------------
Robert K. Moses, Jr.
</TABLE>
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<PAGE> 232
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of March 4, 1998,
by and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.1 to
Amendment No. 1 to Form 8-K on Form 8-K/A, File 1-13086,
filed March 9, 1998).
2.2 -- Amendment No. 1 dated as of April 17, 1998, to the
Agreement and Plan of Merger dated as of March 4, 1998,
by and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.2 to Form
8-K, File 1-13086, filed April 21, 1998).
2.3 -- Amendment No. 2 dated as of April 22, 1998, to the
Agreement and Plan of Merger dated as of March 4, 1998,
as amended by and between EVI, Inc. and Weatherford
Enterra, Inc. (incorporated by reference to Exhibit No.
2.3 to Form 8-K, File 1-13086, filed April 23, 1998).
2.4 -- Share Purchase Agreement made and entered into as of
January 30, 1998, by and among the shareholders of Nika
Enterprises Ltd., an Alberta corporation, listed on the
signature pages thereto and EVI Oil Tools Canada Ltd., an
Alberta corporation (incorporated by reference to Exhibit
No. 2.1 to the Form 8-K, File 1-13086, filed March 3,
1998).
2.5 -- Agreement and Plan of Merger dated as of December 12,
1997, by and among EVI, Inc., Christiana Acquisition,
Inc., Christiana Companies, Inc. and C2, Inc.
(incorporated by reference to Exhibit No. 2.1 to Form
8-K, File 1-13086, filed December 31, 1997).
2.6 -- Agreement dated as of December 12, 1997, by and among
EVI, Inc., Christiana Companies, Inc., Total Logistic
Control LLC and C2, Inc. (incorporated by reference to
Exhibit No. 2.2 to Form 8-K, File 1-13086, filed December
31, 1997).
2.7 -- Letter Agreement dated December 12, 1997, by and among
EVI, Inc., Christiana Acquisition, Inc., Christiana
Companies, Inc. and C2, Inc. (incorporated by reference
to Exhibit No. 2.3 to Form 8-K, File 1-13086, filed
December 31, 1997).
2.8 -- Amended and Restated Arrangement Agreement by and between
Taro Industries Limited, and EVI, Inc. and 756745 Alberta
Ltd. And 759572 Alberta Ltd. dated as of December 5, 1997
(incorporated by reference to Exhibit No. 2.4 to Form
8-K, File 1-13086, filed December 31, 1997).
2.9 -- Stock Purchase Agreement dated as of October 9, 1997,
between EVI, Inc. and PACCAR Inc (incorporated by
reference to Exhibit No. 2.1 to Form 8-K, File 1-13086,
filed October 21, 1997).
2.10 -- Stock Purchase Agreement dated as of October 9, 1997,
among certain shareholders of BMW Monarch (Lloydminster)
Ltd., the shareholders of BMW Pump Inc., the shareholder
of Makelki Holdings Ltd., the shareholder of 589979
Alberta Ltd., the shareholders of 600969 Alberta Ltd.,
the shareholders of 391862 Alberta Ltd. and EVI, Inc.
(incorporated by reference to Exhibit No. 2.2 to Form
8-K, File 1-13086, filed October 21, 1997).
2.11 -- Agreement and Plan of Merger dated as of July 16, 1997,
as amended, by and among XLS Holding, Inc., EVI, Inc. and
GPXL, Inc. (incorporated by reference to Exhibit No. 2.1
to Form 8-K, File 1-13086, filed August 26, 1997).
</TABLE>
<PAGE> 233
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.12 -- Stock Purchase Agreement dated as of February 21, 1997,
among Seigo Arai, Kanematsu USA Inc. and Energy Ventures,
Inc. (incorporated by reference to Exhibit No. 2.1 to
Form 8-K, File 1-13086, filed March 17, 1997).
2.13 -- Agreement and Plan of Merger dated as of December 5,
1996, among Energy Ventures, Inc., GulfMark Acquisition
Co., GulfMark International, Inc. and New GulfMark
International, Inc. (incorporated by reference to Exhibit
No. 2.2 to Form 8-K, File 1-13086, filed December 26,
1996).
2.14 -- Agreement and Plan of Distribution dated as of December
5, 1996, by and among GulfMark International, Inc., New
GulfMark International, Inc. and Energy Ventures, Inc.
(incorporated by reference to Exhibit No. 2.3 to Form
8-K, File 1-13086, filed December 26, 1996).
2.15 -- First Amendment to Agreement and Plan of Merger dated as
of March 27, 1997, by and among Energy Ventures, Inc.,
GulfMark Acquisition Co., GulfMark International, Inc.
and GulfMark Offshore, Inc. (incorporated by reference to
Exhibit No. 2.3 to the Registration Statement on Form S-4
(Reg. No. 333-24133)).
2.16 -- Stock Purchase Agreement dated as of September 14, 1996,
by and among Parker Drilling Company and Energy Ventures,
Inc. (incorporated by reference to Exhibit 2.1 to Form
8-K, File 1-13086, filed October 3, 1996).
2.17 -- Agreement and Plan of Merger dated as of June 20, 1996
between Energy Ventures, Inc., TCA Acquisition, Inc. and
Tubular Corporation of America (incorporated by reference
to Exhibit No. 2.1 to Form 8-K, File 1-13086, filed June
24, 1996).
2.18 -- Amendment No. 1 dated as of May 26, 1998, to the
Agreement and Plan of Merger dated as of December 12,
1997 and to the Agreement dated as of December 12, 1997,
by and among EVI, Inc., Christiana Acquisition, Inc.,
Christiana Companies, Inc., C2, Inc. and Total Logistic
Control, LLC.
*2.19 -- Amended and Restated Agreement and Plan of Merger among
Weatherford International, Inc., Christiana Acquisition,
Inc., Christiana Companies, Inc. and C2, Inc. dated as of
October 14, 1998.
**2.20 -- Amendment No. 2 to the Agreement by and among Weatherford
International, Inc., Total Logistic Control, LLC,
Christiana Companies, Inc. and C2, Inc. dated as of
October 12, 1998.
3.1 -- Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit No. 3.1
to Form 8-K, File 1-13086, filed June 2, 1998).
3.2 -- Amended and Restated By-laws of the Registrant, as
amended (incorporated by reference to Exhibit No. 3.2 to
Form 8-K, File 1-13086, filed June 2, 1998).
*3.3 -- Certificate of Amendment to Amended and Restated
Certificate of Incorporation of the Registrant.
4.1 -- See Exhibit Nos. 3.1, 3.2 and 3.3 for provisions of the
Amended and Restated Certificate of Incorporation and
Amended and Restated By-laws of the Registrant defining
the rights of the holders of Common Stock.
</TABLE>
<PAGE> 234
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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<C> <S> <C>
4.2 -- Amended and Restated Credit Agreement dated as of May 27,
1998, among EVI Weatherford, Inc., EVI Oil Tools Canada
Ltd., Chase Bank of Texas, National Association, as U.S.
Administrative Agent, The Bank of Nova Scotia, as
Documentation Agent and Canadian Agent, ABN AMRO Bank,
N.V., as Syndication Agent, and the other Lenders defined
therein, including the forms of Notes (incorporated by
reference to Exhibit No. 4.1 to the Form 8-K, File
1-13086, filed June 16, 1998).
4.3 -- Indenture dated March 15, 1994, among Energy Ventures,
Inc., as Issuer, the Subsidiary Guarantors party thereto,
as Guarantors, and Chemical Bank, as Trustee
(incorporated by reference to Form 8-K, File 1-13086,
filed April 5, 1994).
4.4 -- Specimen 10 1/4% Senior Note due 2004 of Energy Ventures,
Inc. (incorporated by reference to Form 8-K, File
1-13086, filed April 5, 1994).
4.5 -- First Supplemental Indenture by and among Energy
Ventures, Inc., Prideco and Chemical Bank, as trustee,
dated June 30, 1995 (incorporated by reference to Exhibit
No. 4.4 to the Registration Statement on Form S-3 (Reg.
No. 33-61933)).
4.6 -- Second Supplemental Indenture by and among Energy
Ventures, Inc., EVI Arrow, Inc., EVI Watson, Inc. and The
Chase Manhattan Bank, as trustee, dated effective as of
December 6, 1996 (incorporated by reference to Exhibit
4.6 to Form 10-K, File 1-13086, filed March 20, 1997).
4.7 -- Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997 (incorporated by
reference to Exhibit 99.2 to Form 8-K, File 1-13086,
filed October 27, 1997).
4.8 -- Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997
(incorporated by reference to Exhibit 99.3 to Form 8-K,
File 1-13086, filed October 27, 1997).
4.9 -- Fifth Supplemental Indenture by and between EVI, Inc. and
The Chase Manhattan Bank dated as of December 12, 1997
(including the Form of Note and Form of Exchange Note)
(incorporated by reference to Exhibit 4.1 to Form 8-K,
File 1-13086, filed December 31, 1997).
4.10 -- Indenture dated as of October 15, 1997, between EVI, Inc.
and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit No. 4.13 to the Registration
Statement on Form S-3 (Reg. No. 333-45207)).
4.11 -- First Supplemental Indenture dated as of October 28,
1997, between EVI, Inc. and The Chase Manhattan Bank, as
Trustee (including Form of Debenture) (incorporated by
reference to Exhibit 4.2 to Form 8-K, File 1-13086, filed
November 5, 1997).
4.12 -- Registration Rights Agreement dated November 3, 1997, by
and among EVI, Inc., Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation,
Credit Suisse First Boston Corporation, Lehman Brothers
Inc., Prudential Securities Incorporated and Schroder &
Co. Inc. (incorporated by reference to Exhibit 4.3 to
Form 8-K, File 1-13086, filed November 5, 1997).
4.13 -- Indenture dated May 17, 1996, between Weatherford
Enterra, Inc. and Bank of Montreal Trust Company, as
Trustee (incorporated by reference to Exhibit 4.1 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K,
File No. 1-7867, dated May 28, 1996).
</TABLE>
<PAGE> 235
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
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<C> <S> <C>
4.14 -- First Supplemental Indenture dated and effective as of
May 27, 1998, by and among EVI Weatherford, Inc., the
successor by merger to Weatherford Enterra, Inc., and
Bank of Montreal Trust Company, as Trustee (incorporated
by reference to Exhibit No. 4.1 to Form 8-K, File
1-13086, filed June 2, 1998).
4.15 -- Form of Weatherford Enterra, Inc.'s 7 1/4% Notes Due May
15, 2006 (incorporated by reference to Exhibit 4.2 to
Weatherford Enterra, Inc.'s Current Report on Form 8-K,
File No. 1-7867, dated May 28, 1996).
**5.1 -- Opinion of Fulbright & Jaworski L.L.P., regarding
legality of securities.
**8.1 -- Opinion of Arthur Andersen LLP, regarding certain tax
matters.
**23.1 -- Consent of Fulbright & Jaworski L.L.P. (included in
Exhibit No. 5.1).
**23.2 -- Consent of Arthur Andersen LLP, with respect to the Tax
Opinion (included in Exhibit No. 8.1).
*23.3 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford International, Inc.
*23.4 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford Enterra, Inc.
*23.5 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Christiana Companies, Inc.
*23.6 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of GulfMark Retained Assets.
*23.7 -- Consent of Ernst & Young LLP, with respect to the
consolidated financial statements of Trico Industries,
Inc.
*23.8 -- Consent of Arthur Andersen LLP, with respect to the
combined financial statements of BMW Monarch
(Lloydminster) Ltd. and BMW Pump, Inc.
*23.9 -- Consent of Morgan Stanley & Co. Incorporated with respect
to their fairness opinion (included in the Morgan Stanley
Opinion attached as Appendix D to the Joint Proxy
Statement/Prospectus).
*23.10 -- Consent of Prudential Securities Incorporated with
respect to their fairness opinion (included in the
Prudential Securities Opinion attached as Appendix E to
the Joint Proxy Statement/Prospectus).
*23.11 -- Consent of American Appraisal Associates, Inc. with
respect to their appraisal opinion.
*24.1 -- Powers of Attorney (included on signature page).
*99.1 -- Proxy card for use at Special Meeting of Stockholders of
Weatherford International, Inc.
*99.2 -- Proxy card for use at Special Meeting of Shareholders of
Christiana Companies, Inc.
**99.3 -- Form of Letter of Transmittal for use by shareholders of
Christiana Companies, Inc.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
<PAGE> 1
EXHIBIT 2.19
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMONG
WEATHERFORD INTERNATIONAL, INC.,
CHRISTIANA ACQUISITION, INC.,
CHRISTIANA COMPANIES, INC.
AND
C2, INC.
DATED AS OF
OCTOBER 14, 1998
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
<TABLE>
<S> <C> <C>
THE MERGER.................................................. A-3
1.1 THE MERGER.................................................. A-3
1.2 CLOSING DATE................................................ A-4
1.3 CONSUMMATION OF THE MERGER.................................. A-4
1.4 EFFECTS OF THE MERGER....................................... A-4
1.5 ARTICLES OF INCORPORATION; BYLAWS........................... A-4
1.6 DIRECTORS AND OFFICERS...................................... A-4
1.7 CONVERSION OF SECURITIES.................................... A-4
1.8 EXCHANGE OF CERTIFICATES.................................... A-5
(a) Exchange Agent.......................................... A-5
(b) Payment of Merger Consideration......................... A-5
(c) Retention of Cash Pending Post Closing Audit............ A-5
(d) [Intentionally Omitted]................................. A-5
(e) Exchange Procedure...................................... A-5
(f) Distributions with Respect to Unexchanged Christiana
Shares...................................................... A-6
(g) No Further Ownership Rights in Christiana Shares........ A-6
(h) Escheat................................................. A-6
1.9 TAKING OF NECESSARY ACTION; FURTHER ACTION.................. A-6
ARTICLE II
REPRESENTATIONS AND WARRANTIES.............................. A-7
2.1 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD AND SUB....... A-7
(a) Organization and Compliance with Law.................... A-7
(b) Capitalization.......................................... A-7
(c) Authorization and Validity of Agreement................. A-7
(d) No Approvals or Notices Required; No Conflict........... A-8
(e) Commission Filings; Financial Statements................ A-8
(f) Absence of Certain Charges and Events................... A-8
(g) Tax Matters............................................. A-8
(h) Voting Requirements..................................... A-9
(i) Brokers................................................. A-9
(j) Information Supplied.................................... A-9
2.2 REPRESENTATIONS AND WARRANTIES OF CHRISTIANA AND C2......... A-9
(a) Organization............................................ A-9
(b) Capitalization.......................................... A-10
(c) Authorization and Validity of Agreement................. A-11
(d) No Approvals or Notices Required; No Conflict with
Instruments
to which Christiana is a Party.............................. A-11
(e) Commission Filings; Financial Statements................ A-12
(f) Conduct of Business in the Ordinary Course; Absence of
Certain Changes and Events.................................. A-12
(g) Litigation.............................................. A-13
(h) Employee Benefit Plans.................................. A-13
(i) Taxes................................................... A-14
(j) Environmental Matters................................... A-15
(k) Investment Company...................................... A-16
(l) Severance Payments...................................... A-16
(m) Voting Requirements..................................... A-16
(n) Brokers................................................. A-16
(o) Assets and Liabilities at Closing....................... A-16
(p) Compliance with Laws.................................... A-17
(q) Contracts............................................... A-17
(r) Title to Property....................................... A-18
</TABLE>
A-1
<PAGE> 3
<TABLE>
<S> <C> <C>
(s) Insurance Policies...................................... A-18
(t) Loans................................................... A-18
(u) No Fraudulent Transfer.................................. A-18
(v) Information Supplied.................................... A-19
ARTICLE III
COVENANTS OF CHRISTIANA..................................... A-19
3.1 CONDUCT OF BUSINESS BY CHRISTIANA PENDING THE MERGER........ A-19
3.2 CASH REQUIREMENTS........................................... A-21
3.3 AFFILIATES' AGREEMENTS...................................... A-22
3.4 WEATHERFORD COMMON STOCK PURCHASES.......................... A-22
ARTICLE IV
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME........ A-22
4.1 RESERVATION OF WEATHERFORD STOCK............................ A-22
4.2 CONDUCT OF WEATHERFORD PENDING THE MERGER................... A-22
4.3 STOCK EXCHANGE LISTING...................................... A-22
ARTICLE V
ADDITIONAL AGREEMENTS....................................... A-22
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.... A-22
5.2 ACCOUNTANTS LETTER.......................................... A-23
5.3 MEETINGS OF STOCKHOLDERS.................................... A-23
5.4 FILINGS; CONSENTS; REASONABLE EFFORTS....................... A-23
5.5 NOTIFICATION OF CERTAIN MATTERS............................. A-24
5.6 EXPENSES.................................................... A-24
5.7 CHRISTIANA'S EMPLOYEE BENEFITS.............................. A-24
5.8 LIQUIDATION OR MERGER OF CHRISTIANA......................... A-24
ARTICLE VI
CONDITIONS.................................................. A-25
CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE
6.1 MERGER...................................................... A-25
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD......... A-25
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF CHRISTIANA.......... A-27
ARTICLE VII
MISCELLANEOUS............................................... A-27
7.1 TERMINATION................................................. A-27
7.2 EFFECT OF TERMINATION....................................... A-28
7.3 WAIVER AND AMENDMENT........................................ A-28
7.4 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES............... A-28
7.5 PUBLIC STATEMENTS........................................... A-29
7.6 ASSIGNMENT.................................................. A-29
7.7 NOTICES..................................................... A-29
7.8 GOVERNING LAW............................................... A-30
7.9 ARBITRATION................................................. A-30
7.10 SEVERABILITY................................................ A-31
7.11 COUNTERPARTS................................................ A-31
7.12 HEADINGS.................................................... A-31
7.13 CONFIDENTIALITY AGREEMENT................................... A-31
7.14 ENTIRE AGREEMENT: THIRD PARTY BENEFICIARIES................. A-31
7.15 DISCLOSURE LETTERS.......................................... A-31
</TABLE>
LIST OF EXHIBITS
Exhibit A -- Logistic Purchase Agreement
Exhibit B -- Amended and Restated Articles of Incorporation of Christiana
A-2
<PAGE> 4
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER dated as of October
14, 1998 (this "Agreement"), is made and entered into by and among WEATHERFORD
INTERNATIONAL, INC. (formerly known as EVI, Inc.), a Delaware corporation
("Weatherford"), CHRISTIANA ACQUISITION, INC., a Wisconsin corporation and
wholly owned subsidiary of Weatherford ("Sub"), CHRISTIANA COMPANIES, INC., a
Wisconsin corporation ("Christiana"), and C2, INC., a Wisconsin corporation
("C2").
WHEREAS, Weatherford, Sub, Christiana and C2 entered into an Agreement and
Plan of Merger, dated as of December 12, 1997, and an Amendment No. 1 to
Agreement and Plan of Merger and Logistic Purchase Agreement dated May 26, 1998;
WHEREAS, Weatherford, Sub, Christiana and C2 desire to amend and restate
the Agreement and Plan of Merger to provide for additional amendments set forth
herein;
WHEREAS, subject to and in accordance with the terms and conditions of this
Agreement, the respective Boards of Directors of Weatherford, Sub and
Christiana, and Weatherford as sole stockholder of Sub, have approved the merger
of Sub with and into Christiana (the "Merger"), whereby each issued and
outstanding share of common stock, $1.00 par value, of Christiana ("Christiana
Common Stock") not owned directly or indirectly by Christiana will be converted
into the right to receive (i) common stock, $1.00 par value, of Weatherford
("Weatherford Common Stock") plus (ii) the Cash Consideration Per Share (as
defined in Section 1.7(e));
WHEREAS, as a condition to the Merger, Christiana will sell to C2
two-thirds of the interest (the "Logistic Interest") in Total Logistic Control,
LLC, a Delaware limited liability company and wholly owned subsidiary of
Christiana ("Logistic"), in consideration for $10,666,667 in cash (the "Logistic
Sale") pursuant to a Purchase Agreement, as amended by Amendment No. 1 to
Agreement and Plan of Merger and Logistic Purchase Agreement, dated May 26, 1998
and Amendment No. 2 to Logistic Purchase Agreement dated October 14, 1998,
between Christiana, C2, EVI, Inc. (now known as Weatherford International, Inc.)
and Sub in substantially the form attached hereto as Exhibit A (the "Logistic
Purchase Agreement");
WHEREAS, immediately after the Effective Time, Christiana will only hold
the Christiana Assets, as such terms are hereinafter defined in Sections 1.3 and
2.2(o);
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) by
reason of Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended
(the "Code"); and
WHEREAS, the parties hereto desire to set forth certain representations,
warranties and covenants made by each to the other as an inducement to the
consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to and in accordance with the terms and conditions
of this Agreement and in accordance with the Wisconsin Business Corporation Law
("WBCL"), at the Effective Time (as defined in Section 1.3), Sub shall be merged
with and into Christiana. As a result of the Merger, the separate corporate
existence of Sub shall cease and Christiana shall continue as the surviving
corporation (sometimes referred to herein as the "Surviving Corporation"), and
all the properties, rights, privileges, powers and franchises of Sub and
Christiana shall vest in the Surviving Corporation, without any transfer or
assignment having occurred, and certain liabilities, debts and duties of Sub and
Christiana shall attach to the Surviving Corporation, all in accordance with the
WBCL and subject to the provisions of the Logistic Purchase Agreement.
A-3
<PAGE> 5
1.2 CLOSING DATE. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Fulbright &
Jaworski L.L.P., Houston, Texas, as soon as practicable after the satisfaction
or waiver of the conditions set forth in Article VI hereof or at such other time
and place and on such other date as Weatherford and Christiana shall agree;
provided that the closing conditions set forth in Article VI hereof shall have
been satisfied or waived at or prior to such time. The date on which the Closing
occurs is herein referred to as the "Closing Date".
1.3 CONSUMMATION OF THE MERGER. As soon as practicable on the Closing
Date, the parties hereto will cause the Merger to be consummated by filing with
the Department of Financial Institutions of the State of Wisconsin the Articles
of Merger in such form as required by, and executed in accordance with, the
relevant provisions of the WBCL. The "Effective Time" of the Merger, as that
term is used in this Agreement, shall mean such time as the Articles of Merger
are duly filed with the Department of Financial Institutions of the State of
Wisconsin or at such later time (not to exceed seven days from the date the
Articles of Merger are filed) as is specified in the Articles of Merger pursuant
to the mutual agreement of Weatherford and Christiana.
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
the applicable provisions of the WBCL. If at any time after the Effective Time
of the Merger, the Surviving Corporation shall consider or be advised that any
further assignments or assurances in law or otherwise are necessary or desirable
to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, all rights, title and interests in all real estate and other
property and all privileges, powers and franchises of Christiana and Sub, the
Surviving Corporation and its proper officers and directors, in the name and on
behalf of Christiana and Sub, shall execute and deliver all such proper deeds,
assignments and assurances in law and do all things necessary and proper to
vest, perfect or confirm title to such property or rights in the Surviving
Corporation and otherwise to carry out the purpose of this Agreement, and the
proper officers and directors of the Surviving Corporation are fully authorized
in the name of Christiana or otherwise to take any and all such action.
1.5 ARTICLES OF INCORPORATION; BYLAWS. The Articles of Incorporation of
Christiana, as amended and restated by the amendment set forth in Exhibit B
attached hereto, shall be the Articles of Incorporation of the Surviving
Corporation and thereafter shall continue to be its Articles of Incorporation
until amended as provided therein or under the WBCL. The bylaws of Sub, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation and thereafter shall continue to be its bylaws until
amended as provided therein or under the WBCL.
1.6 DIRECTORS AND OFFICERS. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation at and after
the Effective Time, each to hold office in accordance with the Articles of
Incorporation and bylaws of the Surviving Corporation, and the officers of Sub
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation at and after the Effective Time, in each case until the earlier of
their resignation or removal or their respective successors are duly elected or
appointed and qualified.
1.7 CONVERSION OF SECURITIES. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any
further action on the part of Weatherford, Christiana, Sub or their
stockholders:
(a) Subject to adjustments pursuant to Section 1.7(e) hereof, each
share of Christiana Common Stock issued and outstanding immediately prior
to the Effective Time (the "Christiana Shares") shall be converted into the
right to receive (i) a fraction of a share of Weatherford Common Stock
equal to the number of shares of Weatherford Common Stock held by
Christiana at the Effective Time divided by the number of shares of
Christiana Common Stock outstanding immediately prior to the Effective Time
(the "Stock Exchange Ratio") plus (ii) the Cash Consideration Per Share as
defined in Section 1.7(e); provided, however, that no fractional shares of
Weatherford Common Stock shall be issued and, in lieu thereof, all
fractional shares of Weatherford Common Stock that would otherwise be
issuable in the Merger shall be rounded to the nearest whole share of
Weatherford Common Stock. Except as set forth in the preceding sentence
with respect to the Cash Consideration Per Share, no other consideration
will be paid to the Christiana stockholders.
A-4
<PAGE> 6
(b) Each Christiana Share owned directly or indirectly by Christiana
as treasury stock and each Christiana Share owned by Sub, Weatherford or
any direct or indirect wholly-owned subsidiary of Weatherford or of
Christiana immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment or other
consideration shall be made or paid with respect thereto.
(c) Each share of common stock, $1.00 par value, of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into
one fully paid and nonassessable share of common stock, $1.00 par value, of
the Surviving Corporation.
(d) [Intentionally Omitted]
(e) The "Cash Consideration Per Share", shall equal the quotient of
the Christiana Net Cash divided by 5,149,330. The "Christiana Net Cash"
shall mean and be equal to all cash on hand of Christiana at the Closing
minus (ii) an amount of cash necessary to pay the Christiana Liabilities in
full without giving effect to the use or application of any tax deductions
relating to the exercise of options or any tax benefits that may be
realized as a result of amended Tax Returns. The "Cash Consideration Per
Share" is based on 5,149,330 shares of Christiana Common Stock being issued
and outstanding immediately prior to the Effective Time. In the event the
number of shares of Christiana Common Stock outstanding immediately prior
to the Effective Time is greater or less than 5,149,330, the Cash
Consideration Per Share shall be adjusted to equal the quotient of the
Christiana Net Cash divided by the number of shares of Christiana Common
Stock issued and outstanding immediately prior to the Effective Time.
1.8 EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Prior to the Effective Time of the Merger,
Weatherford shall select a bank or trust company to act as exchange agent
(the "Exchange Agent") for the issue of shares of Weatherford Common Stock
upon surrender of certificates representing Christiana Shares.
(b) Payment of Merger Consideration. Weatherford shall take all steps
necessary to enable and cause there to be provided to the Exchange Agent on
a timely basis, as and when needed after the Effective Time of the Merger,
certificates for the shares of Weatherford Common Stock to be issued upon
the conversion of the Christiana Shares pursuant to Section 1.7 and the
cash necessary to be issued for the Cash Consideration Per Share.
(c) Retention of Cash Pending Post Closing Audit. Within 30 days
following the Effective Date, Weatherford shall (i) complete a post closing
audit by Weatherford of the Christiana Net Cash and (ii) pay to the
Exchange Agent on behalf of the holders of the Christiana Shares the Cash
Consideration Per Share in respect of such Christiana Shares subject to the
prior presentation of the certificates that immediately prior to the
Effective Time represented the outstanding Christiana Shares (the
"Certificates").
(d) [Intentionally Omitted]
(e) Exchange Procedure. As soon as reasonably practical after the
Effective Time of the Merger, the Exchange Agent shall mail to each holder
of record of a Certificate or Certificates, other than Weatherford, Sub and
Christiana and any directly or indirectly wholly owned subsidiary of
Weatherford, Sub or Christiana, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in a form and have such other provisions as
Weatherford and Sub may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for the
certificates representing the shares of Weatherford Common Stock and the
Cash Consideration Per Share. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by the Surviving Corporation, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor a certificate or certificates
representing the number of whole shares of Weatherford Common Stock into
which the Christiana Shares theretofore represented by such Certificate
shall have been converted pursuant to Section 1.7 and the Cash
A-5
<PAGE> 7
Consideration Per Share as provided in Section 1.8(c), and the Certificate
so surrendered shall forthwith be canceled. If the shares of Weatherford
Common Stock are to be issued to an individual, corporation, limited
liability company, partnership, governmental authority or any other entity
(a "Person"), other than the person in whose name the Certificate so
surrendered is registered, it shall be a condition of exchange that such
Certificate shall be properly endorsed or otherwise in proper form for
transfer and that the Person requesting such exchange shall pay any
transfer or other taxes required by reason of the exchange to a Person
other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is
not applicable. Until surrendered as contemplated by this Section 1.8, each
Certificate shall be deemed at any time after the Effective Time of the
Merger to represent only the right to receive upon such surrender the
number of shares of Weatherford Common Stock and the Cash Consideration Per
Share payable in respect of the Christiana Shares pursuant to Section 1.7.
The Exchange Agent shall not be entitled to vote or exercise any rights of
ownership with respect to the shares of Weatherford Common Stock held by it
from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect thereto
for the account of Persons entitled thereto. Any unexchanged shares of
Weatherford Common Stock issuable pursuant to the Merger in respect of the
Christiana Shares shall be issued in the name of the Exchange Agent pending
the receipt by the Exchange Agent of Certificates.
(f) Distributions with Respect to Unexchanged Christiana Shares. No
dividends or other distributions declared or made after the Effective Time
of the Merger with respect to the shares of Weatherford Common Stock with a
record date after the Effective Time of the Merger shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of
Weatherford Common Stock represented thereby and the Cash Consideration Per
Share shall not be paid until the holder of record of such Certificate
shall surrender such Certificate. Subject to the effect of applicable laws,
following surrender of any such Certificate, there shall be paid to the
record holder of the Certificates representing the shares of Weatherford
Common Stock issued in exchange therefor, without interest, (i) the amount
of dividends or other distributions with a record date after the Effective
Time of the Merger theretofore paid with respect to such whole shares of
Weatherford Common Stock, as the case may be, (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record
date after the Effective Time of the Merger but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole
shares of Weatherford Common Stock and (iii) the Cash Consideration Per
Share at the appropriate payment date as provided in this Section 1.8.
(g) No Further Ownership Rights in Christiana Shares. All shares of
Weatherford Common Stock issued upon the surrender of Certificates in
accordance with the terms of this Article I, together with any dividends
payable thereon to the extent contemplated by this Section 1.8 and the
rights to receive the Cash Consideration Per Share as provided herein,
shall be deemed to have been exchanged and paid in full satisfaction of all
rights pertaining to the Christiana Shares theretofore represented by such
Certificates and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the Christiana Shares
that were outstanding immediately prior to the Effective Time of the
Merger. If, after the Effective Time of the Merger, Certificates are
presented to the Surviving Corporation for any reason, they shall be
canceled and exchanged as provided in this Article I.
(h) Escheat. None of Weatherford, Sub, Christiana, the Surviving
Corporation or their transfer agents shall be liable to a holder of the
Christiana Shares for any amount properly paid to a public official
pursuant to applicable property, escheat or similar laws.
1.9 TAKING OF NECESSARY ACTION; FURTHER ACTION. The parties hereto shall
take all such reasonable and lawful action as may be necessary or appropriate in
order to effectuate the Merger and the Logistic Sale as promptly as possible.
If, at any time after the Effective Time, any such further action is necessary
or desirable to carry out the purposes of this Agreement or the Logistic Sale,
and to vest the Surviving Corporation with full right, title and possession to
all assets, property, rights, privileges, powers and franchises of Christiana or
Sub as of the Effective Time, such corporations shall direct their respective
officers and directors to take all such lawful and necessary action.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD AND SUB. Weatherford and
Sub hereby jointly and severally represent and warrant to Christiana that:
(a) Organization and Compliance with Law. Weatherford and Sub are
corporations duly incorporated, validly existing and in good standing under
the laws of the states of Delaware and Wisconsin, respectively. Each of
Weatherford and Sub has all requisite corporate power and corporate
authority to own, lease and operate all of its properties and assets and to
carry on its business as now being conducted, except where the failure to
be so organized, existing or in good standing would not have a material
adverse effect on the financial condition of Weatherford and its
subsidiaries (the "Weatherford Subsidiaries"), taken as a whole (a
"Weatherford MAE"). Each of Weatherford and Sub is duly qualified to do
business, and is in good standing, in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to be duly qualified would not have a
Weatherford MAE. Each of Weatherford and Sub is in compliance with all
applicable laws, judgments, orders, rules and regulations, except where
such failure would not have a Weatherford MAE. Weatherford has heretofore
delivered to Christiana true and complete copies of Weatherford's Amended
and Restated Certificate of Incorporation (the "Weatherford Certificate"),
and Sub's Articles of Incorporation and their respective bylaws as in
existence on the date hereof.
(b) Capitalization.
(i) The authorized capital stock of Weatherford consists of
250,000,000 shares of Weatherford Common Stock, $1.00 par value, and
3,000,000 shares of preferred stock, $1.00 par value ("Weatherford
Preferred Stock"). As of July 10, 1998, there were 97,511,967 shares of
Weatherford Common Stock issued and outstanding. As of July 10, 1998,
(i) 5,031,250 shares of Weatherford Common Stock were reserved for
issuance pursuant to the conversion provisions of Weatherford's 5%
Convertible Subordinated Preferred Equivalent Debentures due 2027, (ii)
3,900,000 shares of Weatherford Common Stock were reserved for issuance
pursuant to pending or proposed acquisitions, (iii) 1,577,410 shares of
Weatherford Common Stock were remaining to be exchanged for shares of
stock in connection with various completed acquisitions and (iv)
3,269,376 shares of Weatherford Common Stock were reserved for issuance
pursuant to Weatherford's employee and director benefit plans and
arrangements, of which 1,897,704 shares of Weatherford Common Stock were
reserved for issuance upon exercise of outstanding options. At July 10,
1998, there were no shares of Weatherford Preferred Stock issued or
outstanding. No holder of Weatherford Common Stock is entitled to
preemptive rights under Delaware law or Weatherford's Certificate of
Incorporation.
(ii) As of the date hereof, the authorized capital stock of Sub
consists of 1,000 shares of common stock, $1.00 par value, all of which
are validly issued, fully paid and nonassessable and are owned by
Weatherford.
(iii) Each share of Weatherford Common Stock to be issued hereunder
as a result of the Merger will be fully paid and non-assessable upon
issuance.
(c) Authorization and Validity of Agreement. The execution and
delivery by Weatherford and Sub of this Agreement and the consummation by
each of them of the transactions contemplated hereby have been duly
authorized by all necessary corporate action (subject only, with respect to
the Merger, to approval of this Agreement by each of their stockholders as
provided for in Section 5.3). On or prior to the date hereof, the Board of
Directors of Weatherford or duly authorized committee thereof has
determined to recommend approval of the Merger to the stockholders of
Weatherford, and such determination is in effect on the date hereof. This
Agreement has been duly executed and delivered by Weatherford and Sub and
is the valid and binding obligation of Weatherford and Sub, enforceable
against Weatherford and Sub in accordance with its terms.
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(d) No Approvals or Notices Required; No Conflict. Neither the
execution and delivery of this Agreement nor the performance by Weatherford
or Sub of its obligations hereunder, nor the consummation of the
transactions contemplated hereby by Weatherford and Sub, will (i) conflict
with the Weatherford Certificate or the bylaws of Weatherford or Sub; (ii)
assuming satisfaction of the requirements set forth in clause (iii) below,
violate any provision of law applicable to Weatherford or any of the
Weatherford Subsidiaries; (iii) except for (A) requirements of Federal or
state securities laws, (B) requirements arising out of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act"), (C)
requirements of notice filings in such foreign jurisdictions as may be
applicable, and (D) the filing of Articles of Merger by Sub in accordance
with the WBCL, require any consent or approval of, or filing with or notice
to, any public body or authority, domestic or foreign, under any provision
of law applicable to Weatherford or any of the Weatherford Subsidiaries; or
(iv) require any consent, approval or notice under, or violate, breach, be
in conflict with or constitute a default (or an event that, with notice or
lapse of time or both, would constitute a default) under, or permit the
termination of any provision of, or result in the creation or imposition of
any lien, mortgage, pledge, security interest, restriction on transfer,
option, charge, right of any third Person or any other encumbrance of any
nature (a "Lien") upon any properties, assets or business of Weatherford or
any of the Weatherford Subsidiaries under, any note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization, license,
contract, instrument or other agreement or commitment or any order,
judgment or decree to which Weatherford or any of the Weatherford
Subsidiaries is a party or by which Weatherford or any of the Weatherford
Subsidiaries or any of its or their assets or properties is bound or
encumbered, except (A) those that have already been given, obtained or
filed and (B) those that, in the aggregate, would not have a Weatherford
MAE.
(e) Commission Filings; Financial Statements. Weatherford has filed
all reports and documents required to filed with the Securities and
Exchange Commission (the "Commission") since December 31, 1995. All
reports, registration statements and other filings (including all notes,
exhibits and schedules thereto and documents incorporated by reference
therein) filed by Weatherford with the Commission since December 31, 1995,
through the date of this Agreement, together with any amendments thereto,
are sometimes collectively referred to as the "Weatherford Commission
Filings". Weatherford has heretofore delivered to, or made accessible to,
Christiana copies of the Weatherford Commission Filings. As of the
respective dates of their filing with the Commission, the Weatherford
Commission Filings complied in all material respects with the applicable
requirements of the Securities Act of 1934 (the "Securities Act"), the
Securities Exchange Act of 1934 (the "Exchange Act") and the rules and
regulations of the Commission thereunder, and did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
(f) Absence of Certain Charges and Events. Since December 31, 1997,
except as contemplated by this Agreement or as disclosed in the Weatherford
Commission Filings filed with the Commission prior to the date hereof,
there has been no Weatherford MAE.
(g) Tax Matters.
(i) Except as set forth in Section 2.1(g) of the disclosure letter
delivered by Weatherford to Christiana on the date hereof (the
"Weatherford Disclosure Letter"), all returns and reports, including,
without limitation, information and withholding returns and reports
("Tax Returns"), of or relating to any foreign, federal, state or local
tax, assessment or other governmental charge ("Taxes" or a "Tax") that
are required to be filed on or before the Closing Date by or with
respect to Weatherford or any of the Weatherford Subsidiaries, or any
other corporation that is or was a member of an affiliated group (within
the meaning of Section 1504(a) of the Code) of corporations of which
Weatherford was a member for any period ending on or prior to the
Closing Date, have been or will be duly and timely filed, and all Taxes,
including interest and penalties, due and payable pursuant to such Tax
Returns have been paid or, except as set forth in Section 2.1(g) of the
Weatherford Disclosure Letter, adequately provided for in reserves
established by Weatherford, except where the failure to file, pay or
provide for would not have a Weatherford MAE.
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(ii) Weatherford has no present plan or intention after the Merger
to (A) liquidate the Surviving Corporation, (B) merge the Surviving
Corporation with or into another corporation, (C) sell or otherwise
dispose of the stock of the Surviving Corporation, (D) cause or permit
the Surviving Corporation to sell or otherwise dispose of any of the
assets of Christiana or the assets of Sub vested in the Surviving
Corporation except for dispositions made in the ordinary course of
business or transfers of assets to a corporation controlled by the
Surviving Corporation within the meaning of Section 368(a)(2)(C) of the
Code, or (E) reacquire any of the stock issued to the Christiana
stockholders pursuant to the Merger.
(iii) Weatherford is not an investment company as defined in
sec.368(a)(2)(F)(iii) and (iv) of the Code or as defined in the
Investment Company Act of 1940 and the rules and regulations promulgated
thereunder.
(h) Voting Requirements. The affirmative vote of the holders of a
majority of the shares of Weatherford Common Stock present at the special
stockholders' meeting and entitled to vote is the only vote of the holders
and any class or series of the capital stock of Weatherford necessary to
approve this Agreement and the Merger.
(i) Brokers. Except for fees and expenses payable by Weatherford to
Morgan Stanley & Co. Incorporated, no broker, investment banker, or other
Person acting on behalf of Weatherford is or will be entitled to any
broker's, finder's or other similar fee or commission in connection with
the transactions contemplated by this Agreement.
(j) Information Supplied. None of the information supplied or to be
supplied by Weatherford for inclusion or incorporation by reference in (i)
the Registration Statement (as defined in Section 5.1) will, at the time
the Registration Statement is filed with the Commission, and at any time it
is amended or supplemented or at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and (ii) the Proxy Statement (as
defined in Section 2.2(d)) will, at the date the Proxy Statement is first
mailed to Weatherford's stockholders and at the time of the Weatherford
Stockholders Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Proxy Statement will comply
as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder. For purposes of this
Agreement, the parties agree that the statements made and information in
the Registration Statement and the Proxy Statement relating to the Federal
income tax consequences of the transactions contemplated hereby shall be
deemed to be supplied by Christiana and not by Weatherford or Sub.
2.2 REPRESENTATIONS AND WARRANTIES OF CHRISTIANA AND C2. Each of
Christiana and C2 hereby, jointly and severally, represents and warrants to
Weatherford that:
(a) Organization. Each of Christiana and C2 is a corporation duly
organized, validly existing and in good standing under the laws of the
state of Wisconsin. Logistic is a limited liability company duly organized,
validly existing and in good standing under the laws of the state of
Delaware. Each of Christiana, C2 and Logistic has all requisite corporate
(or equivalent) power and corporate (or equivalent) authority and all
necessary governmental authorizations to own, lease and operate all of its
properties and assets and to carry on its business as now being conducted,
except where the failure to be so organized, existing or in good standing
or to have such governmental authority would not (i) have a material
adverse effect on the financial condition of Christiana or Logistic after
giving effect to the Logistic Sale or (ii) prevent or adversely affect the
ability of Christiana and C2 to perform and comply with their respective
obligations under this Agreement, the Logistic Purchase Agreement or any
other agreement to be executed and delivered in connection with the
transactions contemplated hereby or thereby (a "Christiana MAE"). Except as
set forth in Section 2.2(a) of the disclosure letter delivered by
Christiana to Weatherford on the date hereof (the "Christiana Disclosure
Letter"), each of Christiana,
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Logistic and C2 is duly qualified as a foreign corporation or limited
liability company to do business, and is in good standing, in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except in such jurisdictions where the failure to be duly qualified does
not and would not have a Christiana MAE. Each of Christiana, Logistic and
C2 is in compliance with all applicable laws, judgments, orders, rules and
regulations, domestic and foreign, except where failure to be in such
compliance would not have a Christiana MAE. Christiana has heretofore
delivered to Weatherford true and complete copies of (i) Christiana's
Articles of Incorporation (the "Christiana Articles") and bylaws, (ii)
Logistic's Certificate of Organization and operating agreement and (iii)
C2's Articles of Incorporation and operating agreement, in each case as in
existence on the date hereof.
(b) Capitalization.
(i) The authorized capital stock of Christiana consists of
12,000,000 shares of Christiana Common Stock, $1.00 par value, and
1,000,000 shares of preferred stock, $10.00 par value ("Christiana
Preferred Stock"). As of July 10, 1998, there were 5,149,330 shares of
Christiana Common Stock issued and outstanding and no shares of
Christiana Common Stock were held as treasury shares. There are no
outstanding shares of Christiana Preferred Stock. No shares of
Christiana Common Stock have been reserved for issuance pursuant to the
stock option plan described in Section 2.2(b)(iii). All issued and
outstanding shares of Christiana Common Stock are validly issued, fully
paid and nonassessable (except as set forth in Wis Stats sec. 180.0622)
and no holder thereof is entitled to preemptive rights. Christiana is
not a party to, and is not aware of, any voting agreement, voting trust
or similar agreement or arrangement relating to any class or series of
its capital stock, or any agreement or arrangement providing for
registration rights with respect to any capital stock or other
securities of Christiana.
(ii) Christiana owns 100% of the membership interests in Logistic.
All issued and outstanding membership interests of Logistic are validly
issued, fully paid and nonassessable and no holder thereof is entitled
to preemptive rights. Logistic is not a party to, any voting agreement,
voting trust or similar agreement or arrangement relating to its
membership interests, or any agreement or arrangement providing for
registration rights with respect to any membership interests or other
interests of Logistic.
(iii) As of the date hereof, there are outstanding options (the
"Christiana Options") to purchase an aggregate of 267,083 shares of
Christiana Common Stock under the 1995 Stock Option Plan (the
"Christiana Option Plan"). All Christiana Options shall be terminated or
exercised prior to the Effective Time. As of the Effective Time, there
will be no options outstanding under the Christiana Option Plan. There
are not now (other than as set forth in this Section 2.2(b)), and at the
Effective Time there will not be, any (A) shares of capital stock or
other equity securities of Christiana issuable pursuant to the exercise
of Christiana Options or (B) outstanding options, warrants, scrip,
rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of any class of capital stock of Christiana, or
contracts, understandings or arrangements to which Christiana is a
party, or by which it is or may be bound, to issue additional shares of
its capital stock or options, warrants, scrip or rights to subscribe
for, or securities or rights convertible into or exchangeable for, any
additional shares of its capital stock.
(iv) Section 2.2(b)(iv) of the Christiana Disclosure Letter sets
forth a list of all corporations, partnerships, limited liability
companies and other entities of which Christiana owns directly or
indirectly, an equity interest (such entities, excluding Weatherford and
its subsidiaries, referred to herein as the "Christiana Subsidiaries").
(c) Authorization and Validity of Agreement. Each of Christiana and C2
has all requisite corporate power and authority to enter into this
Agreement, the Logistic Purchase Agreement and the other agreements and
instruments contemplated to be executed and delivered in connection with
the Merger and the Logistic Sale (the Logistic Purchase Agreement and such
other agreements and instruments contemplated to be executed and delivered
in connection with the Merger and the Logistic Sale being
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referred to as the "Other Agreements") and to perform its obligations
hereunder and thereunder. The execution and delivery by Christiana and C2
of this Agreement and the Other Agreements to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action (subject only, with
respect to the Merger and the Logistic Sale, to approval of this Agreement
and the Logistic Sale by the Christiana stockholders as provided for in
Section 5.3). On or prior to the date hereof the Board of Directors of
Christiana has determined to recommend approval of the Merger and the
Logistic Sale to the stockholders of Christiana, and such determination is
in effect as of the date hereof. This Agreement has been duly executed and
delivered by Christiana and C2 and is the valid and binding obligation of
Christiana and C2 enforceable against it in accordance with its terms. The
Other Agreements, when executed and delivered by Christiana and C2, as
applicable, will constitute valid and binding obligations of Christiana and
C2, enforceable against them in accordance with their respective terms.
(d) No Approvals or Notices Required; No Conflict with Instruments to
which Christiana is a Party. The execution and delivery of this Agreement
and the Other Agreements do not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the provisions hereof
and thereof will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of or "put"
right with respect to any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of Christiana, Logistic, C2 or any of their subsidiaries under, any
provision of (i) the Christiana Articles or bylaws of Christiana, the
Certificate of Organization or operating agreement of Logistic or the
Articles of Incorporation or bylaws of C2, or any provision of the
comparable organizational documents of its subsidiaries, (ii) except as set
forth in Section 2.2(d) of the Christiana Disclosure Letter, any loan or
credit agreement, note, bond, mortgage, indenture, lease, guaranty or other
financial assurance agreement or other agreement, instrument, permit,
concession, franchise or license applicable to Christiana or its properties
or assets, (iii) except as set forth in Section 2.2(d) of the Christiana
Disclosure Letter, any loan or credit agreement, note, bond, mortgage,
indenture, lease, guaranty or other financial assurance agreement or other
agreement, instrument, permit, concession, franchise or license applicable
to Logistic or any other Christiana Subsidiary, or their respective
properties or assets and (iv) subject to governmental filing and other
matters referred to in the following sentence, any judgment, order, decree,
statute, law, ordinance, rule or regulation or arbitration award applicable
to Christiana, Logistic or C2 or any of their subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not have a Christiana MAE. No
consent, approval, order or authorization of, or registration, declaration
or filing with, any court, administrative agency or commission or other
governmental authority or agency, domestic or foreign, including local
authorities (a "Governmental Entity"), is required by or with respect to
Christiana, Logistic or C2 or any of their subsidiaries in connection with
the execution and delivery of this Agreement by Christiana and C2 or the
consummation by Christiana of the transactions contemplated hereby, except
for (i) the filing of a pre-merger notification and report form by
Christiana under the HSR Act, (ii) the filing with the Commission of (A) a
proxy or information statement relating to Stockholder Approval (such proxy
or information statement as amended or supplemented from time to time, the
"Proxy Statement"), and (B) such reports under Section 13(a) of the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby, (iii) the filing of the Certificate of
Merger with the Wisconsin Secretary of State with respect to the Merger as
provided in the WBCL and appropriate documents with the relevant
authorities of other states in which Christiana is qualified to do business
and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations, filings and notices as are set forth in
Section 2.2(d) of the Christiana Disclosure Letter.
(e) Commission Filings; Financial Statements. Christiana has filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that it has been
required to file with the Commission. All reports, registration statements
and other filings (including all notes, exhibits and schedules thereto and
documents incorporated by reference therein) filed by Christiana with the
Commission since December 31, 1995, through the date of this Agreement,
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together with any amendments thereto, are sometimes collectively referred
to as the "Christiana Commission Filings." Christiana has heretofore
delivered to Weatherford copies of the Christiana Commission Filings. As of
the respective dates of their filing with the Commission, the Christiana
Commission Filings complied in all material respects with the Securities
Act, the Exchange Act and the rules and regulations of the Commission
thereunder, and did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which
they were made, not misleading. To the best knowledge of Christiana, all
material contracts of Christiana and its subsidiaries have been included in
the Christiana Commission Filings since the initial registration of its
stock under the Exchange Act, except for those contracts not required to be
filed pursuant to the rules and regulations of the Commission.
Each of the consolidated financial statements (including any related
notes or schedules) included in the Christiana Commission Filings was
prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be noted therein or in the
notes or schedules thereto) and complied with the rules and regulations of
the Commission. Such consolidated financial statements fairly present the
consolidated financial position of Christiana as of the dates thereof and
the results of operations, cash flows and changes in stockholders' equity
for the periods then ended (subject, in the case of the unaudited interim
financial statements, to normal year-end audit adjustments on a basis
comparable with past periods). As of the date hereof, Christiana has no
liabilities, absolute or contingent, that may reasonably be expected to
have a Christiana MAE, that are not reflected in the Christiana Commission
Filings, except (i) those incurred in the ordinary course of business
consistent with past operations and not relating to the borrowing of money
and (ii) those set forth in Section 2.2(e) of the Christiana Disclosure
Letter.
(f) Conduct of Business in the Ordinary Course; Absence of Certain
Changes and Events. Since December 31, 1995, except as contemplated by this
Agreement, the Logistic Purchase Agreement or as disclosed in the
Christiana Commission Filings or set forth in Section 2.2(f) of the
Christiana Disclosure Letter, Christiana and its subsidiaries have
conducted their respective businesses only in the ordinary and usual course
in accordance with past practice, and there has not been: (i) a Christiana
MAE or any other material adverse change in the financial condition,
results of operations, assets or business of Christiana, taken as a whole;
(ii) to the knowledge of Christiana, any other condition, event or
development that reasonably may be expected to result in any such material
adverse change or a Christiana MAE; (iii) any change by Christiana or
Logistic in its accounting methods, principles or practices; (iv) any
revaluation by Christiana or Logistic of any of its assets, including,
without limitation, writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business
and consistent with past practice; (v) any entry by Christiana or Logistic
into any commitment or transaction that would be material to Christiana or
Logistic; (vi) any declaration, setting aside or payment of any dividends
or distributions in respect of the Christiana Common Stock or any
redemption, purchase or other acquisition of any of its securities; (vii)
any damage, destruction or loss (whether or not covered by insurance)
adversely affecting the properties or business of Christiana or Logistic;
(viii) any increase in indebtedness of borrowed money other than borrowing
under existing credit facilities as disclosed in Section 2.2(f) of the
Christiana Disclosure Letter; (ix) any granting of a security interest or
Lien on any property or assets of Christiana or Logistic, other than (A)
Liens for taxes not due and payable and (B) inchoate mechanics',
warehousemen's and other statutory Liens incurred in the ordinary course of
business (collectively, "Permitted Liens"); or (x) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee benefit plan or any other increase in the compensation payable or
to become payable to any directors, officers or key employees of Christiana
or Logistic or which Christiana or Logistic would be responsible.
(g) Litigation. Except as disclosed in the Christiana Commission
Filings or as set forth in Section 2.2(g) of the Christiana Disclosure
Letter, there are no claims, actions, suits, investigations,
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inquiries or proceedings, ("Demands"), pending or, to the knowledge of
Christiana, threatened against or affecting (i) Christiana or Logistic or
any of their respective properties at law or in equity, or any of their
employee benefit plans or fiduciaries of such plans, or (ii) C2 or any
Christiana or C2 subsidiaries or any of their respective properties at law
or in equity, or any of their respective employee benefit plans or
fiduciaries of such plans, before or by any federal, state, municipal or
other governmental agency or authority, or before any arbitration board or
panel (each a "Governmental Entity"), wherever located (i) that exist today
or (ii) that would otherwise, if adversely determined, have a Christiana
MAE. None of Christiana, Logistic or C2 is subject to any judicial,
governmental or administrative order, writ, judgment, injunction or decree.
(h) Employee Benefit Plans.
(i) Section 2.2(h) of the Christiana Disclosure Letter provides a
description of each of the following which is sponsored, maintained or
contributed to by Christiana or any corporation, trade, business or
entity under common control with Christiana within the meaning of
Section 414(b),(c),(m) or (o) of the Code or Section 4001 of ERISA (a
"Christiana ERISA Affiliate") for the benefit of its employees, or has
been so sponsored, maintained or contributed to within three years prior
to the Closing Date.
(A) each "employee benefit plan," as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), ("Plan"); and
(B) each stock option plan, collective bargaining agreement,
bonus plan or arrangement, incentive award plan or arrangement,
vacation policy, severance pay plan, policy or agreement, deferred
compensation agreement or arrangement, executive compensation or
supplemental income arrangement, consulting agreement, employment
agreement and each other employee benefit plan, agreement,
arrangement, program, practice or understanding that is not described
in Section 2.2(h)(i)(A) to which Christiana or Logistic is a party or
has any obligation ("Benefit Program or Agreement").
True and complete copies of each of the Plans, Benefit Programs
or Agreements, related trusts, if applicable, and all amendments
thereto, together with (i) the Forms 5500, 990 and 1041, as
applicable, for the three most recent fiscal years, (ii) all current
summary plan descriptions for each such Plan, (iii) the most recent
Internal Revenue Service determination letters for each such Plan, as
applicable, and all correspondence with the Internal Revenue Service
and the Department of Labor relating to such Plans, Benefit Programs
and Agreements have been furnished to Weatherford.
(ii) Except as otherwise set forth in Section 2.2(h) of the
Christiana Disclosure Letter,
(A) None of Christiana or any Christiana ERISA Affiliate
contributes to or has an obligation to contribute to, or has at any
time contributed to or had an obligation to contribute to, a plan
subject to Title IV of ERISA, including, without limitation, a multi
employer plan within the meaning of Section 3(37) of ERISA, nor have
such companies engaged in any transaction described in Sections 406
and 407 of ERISA (unless exempt under Section 408) or Section 4975 of
the Code (unless exempt);
(B) Each Plan and each Benefit Program or Agreement has been
administered, maintained and operated in all material respects in
accordance with the terms thereof and in compliance with its
governing documents and applicable law (including, where applicable,
ERISA and the Code and timely filing of Form 5500s for each year);
(C) There is no matter pending with respect to any of the Plans
before any governmental agency, and there are no actions, suits or
claims pending (other than routine claims for benefits) or, to the
knowledge of Christiana or C2, threatened against, or with respect
to, any of the Plans or Benefit Programs or Agreements or its assets;
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(D) No act, omission or transaction has occurred which would
result in imposition on Christiana or any Christiana ERISA Affiliate
of breach of fiduciary duty liability damages under Section 409 of
ERISA, a civil penalty assessed pursuant to subsections (c), (i) or
(l) of Section 502 of ERISA or a tax imposed pursuant to Chapter 43
of Subtitle D of the Code; and
(E) Except as provided in Section 5.7, the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not require Christiana or any Christiana
ERISA Affiliate to make a larger contribution to, or pay greater
benefits under, any Plan, Benefit Program or Agreement than it
otherwise would or create or give rise to any additional vested
rights or service credits under any Plan or Benefit Program or
Agreement or cause the companies to make accelerated payments.
(iii) Except as set forth in Section 2.2(h) of the Christiana
Disclosure Letter, termination of employment of any employee of
Christiana immediately after consummation of the transactions
contemplated by this Agreement would not result in payments under the
Plans, Benefit Programs or Agreements which, in the aggregate, would
result in imposition of the sanctions imposed under Sections 280G and
4999 of the Code.
(iv) Each Plan may be unilaterally amended or terminated in its
entirety without liability except as to benefits accrued thereunder
prior to such amendment or termination.
(v) Except as set forth in Section 2.2(h) of the Christiana
Disclosure Letter, none of the employees of Christiana or Logistic are
subject to union or collective bargaining agreements.
(vi) None of Christiana or any of the Christiana ERISA Affiliates
has agreed or is obligated to provide retiree medical coverage and each
of such companies has fully complied with all obligations under COBRA
applicable to it.
(i) Taxes.
(i) Except as set forth in Section 2.2(i) of the Christiana
Disclosure Letter, all Tax Returns of or relating to any Tax that are
required to be filed on or before the Closing Date by or with respect to
Christiana or any Christiana Subsidiary, or any other corporation that
is or was a member of an affiliated group (within the meaning of Section
1504(a) of the Code) of corporations of which Christiana was a member
for any period ending on or prior to the Closing Date, have been or will
be duly and timely filed, and all Taxes, including interest and
penalties, due and payable pursuant to such Tax Returns have been or
will be duly and timely paid or adequately provided for in reserves
established by Christiana or any such Christiana Subsidiary, except
where the failure to file, pay or provide for would not have a material
adverse effect on the financial condition, results of operations, or
business of Christiana or otherwise result in a Christiana MAE. All
income Tax Returns of or with respect to Christiana or any Christiana
Subsidiary have been audited by the applicable Governmental Authority,
or the applicable statute of limitations has expired, for all periods up
to and including the tax year ended June 30, 1993. There is no material
claim against Christiana or any Christiana Subsidiary with respect to
any Taxes, and no material assessment, deficiency or adjustment has been
asserted or proposed with respect to any Tax Return of or with respect
to Christiana or any Christiana Subsidiary that has not been adequately
provided for in reserves established by Christiana or such Christiana
Subsidiary. The total amounts set up as liabilities for current and
deferred Taxes in the consolidated financial statements included in the
Christiana Commission Filings have been prepared in accordance with
generally accepted accounting principles and are sufficient to cover the
payment of all material Taxes, including any penalties or interest
thereon and whether or not assessed or disputed, that are, or are
hereafter found to be, or to have been, due with respect to the
operations of Christiana or any Christiana Subsidiary through the
periods covered thereby. Christiana has (and as of the Closing Date will
have) made estimated tax payments for taxable years for which the United
States consolidated federal income Tax return is not yet due required
with respect to Taxes. Except as set forth in Section 2.2(i) of the
Christiana Disclosure Letter, no waiver or extension of any statute of
limitations as to any federal, state, local or
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foreign Tax matter has been given by or requested from Christiana or any
Christiana Subsidiary. Except for statutory Liens for current Taxes not
yet due, no Liens for Taxes exist upon the assets of Christiana. Except
as set forth in paragraph 2.2(i) of the Christiana Disclosure Letter,
none of Christiana or any Christiana Subsidiary has filed consolidated
income Tax Returns with any corporation, other than consolidated
federal, state or foreign income Tax returns by Christiana for any
taxable period which is not now closed by the applicable statute of
limitations. Except as set forth in Section 2.2(i) of the Christiana
Disclosure Letter, none of Christiana or any Christiana Subsidiary has
any deferred intercompany gain as defined in Treasury Regulations
Section 1.1502-13.
(ii) As of the Closing Date, to Christiana's knowledge, there is no
plan or intention by the stockholders of Christiana to sell, exchange or
otherwise dispose of a number of shares of Weatherford received in the
Merger that would reduce the Christiana stockholders' ownership of
Weatherford shares to a number of shares having a value, as of the date
of the Merger, of less than 50% of the value of all of the formerly
outstanding Christiana Shares as of the same date. The shares of
Weatherford Common Stock held by the Christiana stockholders and
otherwise sold, redeemed or disposed of prior or subsequent to the
Merger will be considered in making this representation.
(iii) Christiana is not under the jurisdiction of a court in a
Title 11 or similar case with the meaning of sec.368(a)(3)(A) of the
Code.
(iv) There is no intercorporate indebtedness existing between
Christiana and Weatherford that was issued, acquired or will be settled
at a discount.
(v) As of the Closing Date, Christiana shall have fully accrued for
all Taxes that may be required to be paid as a result of the Logistic
Sale and the other transactions contemplated hereby. The value of the
interest in Logistic Common Stock to be sold pursuant to the Logistic
Sale has been determined pursuant to an outside appraisal and reflects
an amount equal to or greater than the fair value and fair market value
of such shares.
(j) Environmental Matters. Except as set forth in Section 2.2(j) of
the Christiana Disclosure Letter, (i) the properties, operations and
activities of Christiana and each of its Subsidiaries complies in all
material respects with all applicable Environmental Laws; (ii) none of
Christiana or any of its Christiana Subsidiaries is subject to any
existing, pending or, to the knowledge of Christiana, threatened action,
suit, investigation, inquiry or proceeding by or before any governmental
authority under any Environmental Law; (iii) except where the failure would
have a Christiana MAE, all notices, permits, licenses, or similar
authorizations, if any, required to be obtained or filed by Christiana
under any Environmental Law in connection with any aspect of the business
of Christiana, Logistic or any Christiana Subsidiary, including without
limitation those relating to the treatment, storage, disposal or release of
a hazardous substance or solid waste, have been duly obtained or filed and
will remain valid and in effect after the Merger and the Logistic Sale, and
each of Christiana, Logistic and each other Christiana Subsidiary is in
compliance with the terms and conditions of all such notices, permits,
licenses and similar authorizations; (iv) Christiana and each of its
Subsidiaries has satisfied and are currently in compliance with all
financial responsibility requirements applicable to their operations and
imposed by any governmental authority under any other Environmental Law,
and none of such parties has received any notice of noncompliance with any
such requirements; (v) to Christiana's knowledge, there are no physical or
environmental conditions existing on any property currently owned or
previously owned by Christiana or any entity in which it has or had
ownership interest that could reasonably be expected to give rise to any
on-site or off-site remedial obligations under any Environmental Laws; and
(vi) to Christiana's knowledge, since the effective date of the relevant
requirements of applicable Environmental Laws, all hazardous substances or
solid wastes generated by Christiana or used in connection with their
properties or operations have been transported only by carriers authorized
under Environmental Laws to transport such substances and wastes, and
disposed of only at treatment, storage, and disposal facilities authorized
under environmental laws to treat, store or dispose of such substances and
wastes, and, to the knowledge of Christiana, such carriers and facilities
have been and are operating in compliance with such
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authorizations and are not the subject of any existing, pending, or overtly
threatened action, investigation, or inquiry by any governmental authority
in connection with any Environmental Laws.
For purposes of this Agreement, the term "Environmental Laws" shall
mean any and all laws, statutes, ordinances, rules, regulations, orders or
determinations of any Governmental Authority pertaining to health or the
environment currently in effect in any and all jurisdictions in which the
party in question and its subsidiaries own property or conduct business,
including without limitation, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability Act of
1980 ("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the
Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Hazardous & Solid Waste Amendments Act of 1984, as amended,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, the Oil Pollution Act
of 1990 ("OPA"), any state laws pertaining to the handling of oil and gas
exploration and production wastes or the use, maintenance, and closure of
pits and impoundments, and all other environmental conservation or
protection laws. For purposes of this Agreement, the terms "hazardous
substance" and "release" have the meanings specified in RCRA; provided,
however, that to the extent the laws of the state in which the property is
located establish a meaning for "hazardous substance," "release," "solid
waste" or "disposal" that is broader than that specified in either CERCLA
or RCRA, such broader meaning shall apply. For purposes of this Agreement,
the term "Governmental Authority" includes the United States, any foreign
jurisdiction, the state, county, city, and political subdivisions in which
the party in question owns property or conducts business, and any agency,
department, commission, board, bureau or instrumentality of any of them.
(k) Investment Company. Christiana is not an investment company as
defined in the Investment Company Act of 1940 and the rules and regulations
promulgated thereunder.
(l) Severance Payments. Except as set forth in Section 2.2(l) of the
Christiana Disclosure Letter, Christiana will not have any liability or
obligation to pay a severance payment or similar obligation to any of their
respective employees, officers, or directors as a result of the Merger or
the transactions contemplated by this Agreement, nor will any of such
Persons be entitled to an increase in severance payments or other benefits
as a result of the Merger, the Logistic Sale or the transactions
contemplated by this Agreement or the Other Agreements in the event of the
subsequent termination of their employment.
(m) Voting Requirements. Subject to the provisions of Section 5.3(a),
the affirmative vote of the holders of a majority of the outstanding shares
of Christiana Common Stock is the only vote of the holders of any class or
series of the capital stock of Christiana necessary to approve this
Agreement, the Merger, the Logistic Sale and the transactions contemplated
hereby and by the Other Agreements in order to comply with the WBCL,
Christiana's Articles of Incorporation and Bylaws and the rules and
regulations of the New York Stock Exchange (the "NYSE").
(n) Brokers. Except for Prudential Securities Incorporated, whose fees
shall be paid by Christiana, no broker, investment banker, or other Person
acting on behalf of Christiana is or will be entitled to any broker's,
finder's or other similar fee or commission in connection with the
transactions contemplated by this Agreement.
(o) Assets and Liabilities at Closing. At the Effective Time:
(i) the assets of Christiana (the "Christiana Assets") shall
consist of (1) at least 3,897,462 shares of Weatherford Common Stock,
which shall be held free and clear of all Liens, (2) cash of at least
$13,000,000, (3) a one-third interest in Logistic, (4) certain tax
benefits, and (5) all tax, financial, accounting and other general
corporate records, including records relating to all past operations and
subsidiaries (including partnerships and joint ventures);
(ii) the liabilities of Christiana (the "Christiana Liabilities")
shall consist only of (1) transactional expenses related to the Merger
and the Logistic Sale, (2) all Taxes of Christiana relating to
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periods through the Closing Date, including Taxes (other than the
Weatherford Related Taxes) from the Logistic Sale and deferred
intercompany Taxes and (3) all other outstanding and accrued liabilities
to which Christiana may be subject, other than Assumed Liabilities (as
defined in the Logistic Purchase Agreement) and Weatherford Related
Taxes;
(iii) all obligations and liabilities (fixed or contingent, known
or unknown) of Christiana shall have been assumed by C2 and Logistic
other than liabilities described in clause (ii); and
(iv) except as set forth in Section 2.2(o) of the Disclosure
Schedule or agreed to in writing by Weatherford prior to the Closing,
Christiana shall have been released from all continuing obligations (i)
relating to Logistic or any other historical business of Christiana or
its subsidiaries and affiliates and (ii) under any and all agreements
relating to the borrowing of funds, including any and all guarantees or
similar arrangements relating thereto.
(p) Compliance with Laws. Christiana, Logistic, C2 and each of their
respective subsidiaries hold all required, necessary or applicable permits,
licenses, variances, exemptions, orders, franchises and approvals of all
Governmental Entities, except where the failure to so hold could not
reasonably be expected to have a Christiana MAE (the "Christiana Permits").
All applications with respect to such permits, licenses, variances,
exemptions, orders, franchises and approvals were complete and correct in
all material respects when made and neither Christiana nor C2 know of any
reason why any of such permits, licenses, variances, exemptions, orders,
franchises and approvals would be subject to cancellation. Christiana,
Logistic, C2 and each of their respective subsidiaries are in compliance
with the terms of the Christiana Permits except where the failure to so
comply could not reasonably be expected to have a Christiana MAE. None of
Christiana, Logistic, C2 or any of their respective subsidiaries has
violated or failed to comply with any statute, law, ordinance, regulation,
rule, permit or order of any Federal, state or local government, domestic
or foreign, or any Governmental Entity, any arbitration award or any
judgment, decree or order of any court or other Governmental Entity,
applicable to Christiana, Logistic, C2 or any of their respective
subsidiaries or their respective business, assets or operations, except for
violations and failures to comply that would not have a Christiana MAE.
(q) Contracts.
(i) Section 2.2(q) to the Christiana Disclosure Letter contains a
complete list of the following contracts, agreements, arrangements and
commitments: (i) all employment or consulting contracts or agreements to
which Christiana or Logistic is contractually obligated; (ii) current
leases, sales contracts and other agreements with respect to any
property, real or personal, of Christiana or Logistic or to which
Christiana or Logistic is contractually obligated; (iii) contracts or
commitments for capital expenditures or acquisitions in excess of
$30,000 to which Christiana or Logistic is obligated; (iv) agreements,
contracts, indentures or other instruments relating to the borrowing of
money, or the guarantee of any obligation for the borrowing of money, to
which Christiana or Logistic or any of their subsidiaries is a party or
any of their respective properties is bound; (v) contracts or agreements
or amendments thereto that would be required to be filed as an exhibit
to an Annual Report on Form 10-K filed by Christiana as of the date
hereof that has not been filed as an exhibit to the Christiana's Annual
Report on Form 10-K for the year ended June 30, 1997, filed by it with
the Commission or any report filed with the Commission under the
Exchange Act since such date; (vi) all corporations, partnerships,
limited liability companies and other entities which Christiana has
owed, directly or indirectly, an equity interest since 1953, (vii) all
material indemnification and guaranty or other similar obligations to
which Christiana or Logistic is bound and which the officers of
Christiana, after reasonable investigation, are aware, (viii) any
outstanding bonds, letters of credit posted or guaranteed by Christiana
or Logistic with respect to any Person, (ix) any covenants not to
compete or other obligations affecting Christiana or Logistic that would
restrict the Surviving Corporation or Weatherford and its affiliates
from engaging in any business or activity which the officers of
Christiana or Logistic are aware, after reasonable investigation and (x)
contracts, agreements, arrangements or commitments, other than the
foregoing that could reasonably be considered to be material to
Christiana or Logistic.
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(ii) True and correct copies of all the instruments described in
Section 2.2(q) of the Christiana Disclosure Letter have been furnished
or made available to Weatherford. Except as noted in the Christiana
Disclosure Letter, all such agreements, arrangements or commitments are
valid and subsisting and each of Christiana, Logistic and their
respective subsidiaries to the extent each is a party, has duly
performed its obligations thereunder in all material respects to the
extent such obligations have accrued, and no breach or default
thereunder by Christiana, Logistic or their respective subsidiaries or,
to the knowledge of Christiana, any other party thereto has occurred
that could impair the ability of Christiana, Logistic or their
respective subsidiaries to enforce any material rights thereunder. There
are no material liabilities of any of the parties to any of the
contracts between Christiana, Logistic or C2 or any of their respective
subsidiaries and third parties arising from any breach of or default in
any provision thereof or which would permit the acceleration of any
obligation of any party thereto or the creation of a Lien upon any asset
of Christiana, Logistic or any of their respective subsidiaries.
(r) Title to Property.
(i) At the Effective Time, Christiana will have good and marketable
title to, or valid leasehold interests in, all its properties and
assets. Christiana has good and valid title to 3,897,462 shares of
Weatherford Common Stock, free and clear of all Liens. Christiana has
good and valid title to 1000 units of Logistic, free and clear of all
Liens, which units represents all of the interest in Logistics.
(ii) Except as set forth in Section 2.2(r)(ii) of the Christiana
Disclosure Letter, each of Christiana and Logistic has complied in all
material respects with the terms of all leases to which it is a party
and under which it is in occupancy, and all such leases are in full
force and effect. Each of Christiana and Logistic enjoys peaceful and
undisturbed possession under all such leases.
(s) Insurance Policies. Section 2.2(s) of the Christiana Disclosure
Letter contains a correct and complete description of all insurance
policies of Christiana covering Christiana, Logistic and their respective
subsidiaries, any employees or other agents of Christiana, Logistic and
their respective subsidiaries or any assets of Christiana and its
subsidiaries. Each such policy is in full force and effect, is with
responsible insurance carriers and is substantially equivalent in coverage
and amount to policies covering companies of the size of Christiana and in
the business in which Christiana and its subsidiaries is engaged, in light
of the risk to which such companies and their employees, businesses,
properties and other assets may be exposed. All retroactive premium
adjustments under any worker's compensation policy of Christiana or any of
its Subsidiaries have been recorded in Christiana's financial statements in
accordance with generally accepted accounting principles and are reflected
in the financial statements contained in the Commission Filings.
(t) Loans. Section 2.2(t) of the Christiana Disclosure Letter sets
forth all existing loans, advances or other extensions of credit (excluding
accounts receivable arising in the ordinary course of business) by
Christiana or its subsidiaries to any party other than intercompany loans,
advances, guaranties or extensions of credit. All items listed in Section
2.2(t) of the Christiana Disclosure Letter will be repaid in full or
assumed by C2 prior to the Effective Time of the Merger. All intercompany
obligations and loans between Christiana and its subsidiaries, including
C2, will be extinguished prior to the Logistic Sale without any ongoing
liability to Christiana or C2 with respect thereto, except as set forth
herein or in the Logistic Purchase Agreement.
(u) No Fraudulent Transfer. Christiana has not within the last twelve
months made any transfer or incurred any obligation with actual intent to
hinder, delay or defraud any entity to which it was or may become indebted
and it has not transferred any material property without receiving
reasonably equivalent value for any such transfer obligation. Both
immediately prior to and immediately after the Logistic Sale and the
Merger, (i) the fair value of (x) Christiana's assets at the time of the
Merger and (y) Logistic's and C2's assets after the Logistic Sale and (z)
the assets of CST Financial, Inc. ("CST") Martinique Holdings, Inc. ("MHI")
and Christiana Community Builders, Inc. ("CCB") immediately prior to their
liquidation in each case at a fair valuation exceeds their respective debts
and liabilities, subordinated,
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contingent or otherwise, (ii) the present fair saleable value of
Christiana's, Logistic's, C2's, CST's, MHI's and CCB's property is greater
than the amount that will be required to pay its probable liability on
their respective debts and other liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and mature, (iii)
Christiana prior to the Logistic Sale and Logistic, C2 after the Logistic
Sale and CST, MHI and CCB prior to their liquidation each reasonably expect
to be able to pay its debts and liabilities, subordinated, contingent or
otherwise, as such debts and liabilities become absolute and matured, and
(iv) Christiana before the Logistic Sale and Logistic and C2 after the
Logistic Sale will not have unreasonably small capital with which to
conduct the business in which it is engaged as such business is now
conducted and is proposed to be conducted. For all purposes of clauses of
(i) through (iv), the amount of contingent liabilities at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.
(v) Information Supplied. None of the information supplied or to be
supplied by Christiana or C2 for inclusion or incorporation by reference in
(i) the Registration Statement (as defined in Section 5.1) will, at the
time the Registration Statement is filed with the Commission, and at any
time it is amended or supplemented or at the time it becomes effective
under the Securities Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the Proxy
Statement will, at the date the Proxy Statement is first mailed to
Christiana's stockholders and at the time of the Christiana Stockholders
Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
are made, not misleading. The Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules
and regulations thereunder. For purposes of this Agreement, the parties
agree that the statements made and information in the Registration
Statement and the Proxy Statement relating to the Federal income tax
consequences of the transactions contemplated hereby shall be deemed to be
supplied by Christiana and C2 and not by Weatherford or Sub.
ARTICLE III
COVENANTS OF CHRISTIANA
3.1 CONDUCT OF BUSINESS BY CHRISTIANA PENDING THE MERGER. Christiana
covenants and agrees that, from the date of this Agreement until the Effective
Time, unless Weatherford shall otherwise agree in writing or as otherwise
expressly contemplated by this Agreement or the Logistic Purchase Agreement or
set forth in Section 3.1 of the Christiana Disclosure Letter:
(a) the business of Christiana and the Christiana Subsidiaries shall
be conducted only in, and Christiana and the Christiana Subsidiaries shall
not take any action except in, the ordinary course of business and
consistent with past practice, provided that, Christiana may take the
actions required by Section 3.4 hereof;
(b) Christiana shall not directly or indirectly do any of the
following: (i) issue, sell, pledge, dispose of or encumber any capital
stock of Christiana except upon the exercise of Christiana Options; (ii)
split, combine, or reclassify any outstanding capital stock, or declare,
set aside, or pay any dividend payable in cash, stock, property, or
otherwise with respect to its capital stock whether now or hereafter
outstanding; (iii) redeem, purchase or acquire or offer to acquire any of
its capital stock; (iv) acquire, agree to acquire or make any offer to
acquire for cash or other consideration, any equity interest in or assets
of any corporation, partnership, joint venture, or other entity in an
amount greater than $500,000, provided that, Christiana may take the
actions required by Section 3.4 hereof; or (v) enter into any contract,
agreement, commitment, or arrangement with respect to any of the matters
set forth in this Section 3.1(b);
(c) Christiana shall not transfer, dispose or otherwise convey any of
the shares of Weatherford Common Stock held by it or grant or permit there
to exist any Lien on such shares;
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(d) Christiana shall not enter into any contract regarding its
business having a term greater than 120 days or involving an amount in
excess of $50,000 or commit to do the same and except for a cold storage
facility in Hudsonville, Michigan, no Christiana Subsidiary shall enter
into any contract outside the ordinary course of business;
(e) Christiana shall not become bound by any agreement or obligation
in an amount in excess of $500,000 in the aggregate for all such agreements
and obligations;
(f) Christiana shall not pledge or encumber any of the assets to be
held by Christiana following the Logistic Sale;
(g) Neither Christiana nor any of its Subsidiaries shall enter into
any employment or consulting contracts;
(h) Neither Christiana nor any of its Subsidiaries shall enter into
any contract or agreement that if effective on the date hereof would be
required to be identified as a disclosure pursuant to Section 2.2(q) of the
Christiana Disclosure Letter;
(i) Neither Christiana nor any of its Subsidiaries shall sell, lease,
mortgage, pledge, grant a Lien on or otherwise encumber or otherwise
dispose of any of Christiana's or its Subsidiaries' properties or assets,
except sales of inventory in the ordinary course of business consistent
with past practice and Christiana may liquidate (in a manner acceptable to
Weatherford) CST Financial, Inc., Martinique Holdings, Inc. and Christiana
Community Builders, Inc. and transfer their assets to Logistic without
consideration;
(j) Neither Christiana nor any of its Subsidiaries shall, directly or
indirectly, incur any indebtedness for borrowed money or guarantee any such
indebtedness of another Person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of Christiana or
its Subsidiaries, guarantee any debt securities of another Person, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another Person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings
incurred in the ordinary course of business consistent with past practice
which obligations in respect of Christiana and its Subsidiaries other than
Logistic shall be released in connection with the Logistic Sale, or make or
permit to remain outstanding any loans, advances or capital contributions
to, or investments in, any other Person, other than to Christiana or any
direct or indirect wholly owned subsidiary of Christiana;
(k) Neither Christiana nor any of its Subsidiaries shall make any
election relating to Taxes except for those elections to be made in
connection with its 1997 Tax Returns that are consistent with the 1996 Tax
Returns;
(l) Neither Christiana nor any of its Subsidiaries shall change any
accounting principle used by it;
(m) Christiana shall use its reasonable efforts (i) to preserve intact
the business organization of Christiana and Logistic except Christiana may
liquidate (in a manner acceptable to Weatherford) CST Financial, Inc.,
Martinique Holdings, Inc. and Christiana Community Builders, Inc. and
transfer their assets to Logistic without consideration, (ii) to maintain
in effect any material authorizations or similar rights of Christiana and
Logistic, (iii) to preserve the goodwill of those having material business
relationships with it; (iv) to maintain and keep each of Christiana's
properties in the same repair and condition as presently exists, except for
deterioration due to ordinary wear and tear and damage due to casualty; and
(v) to maintain in full force and effect insurance comparable in amount and
scope of coverage to that currently maintained by it;
(n) Christiana shall, and shall cause the Christiana Subsidiaries to,
perform their respective obligations under any contracts and agreements to
which it is a party or to which any of its assets is subject, except to the
extent such failure to perform would not have a Christiana MAE and except
for such obligations as Christiana in good faith may dispute;
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(o) Christiana shall cause there to exist immediately prior to the
Effective Time Christiana Net Cash (including $10,666,677 to be paid by C2
under the Logistic Purchase Agreement) of not less than $13 million;
(p) Neither Christiana nor any of its Subsidiaries shall settle or
compromise any litigation (whether or not commenced prior to the date of
this Agreement) other than settlements or compromises: (i) of litigation
where the amount paid in settlement or compromise does not exceed $500,000,
or if greater, the amount of the reserve therefor reflected in the most
recent SEC Documents and the terms of the settlement would not otherwise
have a Christiana MAE, or (ii) in consultation and cooperation with
Weatherford, and, with respect to any such settlement, with the prior
written consent of Weatherford;
(q) Christiana shall cause the Logistic Purchase Agreement to be
executed and delivered by Christiana and the Logistic Sale to be effected
prior to the Merger immediately prior to the Effective Time;
(r) Christiana shall not authorize any of, or commit or agree to take
any of, or permit any Christiana Subsidiary to take any of, the foregoing
actions to the extent prohibited by the foregoing and shall not, and shall
not permit any of the Christiana Subsidiaries to, take any action that
would, or that reasonably could be expected to, result in any of the
representations and warranties set forth in this Agreement becoming untrue
or any of the conditions to the Merger set forth in Article VI not being
satisfied. Christiana promptly shall advise Weatherford orally and in
writing of any change or event having, or which, insofar as reasonably can
be foreseen, would have, a material adverse effect on Christiana and the
Christiana Subsidiaries, taken as a whole, or cause a Christiana MAE.
(s) Christiana shall cause Logistic to pay to Christiana a
distribution in the amount of $20 million cash prior to the Effective Time
(the "TLC Dividend");
(t) Christiana shall cause Logistic to pay in full the entire
principal amount of the Wiscold Note dated September 1, 1992, in the
principal amount of $3,000,000, together with all accrued interest thereon
(the "Wiscold Note"); and
(u) Except as set forth in Section 2.2(o) of the Disclosure Schedule
or agreed to in writing by Weatherford prior to the Closing, Christiana
shall cause all of its obligations (i) relating to Logistic or any other
historical business of Christiana or its Subsidiaries and (ii) under any
and all agreements relating to the borrowing of funds, including all
guarantees and other similar arrangements relating thereto, to be fully
released or otherwise satisfied in a manner acceptable to Weatherford.
3.2 CASH REQUIREMENTS. Christiana covenants that as of the Effective Time
it shall have cash equal to the sum of (i) $13 million (including $10,666,677 to
be received under the Logistic Purchase Agreement) and (ii) all accrued and
unpaid liabilities and obligations of Christiana. For purposes of this Section
3.2, the unpaid liabilities and obligations of Christiana shall mean the full
undiscounted amount of liabilities for which Christiana shall be responsible,
including any liabilities that will accrue as a result of the Merger, the
Logistic Sale or the transactions contemplated herein, whether or not such
liabilities would be required to be reflected as a liability by generally
accepted accounting principles; provided, however, that such liabilities shall
not include any liabilities for any gain on any Weatherford Common Stock held by
Christiana realized as a result of a sale of such stock by Christiana or a
liquidation or merger of Christiana (other than the Merger) within two years
after the Effective Time, nor any tax liability for income of Weatherford
attributable to Christiana under the equity method of accounting either before
or after the Effective Time (the "Weatherford Related Taxes"). Further, for
purposes of calculating such liabilities, any Taxes (other than the Weatherford
Related Taxes) payable in respect of the Logistic Sale or other transactions
contemplated herein or under the Logistic Purchase Agreement shall be fully
accrued as a liability and any Tax credits, deductions, other Tax benefits of
Christiana shall not be considered or used to offset any such liability. The
provisions of this Section 3.2 shall not affect Logistic's and C2's obligations
under the Logistic Purchase Agreement to assume and indemnify Weatherford as set
forth therein.
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3.3 AFFILIATES' AGREEMENTS. Prior to the Closing Date, Christiana shall
deliver to Weatherford a letter identifying all Persons that are, at the time
this Agreement is submitted for approval to the stockholders of Christiana,
"affiliates" of Christiana for purposes of Rule 145 under the Securities Act
("Affiliates"). Christiana shall deliver or cause to be delivered to Weatherford
an undertaking by each Affiliate in form satisfactory to Weatherford that no
Weatherford Common Stock received or to be received by such Affiliate pursuant
to the Merger will be sold or disposed of except pursuant to an effective
registration statement under the Securities Act or in accordance with the
provisions of Rule 144 or paragraph (d) of Rule 145 under the Securities Act or
another exemption from registration under the Securities Act.
3.4 WEATHERFORD COMMON STOCK PURCHASES. Prior to the date the Proxy
Statement is mailed to the stockholders of Weatherford and Christiana,
Christiana shall purchase, in one transaction or a series of transactions, at
least $10 million of Weatherford Common Stock (the "$10 Million Purchase").
After the Christiana Stockholders Meeting, as defined in Section 5.3, Christiana
shall purchase, in one transaction or a series of transactions, up to an
additional $5 million of Weatherford Common Stock (the "$5 Million Purchase").
Notwithstanding the foregoing, Christiana shall not be required to make any
purchase unless such purchase, when considering the then current price of
Weatherford Common Stock, prior purchases and amounts, if any, remaining under
the $10 Million Purchase and the $5 Million Purchase, will allow the Merger when
completed to qualify as a reorganization within the meaning of Section
368(a)(1)(A) by reason of Section 368(a)(2)(E) of the Code. Christiana may, but
is not required to, waive the foregoing and purchase any other Weatherford
Common Stock. All such purchases shall be made in accordance with applicable
securities laws, including Regulation M and Rule 10b-18 promulgated under the
Exchange Act.
ARTICLE IV
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME
4.1 RESERVATION OF WEATHERFORD STOCK. Weatherford shall reserve for
issuance, out of its authorized but unissued capital stock, such number of
shares of Weatherford Common Stock as may be issuable upon consummation of the
Merger.
4.2 CONDUCT OF WEATHERFORD PENDING THE MERGER. Weatherford covenants and
agrees that, from the date of this Agreement until the Effective Time, unless
Christiana shall otherwise agree in writing or as otherwise expressly
contemplated by this Agreement, it will not take any action that would, or that
could be expected to, result in any of the representations and warranties set
forth in this Agreement becoming untrue or any of the conditions to the merger
set forth in Article VI not being satisfied.
4.3 STOCK EXCHANGE LISTING. Weatherford shall use reasonable efforts to
cause the shares of Weatherford Common Stock to be issued in the Merger to be
approved for listing on the NYSE, subject to official notice of issuance, prior
to the Closing Date.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As promptly
as reasonably practicable after the execution of this Agreement, Weatherford and
Christiana shall prepare and file with the Commission preliminary proxy
materials that shall constitute the Proxy Statement of Weatherford and
Christiana and the registration statement with respect to the Weatherford Common
Stock to be issued in connection with the Merger (the "Registration Statement").
As promptly as reasonably practicable after final comments are received from and
cleared by the Commission on the preliminary proxy materials, Weatherford and
Christiana shall file with the Commission a combined joint proxy statement and
registration statement on Form S-4 (or on such other form as shall be
appropriate) relating to the approval and adoption of the Merger and this
Agreement by the stockholders of Weatherford and the stockholders of Christiana
and the issuance by Weatherford of Weatherford Common Stock in connection with
the Merger and shall use their reasonable efforts to cause the Registration
Statement to become effective as soon as practicable. Subject to the terms and
conditions set forth in Section 6.2 and the fiduciary obligations of the Board
of Directors of Weatherford with respect to such matters, the Proxy Statement
shall contain a statement that the Board of Directors of Weatherford recommended
that the stockholders of Weatherford approve and adopt the Merger and this
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Agreement. Subject to the terms and conditions set forth in Section 6.3 and the
fiduciary obligations of the Board of Directors of Christiana with respect to
such matters, the Proxy Statement shall contain a statement that the Board of
Directors of Christiana recommended that the stockholders of Christiana approve
and adopt the Merger and this Agreement.
5.2 ACCOUNTANTS LETTER. Christiana shall use its reasonable efforts to
cause Arthur Andersen LLP to deliver a letter pursuant to SAS 72 dated as of the
date of the Proxy Statement and confirmed and updated at the Closing as of the
Closing Date, and addressed to itself and Weatherford, in the form and substance
reasonably satisfactory to Weatherford and customary in the scope and substance
for agreed upon procedures letters delivered by independent public accountants
in connection with registration statements and proxy statements similar to the
Registration Statement and Proxy Statement.
5.3 MEETINGS OF STOCKHOLDERS.
(a) Christiana shall promptly take all action reasonably necessary in
accordance with the WBCL and its Articles of Incorporation and bylaws to
convene a meeting of its stockholders to consider and vote upon the
adoption and approval of the Merger and this Agreement and the Logistic
Sale (the "Christiana Shareholders Meeting"). Christiana shall provide
that, in addition to any vote that may be required by law, the approval of
the Merger and this Agreement and the Logistic Sale shall require approval
of a majority of the votes cast for or against such matters excluding any
shares of Christiana Common Stock held by Lubar & Co. Incorporated and its
affiliates; provided, however, Christiana may, in lieu of such requirement,
obtain an agreement by Lubar & Co. Incorporated and its affiliates to vote
all of its shares of Christiana Common Stock for, against or abstain from
voting with respect to such matters in the same proportion as the shares of
Christiana Common Stock are voted on such matters by the other stockholders
of Christiana. Subject to the terms and conditions set forth in Section 6.3
and the fiduciary obligations of the Board of Directors of Christiana with
respect to such matters, the Board of Directors of Christiana (i) shall
recommend at such meeting that the stockholders of Christiana vote to adopt
and approve the Merger and this Agreement and the Logistic Sale, (ii) shall
use its best efforts to solicit from stockholders of Christiana proxies in
favor of such adoption and approval and (iii) shall take all other action
reasonably necessary to secure a vote of its stockholders in favor of the
adoption and approval of the Merger and this Agreement.
(b) Weatherford shall promptly take all action reasonably necessary in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL") and its Certificate of Incorporation and bylaws to convene a
meeting of its stockholders to consider and vote upon the adoption and
approval of the Merger and this Agreement. Subject to the terms and
conditions set forth in Section 6.2 and the fiduciary obligations of the
Board of Directors of Weatherford with respect to such matters, the Board
of Directors of Weatherford (i) shall recommend at such meeting that the
stockholders of Weatherford vote to adopt and approve the Merger and this
Agreement, (ii) shall use its reasonable efforts to solicit from
stockholders of Weatherford proxies in favor of such adoption and approval
and (iii) shall take all other action reasonably necessary to secure a vote
of its stockholders in favor of the adoption and approval of the Merger and
this Agreement.
(c) Weatherford and Christiana shall coordinate and cooperate with
respect to the timing of such meetings and shall endeavor to hold such
meetings on the same day and as soon as practicable after the date hereof.
5.4 FILINGS; CONSENTS; REASONABLE EFFORTS. Subject to the terms and
conditions of this Agreement, Christiana and Weatherford shall (i) make all
necessary filings with respect to the Merger and this Agreement under the HSR
Act, the Securities Act, the Exchange Act, and applicable blue sky or similar
securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto; (ii) use reasonable efforts to
obtain all consents, waivers, approvals, authorizations, and orders required in
connection with the authorization, execution, and delivery of this Agreement and
the consummation of the Merger; and (iii) use reasonable efforts to take, or
cause to be taken, all appropriate action, and do, or cause to be done, all
things necessary, proper, or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement.
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5.5 NOTIFICATION OF CERTAIN MATTERS. Christiana shall give prompt notice
to Weatherford, and Weatherford shall give prompt notice to Christiana, orally
and in writing, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate at any time from the date
hereof to the Effective Time; and (ii) any material failure of Christiana or
Weatherford, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
compiled with or satisfied by it hereunder.
5.6 EXPENSES. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
those out-of-pocket expenses (which do not include fees for attorneys,
accountants and financial advisors) incurred in connection with (i) the
registration fees for the Weatherford Common Stock under the Securities Act to
be issued in the Merger, (ii) the registration and qualification of the
Weatherford Common Stock under any state securities and blue sky laws, (iii) the
listing of the Weatherford Common Stock on the NYSE, (iv) the HSR filing fee (v)
the investment banking, appraisal, and related expenses of Christiana, (vi) the
cost of any proxy solicitors and (vii) the printing and mailing of the
Registration Statement and the Proxy Statement shall be paid by Christiana;
provided, however, that if this Agreement shall have been terminated pursuant to
Section 7.1 as a result of the willful breach by a party of any of its
representations, warranties, covenants, or agreements set forth in this
Agreement, such breaching party shall pay the direct out-of-pocket costs and
expenses of the other parties in connection with the transactions contemplated
by this Agreement.
5.7 CHRISTIANA'S EMPLOYEE BENEFITS.
(a) Christiana shall take action prior to the Merger and the Logistic
Sale to (i) either cancel all outstanding Christiana Options or accelerate
such Christiana Options and make such Christiana Options terminate prior to
the Effective Time and (ii) and terminate the Christiana Option Plan.
(b) Christiana shall pay to each holder of Christiana Options an
amount of cash necessary to obtain cancellation of all Christiana Options
held by such holders.
(c) Christiana shall cause all employee benefit plans to which it is a
sponsor or has obligations to be terminated or assumed by Logistic or C2
without any continuing obligations on the part of Christiana.
(d) Christiana shall transfer to Logistic or C2 all employees of
Christiana without any liability to the Surviving Corporation. C2 shall be
responsible for all severance and other obligations with respect to such
terminated employees, if any. As of the Effective Time, Christiana shall
have no employees or employee benefit plans or obligations.
5.8 LIQUIDATION OR MERGER OF CHRISTIANA. Weatherford agrees that for a
period of two years following the Effective Date it shall not cause or permit
Christiana to (i) liquidate or dissolve, (ii) sell or transfer any shares of
Weatherford Common Stock held by Christiana or (iii) merge Christiana into any
other entity unless Weatherford receives an opinion of a nationally-recognized
tax counsel or accounting firm that such transaction will not adversely affect
the tax treatment of the Merger; provided, however, this restriction shall not
be deemed to prohibit or restrict (i) a sale or disposition of Christiana's
interest in Logistic to the extent permitted by the Logistic Purchase Agreement
or the operating agreement relating to Logistic, (ii) a change in control of
Weatherford, (iii) a merger, consolidation, share exchange or similar
transaction involving Weatherford or its subsidiaries (other than Christiana) or
(iv) a sale or disposition of any assets of Weatherford or its subsidiaries
(other than Christiana).
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ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) This Agreement and the Merger (and the Logistic Sale in the case
of Christiana) shall have been approved and adopted by the requisite vote
of the stockholders of Christiana and Weatherford, as may be required by
law, by the rules of the NYSE, by Section 5.3(a) and by any applicable
provisions of their respective charters or bylaws;
(b) The waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated;
(c) No order shall have been entered and remain in effect in any
action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal the
consummation of the Logistic Sale and the Merger;
(d) The Registration Statement and a registration statement under the
Securities Act to be filed by C2 in connection with the Merger shall each
be effective on the Closing Date, and all post-effective amendments thereto
filed shall have been declared effective or shall have been withdrawn; and
no stop-order suspending the effectiveness thereof shall have been issued
and no proceedings for that purpose shall have been initiated or, to the
knowledge of the parties, threatened by the Commission;
(e) There shall have been obtained any and all material permits,
approvals and consents of securities or blue sky commissions of any
jurisdiction, and of any other governmental body or agency, that reasonably
may be deemed necessary so that the consummation of the Merger and the
transactions contemplated thereby will be in compliance with applicable
laws, the failure to comply with which would have a Christiana MAE or a
Weatherford MAE;
(f) The shares of Weatherford Common Stock issuable upon consummation
of the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance;
(g) Weatherford, C2 and Christiana shall have received an opinion,
dated as of the Effective Date, from American Appraisal Associates, Inc. in
form and substance satisfactory to them, in respect of the matters
described in Section 2.2(u); and
(h) All approvals and consents of third Persons (i) the granting of
which is necessary for the consummation of the Merger, the Logistic Sale or
the transactions contemplated in connection therewith and (ii) the
non-receipt of which would have a Christiana MAE or a Weatherford MAE.
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD. The obligation of
Weatherford to effect the Merger is, at the option of Weatherford, also subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Christiana contained in
Section 2.2 shall be accurate as of the date of this Agreement and (except
to the extent such representations and warranties speak specifically as of
an earlier date) as of the Closing Date as though such representations and
warranties had been made at and as of that time; all of the terms,
covenants and conditions of this Agreement to be complied with and
performed by Christiana on or before the Closing Date shall have been duly
complied with and performed in all material respects; and a certificate to
the foregoing effect dated the Closing Date and signed by the chief
executive officer and the president of Christiana shall have been delivered
to Weatherford;
(b) There shall not have occurred or exist any fact or condition that
would reasonably result in a Christiana MAE or would constitute a material
fixed or contingent liability to Christiana, and
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Weatherford shall have received a certificate signed by the president of
Christiana dated the Closing Date to such effect;
(c) The Board of Directors of Weatherford shall have received from
Morgan Stanley & Co. Incorporated, financial advisor to Weatherford, a
written opinion, satisfactory in form and substance to the Board of
Directors of Weatherford, to the effect that consideration to be paid by
Weatherford in the Merger is fair to Weatherford from a financial point of
view, which opinion shall not subsequently be withdrawn;
(d) The Christiana Options shall have been cancelled and the
Christiana Plans shall have been terminated or such options shall have been
exercised;
(e) Christiana shall have received, and furnished written copies to
Weatherford of, the Christiana affiliates' agreements pursuant to Section
3.3;
(f) Weatherford shall have received from Foley & Lardner, counsel to
Christiana, an opinion dated the Closing Date covering customary matters
relating to the Agreement and the Merger, including an opinion in form and
substance satisfactory to Weatherford with respect to the matters described
in Section 2.2(a), (b), (c), (d) and (k) (provided that the form of such
opinion shall be agreed upon prior to the filing of the Registration
Statement with the Commission);
(g) Weatherford shall have received from Arthur Andersen LLP a written
opinion, in form and substance satisfactory to Weatherford, dated as of the
date that the Proxy Statement is first mailed to the Stockholders of
Christiana and Weatherford to the effect that (i) the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code by reason of Section
368(a)(2)(E) of the Code, (ii) Weatherford, Sub and Christiana will each be
a party to that reorganization within the meaning of Section 368(b) of the
Code and (iii) Weatherford, Sub and Christiana shall not recognize any gain
or loss for U.S. federal income tax purposes as a result of the Merger
(although Christiana will recognize gain or loss for U.S. federal income
tax purposes as a result of the Logistic Sale), and such opinion shall be
confirmed at the Closing;
(h) Weatherford shall have received from Arthur Andersen LLP a letter,
in form and substance satisfactory to Weatherford, dated as of the Closing
Date, to the effect that the Merger would not adversely affect the ability
of Weatherford to account for any prior or future business combination as a
pooling of interest;
(i) C2 shall have executed and delivered to Christiana and Weatherford
the Logistic Purchase Agreement and agreement among members in form and
substance, including schedules, acceptable to Weatherford;
(j) The Logistic Sale shall have been consummated;
(k) Christiana shall have delivered to Weatherford a pro forma balance
sheet after giving effect to the Logistic Sale, including a full accrual
for Taxes thereon without regard to any tax credits or tax deductions that
Christiana may have in connection with the exercise of any stock options,
reflecting Christiana Net Cash in an amount not less than $13 million;
(l) Except as permitted by Section 3.1, all outstanding Indebtedness
(including guarantees thereof) of Christiana and its Subsidiaries (other
than Logistics) shall have been paid in full or Christiana shall have been
fully released therefrom;
(m) The assets of Christiana shall consist only of cash of at least
$13 million, at least 3,897,462 shares of Weatherford Common Stock, certain
tax benefits and 333.333 units of Logistic representing one-third of the
outstanding interests of Logistic; and
(n) There shall not be pending any litigation involving Christiana or
any of its subsidiaries, that Weatherford, in its sole discretion,
considers to be a material liability for which adequate security has not
been provided.
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6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF CHRISTIANA. The obligation of
Christiana to effect the Merger is, at the option of Christiana, also subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) The representations and warranties of Weatherford and Sub
contained in Section 2.1 shall be accurate as of the date of this Agreement
and (except to the extent such representations and warranties speak
specifically as of an earlier date) as of the Closing Date as though such
representations and warranties had been made at and as of that time; all
the terms, covenants and conditions of this Agreement to be complied with
and performed by Weatherford on or before the Closing Date shall have been
duly complied with and performed in all material respects; and a
certificate to the foregoing effect dated the Closing Date and signed by
the chief executive officer of Weatherford shall have been delivered to
Christiana;
(b) The Board of Directors of Christiana and C2 shall have received
from Prudential Securities Corporation, financial advisor to Christiana and
C2, a written opinion, satisfactory in form and substance to the Board of
Directors of Christiana and C2, to the effect that from a financial point
of view to the Christiana Shareholders the Merger, which includes (i) the
consideration to be received in the Merger and (ii) the purchase price for
Logistic is fair to the Christiana Shareholders, which opinion shall not
subsequently be withdrawn;
(c) Christiana and C2 shall have received from Fulbright & Jaworski
L.L.P. counsel to Weatherford, an opinion dated the Closing Date covering
customary matters relating to this Agreement and the Merger, including an
opinion in form and substance with respect to the matters described in
Section 2.1(a), (b)(iii), (c) and (d)(i), (ii) and (iii);
(d) C2 and Christiana shall have received from Arthur Andersen LLP, a
written opinion, in form and substance satisfactory to Christiana, dated as
of the date that the Proxy Statement is first mailed to stockholders of
Christiana and Weatherford to the effect that (i) the Merger will be
treated for U.S. federal income tax purposes as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code by reason of Section
368(a)(2)(E) of the Code; (ii) Weatherford, Sub and Christiana will each be
a party to that reorganization within the meaning of Section 368(b) of the
Code, and (iii) Weatherford, Sub and Christiana shall not recognize any
gain or loss for U.S. federal income tax purposes as a result of the Merger
(although Christiana will recognize gain or loss for U.S. federal income
tax purposes as a result of the Logistic Sale), and such opinion shall be
confirmed at the Closing; and
(e) The Logistic Sale under the Logistic Purchase Agreement shall have
occurred.
ARTICLE VII
MISCELLANEOUS
7.1 TERMINATION. This Agreement may be terminated and the Merger and the
other transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether prior to or after approval by the stockholders of
Weatherford or the stockholders of Christiana:
(a) by mutual written consent of Weatherford and Christiana;
(b) by either Weatherford or Christiana if (i) the Merger has not been
consummated on or before January 31, 1999 (provided that the right to
terminate this Agreement under this clause (i) shall not be available to
any party whose breach of any representation or warranty or failure to
fulfill any covenant or agreement under this Agreement has been the cause
of or resulted in the failure of the Merger to occur on or before such
date); (ii) any court of competent jurisdiction, or some other governmental
body or regulatory authority shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise prohibiting
the Merger; (iii) the stockholders of Christiana shall not approve the
Logistic Sale or the Merger at the Christiana stockholder meeting or at any
adjournment thereof; (iv) the stockholders of Weatherford shall not approve
the Merger at the Weatherford stockholder meeting or any adjournment
thereof; or (v) in the exercise of its good faith judgment as to its
fiduciary duties to its
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stockholders imposed by law, as advised by outside counsel, the Board of
Directors of Christiana or Weatherford determines that such termination is
appropriate in complying with its fiduciary obligations.
(c) by Christiana if (i) Weatherford shall have failed to comply in
any material respect with any of the covenants or agreements contained in
this Agreement to be complied with or performed by Weatherford or Sub at or
prior to such date of termination (provided such breach has not been cured
within 30 days following receipt by Weatherford of written notice from
Christiana of such breach and is existing at the time of termination of
this Agreement); (ii) any representation or warranty of Weatherford
contained in this Agreement shall not be true in all respects when made
(provided such breach has not been cured within 30 days following receipt
by Weatherford of written notice from Christiana of such breach and is
existing at the time of termination of this Agreement) or on and as of the
Effective Time as if made on and as of the Effective Time (except to the
extent it relates to a particular date), except for such failures to be so
true and correct which would not individually or in the aggregate,
reasonably be expected to have a Weatherford MAE, assuming the
effectiveness of the Merger; or (iii) the Board of Directors of Weatherford
withdraws, modifies or changes its recommendation of this Agreement or the
Merger in a manner adverse to Christiana or shall have resolved to do any
of the foregoing.
(d) by Weatherford if (i) Christiana shall have failed to comply in
any material respect with any of the covenants or agreements contained in
this Agreement to be complied with or performed by it at or prior to such
date of termination (provided such breach has not been cured within 30 days
following receipt by Christiana of written notice from Weatherford of such
breach and is existing at the time of termination of this Agreement); (ii)
any representation or warranty of Christiana contained in this Agreement
shall not be true in all respects when made (provided such breach has not
been cured within 30 days following receipt by Christiana of written notice
from Weatherford of such breach and is existing at the time of termination
of this Agreement) or on and as of the Effective Time as if made on and as
of the Effective Time (except to the extent it relates to a particular
date), except for such failures to be so true and correct which would not
individually or in the aggregate, reasonably be expected to have a
Christiana MAE assuming the effectiveness of the Merger or (iii) the Board
of Directors of Christiana withdraws, modifies or changes its
recommendation of this Agreement or the Merger in a manner adverse to
Weatherford or shall have resolved to do any of the foregoing.
7.2 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either Weatherford or Christiana as provided in Section 7.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of Weatherford, Sub or Christiana, except (i) with respect to this Section
7.2, Section 5.6 and Section 7.13, and (ii) such termination shall not relieve
any party hereto for any intentional breach prior to such termination by a party
hereto of any of its representations or warranties or of any of its covenants or
agreements set forth in this Agreement.
7.3 WAIVER AND AMENDMENT. Any provision of this Agreement may be waived at
any time by the party that is, or whose stockholders are, entitled to the
benefits thereof. This Agreement may not be amended or supplemented at any time,
except by an instrument in writing signed on behalf of each party hereto,
provided that after this Agreement has been approved and adopted by the
stockholders of Weatherford and Christiana, this Agreement may be amended only
as may be permitted by applicable provisions of the DGCL and the WBCL. The
waiver by any party hereto of any condition or of a breach of another provision
of this Agreement shall not operate or be construed as a waiver of any other
condition or subsequent breach. The waiver by any party hereto of any of the
conditions precedent to its obligations under this Agreement shall not preclude
it from seeking redress for breach of this Agreement other than with respect to
the condition so waived.
7.4 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except for the
representations and warranties of C2 contained herein, which shall survive
without limitation, none of the representations and warranties in this Agreement
shall survive the Effective Time.
A-28
<PAGE> 30
7.5 PUBLIC STATEMENTS. Christiana and Weatherford agree to consult with
each other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby.
7.6 ASSIGNMENT. This Agreement shall inure to the benefit of and will be
binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns.
7.7 NOTICES. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i) delivered
in Person or by courier, (ii) sent by telecopy or facsimile transmission, answer
back requested, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
if to Christiana:
Christiana Companies, Inc.
700 N. Water Street, Suite 1200
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
if to C2:
C2, Inc.
700 N. Water Street, Suite 1200
Milwaukee, Wisconsin 53202
Attn: William T. Donovan
Facsimile: (414) 291-9061
with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attn: Joseph B. Tyson, Jr.
Facsimile: (414) 297-4900
if to Weatherford or Sub:
Weatherford International, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attn: Curtis W. Huff
Facsimile: (713) 297-8488
with a copy to:
Fulbright & Jaworski, L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attn: Charles L. Strauss
Facsimile: (713) 651-5246
A-29
<PAGE> 31
or to such other address as any party shall have furnished to the other by
notice given in accordance with this Section 7.7. Such notices shall be
effective, (i) if delivered in Person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
7.8 GOVERNING LAW. All questions arising out of this Agreement and the
rights and obligations created herein, or its validity, existence,
interpretation, performance or breach shall be governed by the laws of the State
of Delaware, without regard to conflict of laws principles.
7.9 ARBITRATION. Any disputes, claims or controversies connected with,
arising out of, or related to, this Agreement and the rights and obligations
created herein, or the breach, validity, existence or termination hereof, shall
be settled by Arbitration to be conducted in accordance with the Commercial
Rules of Arbitration of the American Arbitration Association, except as such
Commercial Rules may be changed by this Section 7.9. The disputes, claims or
controversies shall be decided by three independent arbitrators (that is,
arbitrators having no substantial economic or other material relationship with
the parties), one to be appointed by Christiana, if prior to the Merger, or C2,
if after the Merger, and one to be appointed by Weatherford within fourteen days
following the submission of the claim to the parties hereto and the third to be
appointed by the two so appointed within five days thereafter. Should either
party refuse or neglect to join in the timely appointment of the arbitrators,
the other party shall be entitled to select both arbitrators. Should the two
arbitrators fail timely to appoint a third arbitrator, either party may apply to
the Chief Judge of the United States District Court for the Southern District of
Texas to make such appointment. The arbitrators shall have ninety days after the
selection of the third arbitrator within which to allow discovery, hear evidence
and issue their decision or award and shall in good faith attempt to comply with
such time limits; provided, however, if two of the three arbitrators believe
additional time is necessary to reach a decision, they may notify the parties
and extend the time to reach a decision in thirty day increments, but in no
event to exceed an additional ninety days. Discovery of evidence shall be
conducted expeditiously by the parties, bearing in mind the parties desire to
limit discovery and to expedite the decision or award of the arbitrators at the
most reasonable cost and expense of the parties. Judgment upon an award rendered
pursuant to such Arbitration may be entered in any court having jurisdiction, or
application may be made to such court for a judicial acceptance of the award,
and an order of enforcement, as the case may be. The place of Arbitration shall
be Houston, Texas. The decision of the arbitrators, or a majority thereof, made
in writing, shall be final and binding upon the parties hereto as to the
questions submitted, and each party shall abide by such decision.
Notwithstanding the provisions of this Section 7.9, neither party shall be
prohibited from seeking injunctive relief pending the completion of any
arbitration. The costs and expenses of the arbitration proceeding, including the
fees of the arbitrators and all costs and expenses, including legal fees and
witness fees, incurred by the prevailing party, shall be borne by the losing
party.
Solely for purposes of injunctive relief, orders in aid of arbitration and
entry of the arbitrators' award:
(a) each of the parties hereto irrevocably consents to the
non-exclusive jurisdiction of, and venue in, any state court located in
Harris County, Texas or any federal court sitting in the Southern District
of Texas in any suit, action or proceeding seeking injunctive relief,
orders in aid of arbitration, or entry of an arbitral award arising out of
or relating to this Agreement or any of the other agreements contemplated
hereby and any other court in which a matter that may result in a claim for
indemnification hereunder by a Weatherford Indemnified Party (as defined in
the Logistic Purchase Agreement) may be brought with respect to any claim
for indemnification by a Weatherford Indemnified Party;
(b) each of the parties hereto waives, to the fullest extent permitted
by law, any objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding seeking injunctive relief, orders
in aid of arbitration or entry of an arbitral award arising out of or
relating to this Agreement or any of the other agreements contemplated
hereby brought in any state court located in Harris County, Texas or any
federal court sitting in the Southern District of Texas or any other court
in which a matter that may result in a claim hereunder or for
indemnification under the Logistic Purchase Agreement by a Weatherford
Indemnified Party may be brought with respect to any claim for
indemnification by a
A-30
<PAGE> 32
Weatherford Indemnified Party, and further irrevocably waive any claim that
any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum;
(c) each of the parties hereto irrevocably designates, appoints and
empowers CT Corporation System, Inc. and any successor thereto as its
designee, appointee and agent to receive, accept and acknowledge for and on
its behalf, and in respect of its property, service of any and all legal
process, summons, notices and documents which may be served in any suit,
action or proceeding arising out of or relating to this Agreement or any of
the other agreements contemplated hereby for the purposes of injunctive
relief, orders in aid of arbitration and entry of an arbitral award.
7.10 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provision, covenants and restrictions
of this Agreement shall continue in full force and effect and shall in no way be
affected, impaired or invalidated.
7.11 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same agreement.
7.12 HEADINGS. The Section headings herein are for convenience only and
shall not affect the construction hereof.
7.13 CONFIDENTIALITY Agreement. The Confidentiality Agreements entered
into between Weatherford and Christiana on December 10, 1997 (the
"Confidentiality Agreements") are hereby incorporated by reference herein and
made a part hereof.
7.14 ENTIRE AGREEMENT: THIRD PARTY BENEFICIARIES. This Agreement, the
Other Agreements and the Confidentiality Agreements constitute the entire
agreement and supersede all other prior agreements and understandings, both oral
and written, among the parties or any of them, with respect to the subject
matter hereof and neither this nor any document delivered in connection with
this Agreement confers upon any Person not a party hereto any rights or remedies
hereunder.
7.15 DISCLOSURE LETTERS.
(a) The Christiana Disclosure Letter, executed by Christiana as of the
date hereof, and delivered to Weatherford on the date hereof, contains all
disclosure required to be made by Christiana under the various terms and
provisions of this Agreement. Each item of disclosure set forth in the
Christiana Disclosure Letter specifically refers to the Article and Section
of the Agreement to which such disclosure responds, and shall not be deemed
to be disclosed with respect to any other Article or Section of the
Agreement.
(b) The Weatherford Disclosure Letter, executed by Weatherford as of
the date hereof, and delivered to Christiana on the date hereof, contains
all disclosure required to be made by Weatherford under the various terms
and provisions of this Agreement. Each item of disclosure set forth in the
Weatherford Disclosure Letter specifically refers to the Article and
Section of the Agreement to which such disclosure responds, and shall not
be deemed to be disclosed with respect to any other Article or Section of
the Agreement.
A-31
<PAGE> 33
IN WITNESS WHEREOF each of the parties caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized, all as of the date
first above written.
WEATHERFORD INTERNATIONAL, INC.
By: /s/ CURTIS W. HUFF
----------------------------------
Name: Curtis W. Huff
---------------------------------
Title: Senior Vice President,
General Counsel and
Secretary
---------------------------------
CHRISTIANA ACQUISITION, INC.
By: /s/ CURTIS W. HUFF
----------------------------------
Name: Curtis W. Huff
---------------------------------
Title: President
---------------------------------
CHRISTIANA COMPANIES, INC.
By: /s/ WILLIAM T. DONOVAN
----------------------------------
Name: William T. Donovan
---------------------------------
Title: President
---------------------------------
C2, INC.
By: /s/ WILLIAM T. DONOVAN
----------------------------------
Name: William T. Donovan
---------------------------------
Title: Chairman
---------------------------------
A-32
<PAGE> 1
EXHIBIT NO. 3.3
EVI WEATHERFORD, INC.
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
EVI Weatherford, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "Company"),
does hereby certify:
FIRST: That the Board of Directors of the Company, at a special meeting
duly held on August 7, 1998, unanimously adopted resolutions proposing and
declaring advisable the following amendment to the Amended and Restated
Certificate of Incorporation of the Company and directed that such amendment be
considered at the next annual meeting of stockholders of the Company:
To amend Article 1 of the Amended and Restated Certificate of Incorporation
in its entirety to read as follows:
"1. The name of the Corporation is Weatherford International, Inc."
SECOND: That at the annual meeting of stockholders of the Company duly
called and held on September 21, 1998, in accordance with Section 222 of the
General Corporation Law of the State of Delaware, the holders of a majority of
the shares of Common Stock of the Company entitled to vote on such amendment
voted in favor of such amendment.
THIRD: That the aforesaid amendment was duly adopted in accordance with
the applicable provisions of Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Certificate to be signed by
Bernard J. Duroc-Danner, its Chairman of the Board, President and Chief
Executive Officer, this 21st day of September, 1998.
EVI WEATHERFORD, INC.
By: /s/ BERNARD J. DUROC-DANNER
------------------------------------
Bernard J. Duroc-Danner
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-4 of our report dated
January 29, 1998 included in Weatherford International, Inc.'s (formerly known
as EVI Weatherford, Inc.) Annual Report on Form 10-K, as amended, for the fiscal
year ended December 31, 1997, and our report dated June 15, 1998 with respect to
Weatherford International, Inc.'s supplemental restated financial statements
included in Weatherford International, Inc.'s Current Report on Form 8-K dated
June 15, 1998, and to all references to our Firm included in this Registration
Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
October 9, 1998
<PAGE> 1
EXHIBIT 23.4
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-4 of our report dated
March 11, 1998 included in Weatherford Enterra, Inc.'s Form 10-K for the fiscal
year ended December 31, 1997, and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
October 9, 1998
<PAGE> 1
EXHIBIT 23.5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-4 of our report dated
August 1, 1997 included in Christiana Companies, Inc.'s Form 10-K for the fiscal
year ended June 30, 1997, as amended on Form 10-K/A, and to all references to
our Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
October 9, 1998
<PAGE> 1
EXHIBIT 23.6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-4 of our report dated
February 26, 1997 on the financial statements of GulfMark Retained Assets (a
business segment of GulfMark International, Inc.) at December 31, 1996 and 1995
and each of the three years in the period ended December 31, 1996 and to all
references to our Firm included in this Registration Statement.
ARTHUR ANDERSEN LLP
Houston, Texas
October 9, 1998
<PAGE> 1
EXHIBIT 23.7
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-4 and related Joint Proxy Statement/Prospectus
of Weatherford International, Inc. and to the incorporation by reference therein
of our report dated January 15, 1998, with respect to the consolidated financial
statements of Trico Industries, Inc. for the years ended December 31, 1996 and
1995 included in Weatherford International, Inc.'s (formerly EVI Weatherford,
Inc.) Amendment No. 1 to Form 8-K dated December 2, 1997 on Form 8-K/A filed
with the Securities and Exchange Commission.
ERNST & YOUNG LLP
San Antonio, Texas
October 9, 1998
<PAGE> 1
EXHIBIT 23.8
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent chartered accountants, we hereby consent to the
incorporation by reference in this Registration Statement on Form S-4 of our
report dated December 31, 1997 on the combined financial statements of BMW
Monarch (Lloydminster) Ltd. and BMW Pump Inc. included in Weatherford
International, Inc.'s (formerly known as EVI Weatherford, Inc.) Amendment No. 1
to Form 8-K on Form
8-K/A dated December 2, 1997 and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN & CO.
Chartered Accountants
Calgary, Alberta, Canada
October 9, 1998
<PAGE> 1
EXHIBIT 23.11
CONSENT OF AMERICAN APPRAISAL ASSOCIATES, INC.
We hereby consent to the use in the Registration Statement on Form S-4 of
Weatherford International, Inc., and in the Joint Proxy Statement/Prospectus of
Christiana Companies, Inc. and Weatherford International, Inc. which forms a
part thereof, of our opinion dated December 1, 1997 appearing as an Appendix to
such Joint Proxy Statement/Prospectus, and to the description therein of such
opinion and to the references therein to us. In giving the foregoing consent, we
do not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended (the
"Securities Act"), or the rules and regulations promulgated thereunder, nor do
we admit that we are experts with respect to any part of such Registration
Statement within the meaning of the term "experts" as used in the Securities Act
or the rules and regulations promulgated thereunder.
AMERICAN APPRAISAL ASSOCIATES, INC.
/s/ LEE P. HACKETT
- --------------------------------------
Lee P. Hackett
Executive Vice President
Milwaukee, Wisconsin
October 13, 1998
<PAGE> 1
EXHIBIT 99.1
WEATHERFORD INTERNATIONAL, INC.
PROXY FOR
SPECIAL MEETING OF STOCKHOLDERS
-- , 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned
stockholder of Weatherford International, Inc. ("Weatherford") hereby appoints
Bernard J. Duroc-Danner and Curtis W. Huff, or either of them, as proxies, each
with power to act without the other and with full power of substitution, for the
undersigned to vote the number of shares of Common Stock of Weatherford that the
undersigned would be entitled to vote if personally present at the Special
Meeting of Stockholders of Weatherford to be held on -- , 1998, at 9:00
a.m., Houston time, at The Luxury Collection Hotel of Houston, Houston, Texas,
and at any adjournment or postponement thereof, on the following matters that
are more particularly described in the Joint Proxy Statement/Prospectus dated
-- , 1998:
(1) Proposal to approve the acquisition by merger of Christiana Companies, Inc.
("Christiana") pursuant to an Amended and Restated Agreement and Plan of
Merger dated October 13, 1998, among Weatherford, Christiana, C2, Inc.
("C2") and Christiana Acquisition, Inc. for (i) -- shares of EVI
common stock, $1.00 par value and (ii) cash in an amount equal to the amount
of cash of Christiana as of the effective time of the merger less
Christiana's accrued taxes (without giving effect to the value of certain
tax deductions to be retained by Christiana) and other liabilities as of
such time that are not assumed by C2.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
(2) To approve a postponement or adjournment of the meeting to solicit
additional votes in the event that there are not sufficient votes to approve
the foregoing proposal.
<TABLE>
<S> <C> <C>
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
</TABLE>
(3) To transact such other business as may properly come before the Special
Meeting or any adjournment or postponement thereof.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE> 2
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2. Receipt of the Joint Proxy Statement/Prospectus
dated -- , 1998, is hereby acknowledged.
-------------------------------------
-------------------------------------
Signature of Stockholder(s)
Please sign your name exactly as it
appears hereon. Joint owners must
each sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title
as it appears thereon.
Dated:
------------------------------------- ,
1998
PLEASE MARK, SIGN, DATE AND RETURN USING THE ENCLOSED ENVELOPE.
<PAGE> 1
EXHIBIT 99.2
PROXY
CHRISTIANA COMPANIES, INC.
700 North Water Street
Milwaukee, Wisconsin 53202
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Sheldon B. Lubar and William T. Donovan as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all of the shares of common
stock of Christiana Companies, Inc. (the "Common Shares") held of record by the
undersigned on , 1998, at the special meeting of shareholders to
be held on , 1998, and any and all adjournments thereof.
You are encouraged to specify your choices by marking the appropriate boxes
(SEE BELOW) but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations.
[X] Please mark your votes as in this example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
1. PROPOSAL TO APPROVE THE AMENDED AND RESTATED MERGER -------------------------------
AGREEMENT (which includes as a part thereof the AGREEMENT
PROVIDING FOR THE LOGISTIC SALE), the terms and conditions
of which are described in the enclosed Joint Proxy -------------------------------
Statement/Prospectus.
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C>
2. To approve an adjournment of the Meeting to solicit -------------------------------
additional proxies in the event that there are not
sufficient votes to approve the foregoing proposal.
-------------------------------
3. In their discretion the Proxies are authorized to vote upon such other business as may properly
come before the meeting.
</TABLE>
(continued and to be signed on the reverse side)
<PAGE> 2
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY AND ELECTION FORM
PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name appears below. When Common Shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
<TABLE>
<CAPTION>
<S> <C> <C>
DATED --------------- , ------------------------------ ------------------------------
1998 Signature Signature if held jointly
</TABLE>
