-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JUgpk9ODJowoh1riCyNA9jRRqnzexxsziTjmpNphJ5LPoxPrqzRD4Fj4FC35tEDC RS4YXU9Vq1Hwg69D+7MzqA== 0000950129-97-001186.txt : 19970327 0000950129-97-001186.hdr.sgml : 19970327 ACCESSION NUMBER: 0000950129-97-001186 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 17 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970325 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEATHERFORD ENTERRA INC CENTRAL INDEX KEY: 0000029302 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 741681642 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 001-07867 FILM NUMBER: 97562904 BUSINESS ADDRESS: STREET 1: 1360 POST OAK BLVD STE 1000 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7134399400 MAIL ADDRESS: STREET 1: 1360 POST OAK BLVD STE 1000 CITY: HOUSTON STATE: TX ZIP: 77056 FORMER COMPANY: FORMER CONFORMED NAME: WEATHERFORD INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DIXEL INDUSTRIES INC DATE OF NAME CHANGE: 19750618 10-K405 1 WEATHERFORD ENTERRA, INC. - 12/31/96 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. FOR THE TRANSITION PERIOD FROM ________ TO ________ COMMISSION FILE NUMBER 1-7867 WEATHERFORD ENTERRA, INC. (Exact name of registrant as specified in its charter) DELAWARE 74-1681642 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1360 POST OAK BOULEVARD, SUITE 1000 77056 HOUSTON, TEXAS (Zip Code) (Address of principal executive offices)
(713) 439-9400 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED ------------------- ----------------------------------------- Common Stock, $.10 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No ____. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of the registrant's knowledge, in the Proxy Statement or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the outstanding Common Stock of the registrant held by non-affiliates of the registrant as of March 21, 1997, based on the closing sale price of the Common Stock on the New York Stock Exchange on said date, was $1,147,026,635. There were 52,087,290 shares of Common Stock of the registrant outstanding as of March 21, 1997. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement issued in connection with the 1997 Annual Meeting of Stockholders are incorporated into Part III of this Report. ================================================================================ 2 PART I ITEM 1. BUSINESS. INTRODUCTION TO BUSINESS Weatherford Enterra, Inc. (formerly Weatherford International Incorporated) was organized under the laws of the State of Delaware in 1970. The "Company" or "Weatherford Enterra", as used herein, refers to Weatherford Enterra, Inc. and its subsidiaries and affiliates, unless the context indicates otherwise. Weatherford Enterra is a diversified international energy service and manufacturing company that provides a variety of services and equipment to the exploration, production and transmission sectors of the oil and gas industry. The Company operates in virtually every oil and gas exploration and production region in the world. Weatherford Enterra's principal business segments include (i) the oilfield services segment, which consists of renting specialized oilfield equipment, providing fishing, milling, well control assistance and other downhole services and related tools, and providing tubular running services and related tools; (ii) the oilfield products segment, which consists of manufacturing, selling and servicing a variety of products, including cementation products, liner hangers, gas lift equipment and equipment used to provide oilfield services; and (iii) the gas compression segment, which consists of manufacturing, packaging, selling, renting and providing parts and services for reciprocating natural gas compressors. The Company also has several non-core businesses that it plans to sell, including CRC-Evans(TM) pipeline services and equipment, Total Engineering Services Team, Inc. ("TEST") and the American Aero(R) Cranes division. The Company has grown significantly through acquisitions, having acquired more than 20 businesses since 1991. These acquisitions have allowed the Company to expand its product and service lines, improve its worldwide market position and realize significant consolidation cost savings. Management believes it has positioned Weatherford Enterra as a market leader in its primary businesses while significantly expanding and diversifying the Company's geographic operations. On May 23, 1996, the Company acquired the business and assets of Nodeco AS, a Norwegian company, and its subsidiary, Aarbakke AS (collectively, "Nodeco") for $14.4 million cash, net of cash acquired, 750,000 shares of the Company's Common Stock and the assumption of all of Nodeco's liabilities, totaling approximately $12.1 million. Nodeco designs, manufactures, sells and rents oil and gas well completion products primarily consisting of liner hanger equipment and related services, as well as pump packers. This business complements the Company's existing products and services businesses in the North Sea and worldwide. FINANCIAL INFORMATION BY INDUSTRY SEGMENT See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Note 9 of Notes to Consolidated Financial Statements contained elsewhere herein for additional information. DESCRIPTION OF BUSINESS Weatherford Enterra is a diversified international energy service and manufacturing company that provides a variety of services and equipment to the exploration, production and transmission sectors of the oil and gas industry. The Company operates in three industry segments -- oilfield services, oilfield products and gas compression. Oilfield Services. Weatherford Enterra rents specialized equipment and tools and tubular goods for drilling, completion and workover of oil and gas wells. Operators and drilling contractors often find it uneconomic to maintain complete inventories of tools, drill pipe and other equipment and therefore supplement such inventories by renting. Items rented include pressure control equipment (such as blowout preventers, high-pressure valves, accumulators, adapters and choke and kill manifolds); drill string equipment (such as drill pipe, drill collars, tubing and drilling jars); pipe handling equipment (such as elevators, spiders, 2 3 slips, tongs and kelly spinners); fishing and downhole tools (such as milling tools, casing cutters, jars, spears and overshots) and other equipment, including stabilizers, power swivels and bottom-hole assemblies. Weatherford Enterra provides certain downhole services, including fishing, milling and cutting services, which consist of removing or otherwise eliminating "fish" or "junk" in a well (such as a piece of equipment, a tool, a part of the drill string or debris) that is causing an obstruction. An essential step in the fishing operation is the proper selection and assembly of the fishing string. The string consists of jars, subs, overshots, spears, milling tools, casing cutters and other tools for retrieving or eliminating the "fish". The Company installs whipstocks, which are downhole tools that act as vertical ramps, to "sidetrack" an existing well bore off a vertical drilling path. Whipstocks are used primarily in multilateral and directional drilling applications. Weatherford Enterra provides well control equipment and services in critical well situations (such as a well blow-out or a high pressure sour gas well). The Company also provides plugging and abandonment services, pipe recovery wireline services, foam services and casing patch installation. Management believes that, based on total revenues, Weatherford Enterra is the leading worldwide supplier of rental tools and fishing and other downhole services. Weatherford Enterra provides services and equipment used to "make up" and test threaded tubular connections and to "run" tubulars that are used during the drilling, completion and workover of oil and gas wells. These services and related equipment ensure the mechanical integrity and leak-tight performance of tubular connections. Tubulars include casing, tubing, special high alloy chrome pipe and fiberglass reinforced pipe. Casing is larger diameter pipe installed (or run) in a wellbore to protect the structural integrity of the wellbore and to seal various zones in the well. Tubing is small diameter pipe run inside the casing in a producing well through which oil and gas is produced. In running tubulars, Weatherford Enterra personnel use manual or remote-controlled power tongs (similar in principle to hydraulic wrenches) and other related tubular handling equipment. The Company also provides cementation engineering services (consisting of computer-generated recommendations as to the number and placement of centralizers during cementation) and tubular inspection and cleaning services. Management believes that, based on total revenues, the Company is the leading worldwide provider of tubular running services. Oilfield Products. Weatherford Enterra's oilfield products segment consists of the manufacture, sale and servicing of a variety of products. The Company's cementation products, marketed under the Weatherford and Gemoco trade names, include mechanical cementing products used to center casing strings in the wellbore (such as centralizers, wellbore wipers and scratchers); float equipment used in the cementation of the casing string to prevent cement from flowing back into the casing (such as guide shoes, float shoes and float collars); and stage tools used to set cement in the annular space between the wellbore and the casing string. The Company also sells various proprietary rubber and elastomer products, including thread protectors and cementing plugs. Management believes that, based on total revenues, the Company is the leading worldwide manufacturer and supplier of cementation products. Weatherford Enterra designs, manufactures and sells liner hanger equipment and related services under the Nodeco trade name. Liner hanger equipment is used in the drilling and completion of oil and gas wells, primarily for the production casing string in deep, deviated or horizontal wells. Nodeco is a leading supplier of liner hanger equipment and packers used in completions with electric submersible pumps in the North Sea market, particularly the Norwegian and U.K. sectors. The Company intends to expand this business in the future into other geographic markets. The Company manufactures, sells and services gas lift, plunger lift and related equipment under the McMurry-Macco(TM) name. Gas lift equipment is used to increase the flow of oil to the surface when natural flow does not occur. Weatherford Enterra designs, manufactures, sells and services hydraulic power tongs and related tubular handling equipment used to provide tubular running services; tubular connection testing equipment used to verify the integrity of connections; milling tools, cutters, spears, overshots and whipstocks used to provide fishing and other downhole services; and weighted drill pipe used in its rental business and sold to customers. 3 4 Gas Compression. Weatherford Enterra manufactures, packages, sells, rents and services reciprocating gas compressor units used for increasing natural gas pressure to facilitate gas flow from the wellhead and through gas gathering systems and processing plants, injecting natural gas into oil wells to enhance oil recovery, injecting natural gas into gas storage wells and other general uses such as cogeneration, seismic marine surveys and natural gas fueling stations. The Company is a major manufacturer of gas compressors ranging in size from 26 horsepower to 7200 horsepower. As natural reservoir pressure declines over the life of a producing natural gas well, different compressor configurations may be needed to bring the gas to the surface and through the distribution system. Management believes that the Company is the largest gas compressor rental company based on number of units and the fourth largest based on available horsepower. Other Businesses. The Company's CRC-Evans pipeline services and equipment business manufactures, sells and rents equipment and provides services used in pipeline construction and manufactures and sells specialized equipment for pipe coating plants. TEST provides electrical and instrumentation construction services to the oil and gas production industry and designs, builds, installs and services instrument control systems for offshore production platforms and other applications. The Company also designs, manufactures, sells and services American Aero pedestal-mounted hydraulic cranes used on offshore production platforms, marine vessels and dockside locations. The Company is currently in the process of negotiating sales of these businesses. PATENTS AND LICENSES The Company has followed a policy of seeking U.S. and non-U.S. patents and licenses for products and equipment that appear to have commercial applications. The Company believes its patents and licenses to be adequate for the conduct of its businesses and, while it considers them to be valuable in the aggregate, the Company does not believe that its business is materially dependent on its patents or licenses. In management's opinion, engineering and production skills and application experience are more responsible for the Company's market position than are patents or licenses. SEASONALITY Demand for the Company's oilfield services and products is generally affected by the seasonality of drilling activity. Higher activity generally is experienced in the spring, summer and fall. In the United States and Europe, the lowest drilling activity generally occurs during the early months of the year due to inclement weather; however, in Alaska and Canada, activity generally slows in the spring and early summer due to difficulty in moving equipment during the spring thaws. Weather conditions are not a significant factor in other geographic areas in which the Company offers oilfield services and products. Weather is not necessarily a significant factor in the Company's gas compression segment, although increased demand for gas during the winter months depletes gas reserves, thereby generally increasing the demand for gas compression services. BACKLOG ORDERS At December 31, 1996, the Company's backlog of orders for products and equipment believed to be firm was approximately $94,200,000 compared to approximately $63,800,000 at December 31, 1995. Substantially all of such orders will be filled in 1997. 4 5 INTERNATIONAL AND U.S. OPERATIONS AND EXPORT SALES The Company has manufacturing operations, either through direct ownership (including joint ventures) or through license arrangements, in the United States, Germany, Norway, Canada, the Netherlands, Italy and Saudi Arabia. The Company has product and equipment sales or service operations in virtually every oil and gas exploration and production region in the world. The following table sets forth the Company's revenues, acquisition-related costs and other unusual charges, operating income (loss) and identifiable assets attributable to each of its geographic segments. See Note 9 of Notes to Consolidated Financial Statements contained elsewhere herein for additional information.
YEAR ENDED DECEMBER 31, ------------------------------------ 1996 1995 1994 ---------- ---------- ---------- (IN THOUSANDS) REVENUES: United States.................................... $ 579,024 $ 471,672 $ 383,076 Canada........................................... 78,497 106,491 75,809 Europe........................................... 145,126 110,065 84,830 Africa........................................... 72,457 57,450 41,574 Other international.............................. 119,364 113,229 91,460 ---------- ---------- ---------- $ 994,468 $ 858,907 $ 676,749 ========== ========== ========== ACQUISITION-RELATED COSTS AND OTHER UNUSUAL CHARGES: United States.................................... $ -- $ 43,276 $ 2,500 Canada........................................... -- 2,850 -- Europe........................................... -- 4,302 -- Africa........................................... -- 624 -- Other international.............................. -- 8,119 -- Corporate........................................ -- 29,011 -- ---------- ---------- ---------- $ -- $ 88,182 $ 2,500 ========== ========== ========== OPERATING INCOME (LOSS): United States.................................... $ 72,042 $ 5,745 $ 28,924 Canada........................................... 12,557 11,382 15,502 Europe........................................... 19,470 3,088 3,023 Africa........................................... 15,028 13,912 11,204 Other international.............................. 14,617 4,267 12,490 Corporate........................................ (7,958) (38,212) (5,439) ---------- ---------- ---------- $ 125,756 $ 182 $ 65,704 ========== ========== ========== IDENTIFIABLE ASSETS: United States.................................... $ 828,930 $ 790,625 $ 706,175 Canada........................................... 69,391 73,368 89,462 Europe........................................... 201,137 141,673 125,365 Africa........................................... 67,856 40,299 38,708 Other international.............................. 179,218 148,579 149,677 Corporate........................................ 51,191 64,316 44,583 ---------- ---------- ---------- $1,397,723 $1,258,860 $1,153,970 ========== ========== ==========
During the three-year period ended December 31, 1996, the Company's revenues and operating income, excluding acquisition-related costs and other unusual charges, have increased in every geographic area except Canada, primarily as a result of the impact of acquisitions, increased service activity and the introduction of new services and products into various geographic areas. Canadian revenues declined 26% and operating income before acquisition-related costs and other unusual charges decreased 12% in 1996 compared to 1995, primarily as a result of lower sales volume of gas compressor packages and the sale of certain Canadian 5 6 manufacturing businesses in 1996, which more than offset improved oilfield service activity in Canada. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained elsewhere herein for additional information. The Company's international operations are subject to special considerations inherent in doing business outside the United States that may limit or disrupt markets, restrict the movement of funds or result in the deprivation of contract rights or the taking of property without fair compensation. Operations in certain areas, including the Commonwealth of Independent States (the "CIS"), Algeria, Nigeria, parts of the Middle East and parts of Latin America, have been subjected to war, political disruption or civil disturbances in the past twelve months. Generally, business interruptions resulting from war, political disruptions or civil disturbances negatively impact near-term results of operations; however, management of the Company believes that it is unlikely that any specific business disruption caused by existing or foreseen civil or political instability will have a material adverse impact on the financial condition or liquidity of the Company. International operations also can be affected by U.S., local and international laws and regulations limiting or prohibiting exports to, and operations in, certain countries, including Iran, Iraq, Libya, Cuba and North Korea. Government-owned petroleum companies in some of the countries in which the Company operates have adopted policies (or are subject to governmental policies) giving preference to the purchase of goods and services from companies that are majority-owned by local nationals. As a result of such policies, the Company relies on joint ventures, license arrangements and other business combinations with local nationals in these countries. Political considerations may disrupt the commercial relationships between the Company and government-owned petroleum companies. INDUSTRY CONDITIONS Certain statements in this report may be forward looking statements, including without limitation statements regarding expected worldwide drilling activity, the Company's future capital expenditures and the expected performance of the Company's businesses. The forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including without limitation adverse economic conditions, the impact of competitive products and pricing, product demand and acceptance risks, the presence of competitors with greater financial resources and adverse industry conditions. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. The oil and gas industry in which the Company participates historically has experienced significant volatility. Demand for the Company's oilfield services and products depends primarily upon the level of worldwide spending for oil and gas exploration and production, the number of oil and gas wells being drilled, the depth and drilling conditions of such wells, the volume of production, the number of well completions and the level of workover activity. Drilling and workover activity can fluctuate significantly in a short period of time, particularly in the United States and Canada. Average worldwide drilling activity increased 7% in 1996 to 1,838 active rigs compared to 1,711 active rigs in 1995. Average worldwide drilling activity declined 3% in 1995 compared to 1994. Drilling activity outside of North America increased 5% in 1996 and 3% in 1995 when compared to the prior year's average activity levels. U.S. drilling activity increased 7% in 1996 and decreased 7% in 1995 when compared to the prior year's average activity levels. Canadian drilling activity increased 17% in 1996 and decreased 12% in 1995 when compared to the prior year's average activity level. Worldwide drilling activity is expected to increase in 1997 compared to 1996. However, no assurance can be given as to the level of future drilling activity or demand for the Company's oilfield services and products. The willingness of oil and gas operators to make capital expenditures for the exploration and production of oil and natural gas will continue to be influenced by numerous factors over which the Company has no control, including the prevailing and expected market prices for oil and natural gas. Such prices are impacted by, among other factors, worldwide demand for oil and gas, general economic and political conditions, costs of 6 7 exploration and production, availability of new leases and concessions, the ability of the members of the Organization of Petroleum Exporting Countries ("OPEC") to maintain price stability through voluntary production limits, the level of production by non-OPEC countries, and governmental regulations regarding, among other things, environmental protection, taxation, price controls and product allocations. Worldwide exploration and production expenditures by the oil and gas industry increased approximately 13% in 1996 when compared to 1995 and management of the Company anticipates expenditures to increase in 1997 compared to 1996. However, no assurance can be given as to the level of future oil and gas industry activity or demand for the Company's oilfield services and products. Demand for the Company's gas compression equipment and services depends primarily on demand for natural gas, the level and stability of natural gas prices, natural gas production and consumption, the amount of natural gas in storage, construction of gathering and storage systems, and the age and operating pressures of natural gas wells. Demand for purchased compressor packages fell in 1996 from the 1994 and 1995 levels, resulting in a weakening of market prices. In the fourth quarter of 1996, market conditions improved, resulting in higher demand for compressor packages and increased utilization of rental units. Another factor impacting the U.S. gas compression business is the trend of major oil companies toward outsourcing certain services and selling U.S. gas reserves to smaller operators. Demand for larger horsepower rental units is expected to increase as major oil companies and smaller natural gas producers are less likely to own and operate gas compressor packages and are more likely to rent compressor packages to meet their compression needs. COMPETITION Oilfield Services. The Company experiences significant price pressures in the markets in which it offers rental tools and downhole services, particularly in U.S. markets. The principal methods of competition that apply to the Company's rental tools and downhole services are price, quality, availability and reputation. Weatherford Enterra competes with Baker Hughes Incorporated and Smith International, Inc. in most of the markets in which it participates. In addition, the Company competes with numerous small, single-site operators, larger concerns operating at multiple locations and various well servicing companies engaged in such businesses. Also, many customers own and operate large inventories of equipment they might otherwise rent and have the ability to purchase additional equipment, as opposed to renting. The Company historically has enjoyed a strong competitive position in tubular running services in countries in which it operates outside the United States, but has experienced increasing competition and price pressures in these markets in recent years. The Company has experienced significant competition and price pressures in the U.S. tubular running services market. The principal methods of competition that apply to the Company's tubular running services business are price, quality, reputation and range of services offered. Weatherford Enterra competes with Frank's International, Inc. in all of the U.S. markets and in some international markets in which the Company participates. In addition, the Company competes with BJ Services Company in several of the international markets in which the Company participates. Several other small to medium-sized companies compete with Weatherford Enterra on a regional basis in the United States and in certain other countries. Management expects competition and customer price pressures to continue in the foreseeable future in most international and U.S. markets. Oilfield Products. The Company faces significant competition in the pricing of its cementation products. Management of the Company believes that price will continue to be a significant factor considered in customer purchasing decisions in the foreseeable future. The principal methods of competition that apply to the Company's cementation products business are price, quality, availability and reputation. The Company competes with Halliburton Company, Davis-Lynch Inc. and Top-Co Industries Ltd. in the cementation products business. With respect to liner hangers, competition in the Company's existing markets is primarily based on product design, reputation for quality, delivery response time and price. The Company contacts customers through an experienced sales force supported by an engineering and technical staff. This arrangement allows 7 8 the Company to quickly respond to customer requests for customization or modification of products. The Company competes with Baker Hughes Incorporated, TIW Corporation (owned by Pearce Industries) and Smith International, Inc. In the Company's gas lift equipment business, the principal methods of competition are price, delivery response time, reputation and quality. The Company markets its gas lift product line primarily through an experienced sales force in the United States and through agents outside the United States. The Company competes with Camco International, Inc. and Energy Ventures, Inc. on a worldwide basis and with several small to medium-sized companies on a regional basis. Weatherford Enterra has experienced competition in the pricing of virtually all of its other oilfield products. The Company competes with small to medium-sized companies as well as with larger companies and subsidiaries of large public companies having significant financial resources. Gas Compression. The Company has experienced competition in the pricing of its gas compression equipment and services. Management believes that price and delivery time will continue to be significant factors considered in customer purchasing and rental decisions in the foreseeable future. The principal methods of competition are price, delivery time, quality of equipment and service, reliability and reputation. The Company competes with Tidewater Inc., Hanover Compressors Company, Global (owned by G.E. Capital), CSI, Production Operators and various small to medium-sized companies in the compressor rental business. The Company competes with Ariel and several other companies in the compressor manufacturing business. CUSTOMERS The Company had no customers that individually accounted for 10% or more of its 1996 consolidated revenues. EMPLOYEES At December 31, 1996, the Company employed 6,578 persons, of whom 2,873 were in international locations and 3,705 were in the United States. Of the 6,578 employees, 3,968 were employed in the oilfield services segment, 944 in the oilfield products segment, 747 in the gas compression segment, with 139 in administrative functions. In addition, 780 employees are employed in the businesses that the Company plans to sell. The Company considers its employee relations to be satisfactory. EXECUTIVE OFFICERS The names of the executive officers of the Company and certain information with respect to each of them are set forth below.
NAME AGE OFFICES ---- --- ------- Philip Burguieres......................... 53 Chairman of the Board Thomas N. Amonett......................... 53 Acting President and Chief Executive Officer James R. Burke............................ 59 Senior Vice President and President -- Products/Compression M. E. Eagles.............................. 57 Senior Vice President and President -- Services Norman W. Nolen........................... 54 Senior Vice President, Chief Financial Officer and Treasurer H. Suzanne Thomas......................... 43 Senior Vice President, Secretary and General Counsel Jon R. Nicholson.......................... 54 Vice President -- Human Resources
8 9 Mr. Burguieres has been a director since April 23, 1991, and has served as Chairman of the Board since December 10, 1992. From April 3, 1991 to October 17, 1996, he also served as President and Chief Executive Officer of the Company. Mr. Amonett has served as Acting President and Chief Executive Officer since July 26, 1996. He has been a director of the Company since 1974 and served as Chairman of the Board of the Company from May 1986 to May 1989. From July 1992 to July 1996, Mr. Amonett served as President of Reunion Industries, Inc., a Houston, Texas-based company primarily engaged in the manufacture of high volume, precision plastic products and the providing of engineered plastic services, oil and gas exploration, development and production and wine grape vineyard development. Previously he was Of Counsel with Fulbright & Jaworski L.L.P., Attorneys at Law, Houston, Texas, from September 1986 to July 1992. Mr. Burke, who joined the Company on December 12, 1991 as Senior Vice President, Corporate Development and Marketing, became President of the Products Division effective March 1, 1994 and Senior Vice President and President -- Products/Compression effective October 5, 1995. Mr. Eagles, who joined the Company on March 1, 1993 as Executive Vice President and President and General Manager of the Rental and Fishing Tool Division, became Senior Vice President of the Company and President -- Services effective March 1, 1994. From June 1992 until March 1993, Mr. Eagles served as Senior Vice President of McDermott, Inc., a marine engineering construction company, and President of McDermott Energy Services, Inc.; and from November 1990 until June 1992, he served as Vice President of Marketing of McDermott, Inc. Mr. Nolen joined the Company on April 29, 1991 as Senior Vice President, Chief Financial Officer and Treasurer. Ms. Thomas, who joined the Company in January 1982 as Counsel, was elected Secretary in March 1986, Vice President and General Counsel in July 1987 and Senior Vice President in December 1989. Ms. Thomas was responsible for Human Resources from January 1992 until October 1995. Prior to joining the Company, Ms. Thomas was an attorney with the law firm of Baker & Botts from September 1978 to December 1981. Mr. Nicholson, who joined the Company as Director of Human Resources in February 1993, was elected Vice President-Human Resources effective October 5, 1995. From March 1992 until January 1993, he was a human resources consultant. From July 1990 until March 1992, Mr. Nicholson served as President of Atlas Bradford Corporation, an oilfield services company. ITEM 2. PROPERTIES. The Company has numerous manufacturing facilities located in the United States and various other countries used for the manufacture of oilfield products and equipment, the principal of which are as follows:
OWNED (O) OR APPROXIMATE LEASED (L) -- LOCATION MANUFACTURED PRODUCTS SQUARE FEET EXPIRATION DATE -------- --------------------- ----------- --------------- Houston, Texas.......... Cranes, power tongs, power units and 117,500 O accessories Pearland, Texas......... Fishing tools, milling tools, cutters, 127,500 O overshots, whipstocks, weighted drill pipe and coring equipment Tulsa, Oklahoma......... Pipeline equipment 145,000 O Corpus Christi, Texas... Gas compressors 90,000 O Houma, Louisiana........ Mechanical cementing products, float 109,800 O equipment, stage tools, rubber products and industrial valves Hannover, Germany....... Mechanical cementing products, power tongs, 65,950 L - 12/99 power units and accessories and specialized bucking machines Bryne, Norway........... Liner hanger equipment 60,000 L - 7/02
9 10 The Company believes that its manufacturing facilities will be suitable and adequate to meet production demands anticipated during the next several years. In addition to its manufacturing plants, the Company leases its corporate headquarters office and various administrative offices in Houston, Texas and leases or owns numerous sales offices, warehouses, service centers, pipe yards and stocking locations for its operations in the United States and internationally. During the year ended December 31, 1996, the Company paid real estate rentals in the aggregate amount of approximately $11,900,000. The Company's operations generally do not require highly specialized facilities, and suitable facilities generally are readily available on a lease or purchase basis, as required. ITEM 3. LEGAL PROCEEDINGS AND REGULATORY MATTERS. The Company is not a party to, nor is any of its property the subject of, any material pending legal proceedings, other than ordinary routine litigation incidental to its business and which is believed to be either covered by insurance or not material in amount. Various federal, state and local laws and regulations covering the discharge of materials into the environment, or otherwise relating to the protection of the public health and the environment, affect the Company's operations, expenses and costs. The clear trend in environmental regulation has been to place more restrictions and limitations on activities that may impact the environment, such as emissions of pollutants, generation and disposal of wastes, and use and handling of chemical substances. Increasingly strict environmental restrictions and limitations have resulted in increased operating costs for the Company and other similar businesses throughout the United States, and it is possible that the costs of compliance with environmental laws and regulations will continue to increase, both for the Company and its customers. In this regard, the Resource Conservation and Recovery Act ("RCRA"), the principal federal statute governing the disposal of solid and hazardous wastes, includes a statutory exemption that allows oil and gas exploration and production wastes to be classified as non-hazardous waste. A similar exemption is contained in many of the state counterparts to RCRA. If oil and gas exploration and production wastes were required to be managed and disposed of as hazardous waste, either as a result of changes in RCRA or the imposition of more stringent state regulations, domestic oil and gas producers, including many of the Company's customers, could be required to incur substantial obligations with respect to such wastes. Because of the potential impact on the Company's customers, any regulatory changes that impose additional restrictions or requirements on the disposal of oil and gas wastes could adversely affect demand for the Company's services and products. In addition, the Company is subject to laws and regulations concerning occupational health and safety. The Company believes that it is in substantial compliance with the requirements of environmental and occupational health and safety laws and regulations, but inasmuch as such laws and regulations are frequently changed, the Company is unable to predict the ultimate impact of such laws and regulations on the Company's business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matter was submitted to a vote of security holders during the fourth quarter of 1996. 10 11 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Company's Common Stock, $0.10 par value (the "Common Stock"), is traded on the New York Stock Exchange under the symbol "WII". The following table sets forth, on a per share basis for the periods indicated, the high and low sale prices for the Common Stock as reported by the New York Stock Exchange. The sales prices set forth below have been adjusted to reflect the one-for-two reverse stock split effected on October 5, 1995.
HIGH LOW ------ ------ 1995 First Quarter............................................ $21.25 $16.50 Second Quarter........................................... 25.75 19.75 Third Quarter............................................ 30.00 23.50 Fourth Quarter........................................... 29.50 21.25 1996 First Quarter............................................ 35.88 26.00 Second Quarter........................................... 37.75 28.50 Third Quarter............................................ 32.75 23.13 Fourth Quarter........................................... 32.38 26.88 1997 First Quarter (through March 21, 1997)................... 38.13 28.50
On March 21, 1997, the closing sale price for the Common Stock as reported by the New York Stock Exchange was $29.88. As of March 21, 1997, there were approximately 3,842 record holders of Common Stock. The Company has not declared or paid dividends on the Common Stock since December 1982 and management does not anticipate paying dividends on the Common Stock at any time in the foreseeable future. 11 12 ITEM 6. SELECTED FINANCIAL DATA. The Selected Financial Data set forth below has been derived from the audited consolidated financial statements of the Company. This information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Company's Consolidated Financial Statements and the Notes thereto included elsewhere herein.
AS OF OR FOR THE YEAR ENDED DECEMBER 31, ---------------------------------------------------------- 1996 1995(1) 1994(2) 1993(3) 1992 ---------- ---------- ---------- -------- -------- (IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND PERCENTAGES) OPERATING DATA: Revenues........................... $ 994,468 $ 858,907 $ 676,749 $500,491 $374,203 Acquisition-related costs and other unusual charges................. -- 88,182 2,500 4,000 -- Operating income................... 125,756 182 65,704 49,671 35,579 Depreciation and amortization...... 105,857 95,957 71,037 50,449 35,738 Net income (loss).................. 70,073 (10,558) 41,977 35,175 26,760 Net income (loss) per share........ $ 1.35 $ (0.21) $ 0.94 $ 0.88 $ 0.73 PERCENTAGE OF REVENUES: Selling, general and administrative expenses........................ 14.1% 16.1% 17.1% 18.3% 22.6% Gross profit....................... 28.2% 27.2% 27.9% 29.5% 33.2% Operating income................... 12.6% 0.0% 9.7% 9.9% 9.5% Net income (loss).................. 7.0% (1.2)% 6.2% 7.0% 7.2% BALANCE SHEET DATA: Working capital.................... $ 294,075 $ 267,380 $ 251,778 $211,834 $197,526 Total assets....................... 1,397,723 1,258,860 1,153,970 635,602 474,490 Total debt......................... 315,774 329,266 196,672 21,253 28,685 Stockholders' equity............... 841,608 730,843 734,634 474,472 349,458 Total debt-to-total capitalization.................. 27% 31% 21% 4% 8% OTHER DATA: Capital expenditures, excluding acquisitions.................... $ 148,656 $ 110,625 $ 114,018 $ 63,757 $ 38,259 Weighted average shares outstanding..................... 52,097 50,989 44,845 38,607 34,786
- --------------- (1) Includes acquisition-related costs and other unusual charges of $88,182,000, or $1.17 per common share. (2) Includes acquisition-related costs of $2,500,000, or $0.06 per common share. (3) Includes acquisition-related costs of $4,000,000, or $0.10 per common share. 12 13 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto included elsewhere herein. Certain statements in this report may be forward looking statements, including without limitation statements regarding expected worldwide drilling activity, the Company's future capital expenditures and the expected performance of the Company's businesses. The forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated, including without limitation adverse economic conditions, the impact of competitive products and pricing, product demand and acceptance risks, the presence of competitors with greater financial resources and adverse industry conditions. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of their dates. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. BUSINESS REVIEW Weatherford Enterra is a diversified international energy service and manufacturing company that provides a variety of services and equipment to the exploration, production and transmission sectors of the oil and gas industry. The Company's principal industry segments are oilfield services, oilfield products and gas compression, with operations in virtually every oil and gas exploration and production region in the world. The oilfield services segment includes oilfield equipment rental, downhole services and tubular running services. The Company rents specialized pressure control equipment, drill string equipment, handling tools, stabilizers and other equipment and tools used in the drilling, completion and workover of oil and gas wells. Downhole services include fishing, milling, whipstock installation and retrieval, well control assistance, plugging and abandonment services, pipe recovery wireline services, foam services and casing patch installation. Tubular running services include "making up" threaded tubular connections, installing casing, tubing and other downhole tubulars, ensuring the mechanical integrity and leak-tight performance of tubular connections, inspection and cleaning of tubulars and related engineering services. The oilfield products segment includes the manufacture, sale and service of cementation products, liner hangers, gas lift equipment and equipment used to provide oilfield services. Cementation products include centralizers, float equipment, stage tools and elastomer products which are used in the process of cementing casing strings in oil and gas wells. Liner hanger equipment is used in the drilling and completion of oil and gas wells, primarily for the production casing in deep, deviated or horizontal wells. Gas lift equipment is used to inject gas in producing wells to enhance the flow of oil to the surface. Other manufactured products include hydraulic power tongs and related equipment used to provide tubular running services, milling tools, whipstocks and weighted drill pipe used in rental and downhole services and sold to customers. The gas compression segment includes the manufacturing, packaging, renting, selling and providing parts and services for reciprocating gas compressor units ranging in size from 26 to 7200 horsepower. Gas compressor units are used to increase natural gas pressure to facilitate gas flow from the wellhead and through gas gathering systems and processing plants, to inject natural gas into oil wells for enhanced recovery and into gas storage wells, and in other general applications such as cogeneration, seismic marine surveys and natural gas fueling stations. The Company's operating results include several other businesses that the Company has either sold or announced its intention to sell. Such businesses include Harrisburg/Woolley, which was sold in 1995; Barber Industries Limited, Enterra Patco Oilfield Products, Inc. and Arrow Completion Systems, Inc. ("Arrow"), each of which were sold in 1996; and CRC-Evans Pipeline International, Inc. ("CRC-Evans Pipeline"), the American Aero Cranes division ("Cranes") and Total Engineering Services Team, Inc. ("TEST"), which are in various stages of being divested. The Company has grown significantly through acquisitions, having acquired more than 20 businesses since 1991. These acquisitions have allowed the Company to expand its product and service lines, improve its 13 14 worldwide market position and realize significant consolidation cost savings. Management believes it has positioned Weatherford Enterra as a market leader in its primary businesses while significantly expanding and diversifying the Company's geographic operations. RESULTS OF OPERATIONS A summary of operating results by industry segment is shown below:
YEAR ENDED DECEMBER 31, -------------------------------- 1996 1995 1994 -------- -------- -------- (IN THOUSANDS) REVENUES: Oilfield services................................ $520,195 $470,085 $420,981 Oilfield products................................ 149,713 115,399 86,580 Gas compression.................................. 154,503 94,386 46,145 Other businesses................................. 170,057 179,037 123,043 -------- -------- -------- $994,468 $858,907 $676,749 ======== ======== ======== ACQUISITION-RELATED COSTS AND OTHER UNUSUAL CHARGES: Oilfield services................................ $ -- $ 31,715 $ 2,500 Oilfield products................................ -- 15,745 -- Gas compression.................................. -- -- -- Other businesses................................. -- 11,711 -- Corporate........................................ -- 29,011 -- -------- -------- -------- $ -- $ 88,182 $ 2,500 ======== ======== ======== OPERATING INCOME (LOSS): Oilfield services................................ $ 93,644 $ 41,849 $ 49,484 Oilfield products................................ 23,388 (13,253) 16,918 Gas compression.................................. 7,833 7,788 4,047 Other businesses................................. 8,849 2,010 694 Corporate........................................ (7,958) (38,212) (5,439) -------- -------- -------- $125,756 $ 182 $ 65,704 ======== ======== ========
OILFIELD SERVICES. The oilfield services segment was significantly impacted by cost savings achieved following the Company's mergers with Enterra Corporation ("Enterra") in October 1995 and H & H Oil Tool Co., Inc. ("H & H") in September 1994, both of which were accounted for as poolings of interest. Revenues for the oilfield services segment increased 11% to $520.2 million in 1996 as compared to 1995. International revenues increased 15% to $281.3 million, while U.S. revenues increased 6% to $238.9 million. The increase in international service revenues is primarily attributable to increased activity in Canada, the North Sea, North and West Africa and Latin America. The increase in Canada is consistent with the 17% increase in the average drilling rig count over 1995. The average international drilling rig count, excluding Canada, increased 5% over the prior year, which contributed to the increase in international service revenues. International revenues also benefitted from the introduction of fishing and other downhole services into certain markets in North and West Africa and Latin America in 1996. U.S. service revenues were positively impacted by an increase in the average 1996 U.S. drilling rig count of 7% over 1995, as well as price increases announced by the Company in August 1996 affecting most U.S. services and rentals. Excluding the impact of the acquisition-related costs and other unusual charges in 1995 discussed below, operating income for oilfield services increased 27% to $93.6 million in 1996 as compared to 1995. This increase is attributable to the increase in revenues experienced in 1996, along with cost savings achieved from the higher levels of activity and from efficiencies resulting from consolidating the operations of the Company and Enterra. These increases were partially offset by additional costs incurred to introduce fishing and other downhole services into the markets discussed above. 14 15 Oilfield service revenues increased 12% in 1995 to $470.1 million compared to $421.0 million in 1994. International revenues increased 23% to $245.2 million, primarily as a result of increased activity in certain markets, including Latin America, Africa, the North Sea and Canada. During 1995, the average international drilling rig count, excluding Canada, was 3% higher than in 1994. U.S. revenues increased 1% to $224.9 million, despite a 7% decline in the average U.S. drilling rig count. Operating income for the oilfield services segment decreased in 1995 compared to 1994 as a result of the acquisition-related costs and other unusual charges in 1995 discussed below. Excluding such charges, operating income would have improved 42% to $73.6 million, primarily as a result of the increased international activity and cost savings achieved in consolidating the operations of H & H and Enterra into the Company. OILFIELD PRODUCTS. The Company acquired the business and assets of Nodeco AS, a Norwegian liner hanger manufacturer, and Aarbakke AS (collectively, "Nodeco") in May 1996. The oilfield products segment was also significantly impacted by the October 1995 Enterra merger and Enterra's acquisition of Total Energy Services Company ("Total Energy") in August 1994. Revenues increased 30% to $149.7 million in 1996 compared to 1995, reflecting improved operating results from all manufacturing businesses. The acquisition of Nodeco in May 1996 contributed $18.4 million, or 16%, to the revenue increase. Cementation product sales improved significantly over the prior year due to an increase in market share and the higher levels of drilling activity worldwide. Excluding the impact of the acquisition-related costs and other unusual charges discussed below, operating income increased over 800% to $23.4 million compared to 1995. Approximately $4.0 million of the increase in operating income is attributable to the Nodeco acquisition. The remaining increase is due to the increase in revenues, combined with manufacturing efficiencies achieved as a result of the higher volume of product sales. Revenues increased 33% in 1995 to $115.4 million compared to 1994, primarily as a result of the acquisition of the Total Energy businesses in August 1994. Operating income, excluding the acquisition-related costs and other unusual charges discussed below, decreased 85% to $2.5 million, primarily as a result of operating losses incurred in 1995 by certain businesses acquired from Total Energy, and large one-time shipments of products in 1994. GAS COMPRESSION. Revenues increased 64% to $154.5 million in 1996 as compared to 1995, primarily as a result of the acquisition of the natural gas compression business and assets of Energy Industries, Inc. and Zapata Energy Industries, L.P. (collectively, "Energy Industries") in December 1995. This increase was offset by a weaker market for sales of gas compressor packages, which resulted in a lower volume of manufacturing and packaging sales as well as lower prices for packaged compressors. Operating income increased only slightly over 1995 due to the weaker market, inefficiencies incurred in consolidating the packaging operations of Energy Industries into the Company's existing gas compression business, and amortization of goodwill arising from the Energy Industries acquisition. The gas compression segment was acquired as part of the Total Energy acquisition, which was accounted for as a purchase, in August 1994. Consequently, comparisons of the operating results between 1995 and 1994 are not meaningful. Compression rental revenues remained fairly stable in 1995 and 1994. Sales of packaged compression units, particularly in Canada, declined significantly during the second half of 1995 due to the relatively low demand for natural gas. OTHER BUSINESSES. Revenues decreased 5% to $170.1 million in 1996 as compared to 1995, primarily as a result of businesses which were sold in late 1995 and early 1996. This decrease was offset by higher revenues for TEST and Cranes. TEST revenues improved primarily as a result of increased activity in the Gulf of Mexico, while revenues for Cranes increased in relation to the higher level of drilling activity, which resulted in new crane sales, service and rental contracts worldwide. Operating income excluding the impact of the acquisition-related costs and other unusual charges discussed below decreased 36% to $8.8 million, due primarily to the impact of the sold businesses. The higher revenues for TEST and Cranes did not significantly impact operating income due to higher levels of costs incurred in 1996. Revenues for other businesses increased 46% in 1995 to $179.0 million compared to 1994, primarily as a result of the addition of the Total Energy businesses acquired in August 1994. Revenues were also positively 15 16 impacted by increased activity for CRC-Evans Pipeline, including a large international pipeline construction project and increased automatic welding unit rental and service revenue in Canada, Malaysia and North Africa. Excluding the acquisition-related costs and other unusual charges discussed below, operating income increased to $13.7 million in 1995 compared to $0.7 million in 1994 as a result of the Total Energy businesses operating for the full year in 1995 combined with the improved pipeline results. Also, 1994 operating income included a loss of $4.2 million on a large contract to design and construct specialized equipment to be installed on a large offshore pipe laying vessel. The Company is currently in the process of negotiating sales of these businesses. GROSS PROFIT. The consolidated gross profit percentage was 28.2% in 1996 compared to 27.2% in 1995 and 27.9% in 1994. The increase in 1996 is due primarily to improved gross profitability in U.S. oilfield services and the oilfield products segments primarily as a result of consolidation cost savings, improved pricing in certain areas and increased volume of activity. Compression margins were lower due to the weak market and consolidation costs discussed above. The decline from 1994 to 1995 is primarily attributable to weakness in the gas compression segment and several businesses in the oilfield products segment. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses as a percentage of revenues decreased to 14.1% in 1996 from 16.1% in 1995 and 17.1% in 1994. These decreases are a result of higher levels of revenues, combined with cost efficiencies achieved in consolidating the operations of acquired businesses into the Company. RESEARCH AND DEVELOPMENT. Research and development costs of $7.2 million in 1996 increased $2.2 million, or 44%, compared to 1995. Research and development costs of $5.0 million in 1995 increased 5% compared to 1994. The increases primarily reflect the expansion of the Company's operations and development activities to support its three principal business segments. EQUITY IN EARNINGS OF UNCONSOLIDATED AFFILIATES. The Company owns an interest of 50% or less in several joint ventures, primarily in the oilfield services segment. The Company's equity in the earnings of these affiliates was $2.1 million in 1996 compared to $1.5 million in 1995 and $1.2 million in 1994. These increases are primarily attributable to improved drilling activity in Saudi Arabia. The Company received cash dividends from its 50% or less-owned affiliates totaling $1.6 million, $1.7 million and $2.2 million in 1996, 1995 and 1994, respectively. FOREIGN CURRENCY GAIN, NET. As a result of the fluctuation of the U.S. dollar against the major foreign currencies in which the Company conducts business, the Company recorded net foreign currency gains of $49,000 and $74,000 in 1996 and 1995, compared to a net gain of $2.2 million in 1994. A substantial portion of the gain in 1994 represented an unrealized currency gain related to certain intercompany loans. OTHER EXPENSE, NET. Other expense, net, increased to $8.7 million in 1996 compared to $3.8 million in 1995 and $3.1 million in 1994. The increase in 1996 is primarily related to the amortization of goodwill related to the acquisition of Energy Industries. The increase in 1995 was primarily attributable to the amortization of goodwill related to the 1994 acquisitions of Total Energy and the assets and business of the Rental Division of Odfjell Drilling and Consulting Company, partially offset by increased gains on sales of property, plant and equipment in 1995. ACQUISITION-RELATED COSTS AND OTHER UNUSUAL CHARGES. During the second quarter of 1995, Enterra recorded unusual charges totaling $28.3 million, representing writedowns to fair value of certain businesses to be disposed of, asset writedowns related to certain excess facilities, equipment and inventories, and estimated costs in connection with the closure of certain pipeline businesses and the consolidation of certain oilfield service administrative and operating facilities. During the fourth quarter of 1995, the Company recorded expenses of $59.9 million related to the Enterra merger and the financial impact of management decisions related to the future operations of the combined companies. These acquisition-related costs primarily consisted of transaction costs, severance and termination agreements with former officers and employees, facility closure costs primarily to consolidate the oilfield services operations and administrative functions of Enterra and the Company, and the reduction in recorded value of certain assets that had diminished future value in the operations of the combined company. 16 17 The Company recorded acquisition-related costs of $2.5 million in the third quarter of 1994 related to the H & H merger. The 1994 acquisition-related costs primarily represented transaction costs of the merger and employee termination and facility closure costs to consolidate the operations of H & H into the Company. INTEREST. Net interest expense increased to $20.9 million in 1996 compared to $15.1 million in 1995 and $6.9 million in 1994, primarily as a result of higher average debt balances outstanding. The increased indebtedness primarily relates to the acquisitions of Nodeco in May 1996, Energy Industries in December 1995, Total Energy in August 1994 and Odfjell Rental in April 1994. INCOME TAXES. The income tax provision (benefit) consists of taxes on foreign earnings, foreign taxes withheld on certain remittances from international subsidiaries, U.S. alternative minimum tax, state taxes, the recognition of general business tax credits currently available to reduce U.S. federal income tax, and the recognition of future taxable amounts. Income tax provision (benefit) as a percentage of income (loss) before income taxes and minority interests was 33%, 31% and 29% for 1996, 1995 and 1994, respectively. The increase in the effective tax rates was primarily a result of differences in the components and tax rates applicable to foreign taxable income, the reversal of the valuation allowance on U.S. net operating loss carryforwards in 1995 and the nondeductible goodwill amortization related to the Total Energy acquisition. LIQUIDITY AND CAPITAL RESOURCES The Company's operations provided cash of $128.7 million during 1996 compared to $78.9 million during 1995 and $67.6 million during 1994. Operating cash flow before changes in working capital accounts increased 45% to $172.5 million in 1996 over 1995, and 16% to $118.7 million in 1995 over 1994, reflecting the impact of the acquisitions and growth in the Company's operations. Changes in working capital and other operating accounts used cash of $43.9 million in 1996 compared to $39.8 million during 1995 and $34.4 million in 1994. Working capital of $294.1 million at December 31, 1996 increased 10% compared to December 31, 1995, primarily due to the growth experienced in the Company's operations, including the acquisition of Nodeco. Working capital of $267.4 million at December 31, 1995 increased 6% from December 31, 1994, primarily due to the Energy Industries acquisition. In connection with the plan to consolidate the operations of Enterra into the Company's operations, the Company committed to vacate certain excess facilities. Accrued liabilities associated with this plan decreased from $24.3 million at December 31, 1995 to $3.2 million at December 31, 1996, as a result of cash payments in accordance with the consolidation plan. On May 23, 1996, the Company acquired the business and assets of Nodeco in a transaction accounted for as a purchase. The Company paid cash of $14.4 million net of cash acquired, issued 750,000 shares of its Common Stock and assumed all liabilities of Nodeco, totaling approximately $12.1 million. On December 15, 1995, the Company completed the acquisition of substantially all of the assets of Energy Industries in a transaction accounted for as a purchase. The Company paid approximately $130.0 million in cash and assumed certain liabilities totaling approximately $12.5 million. On October 5, 1995, the Company completed a merger with Enterra. The Company issued approximately 23.7 million shares of Common Stock in exchange for all the outstanding shares of Enterra common stock based on an exchange ratio of 0.845 of a share of Company Common Stock for each share of Enterra common stock outstanding. The merger was accounted for as a pooling of interests. In connection with the Enterra merger, the Company recorded acquisition-related costs totaling $59.9 million. Capital expenditures, excluding business acquisitions, increased 34% in 1996 to $148.7 million compared to 1995, primarily as a result of the acquisition of Energy Industries in December 1995, the increase in industry activity worldwide and the introduction of certain oilfield services businesses into new areas in 1996. Capital expenditures, excluding business acquisitions, decreased 3% to $110.6 million in 1995 compared to $114.0 million in 1994 reflecting lower capital spending in the oilfield services segment due to the consolidation of the Company's and Enterra's rental and service equipment, partially offset by the capital requirements of the Total Energy operations acquired in August 1994. Management anticipates that the 17 18 Company's capital spending levels will continue to be primarily influenced by market opportunities and growth in the Company's operations. The Company has announced its intention to sell certain non-core businesses including CRC-Evans Pipeline, Cranes and TEST. Management expects that proceeds from such divestitures would be used to repay debt and for general corporate purposes. Effective December 6, 1996, the Company sold the business and assets of Arrow for cash of $21.3 million, subject to a working capital adjustment, and the assumption by the purchaser of substantially all operating liabilities of Arrow. The proceeds from the sale were used primarily to repay a portion of the Company's debt. The Company's consolidated indebtedness decreased to $315.8 million at December 31, 1996 from $329.3 million at December 31, 1995, primarily as a result of scheduled debt payments and debt payments made with the proceeds from the sale of Arrow, partially offset by increased debt related to the acquisition of Nodeco. The Company's total debt-to-total capitalization ratio was 27% at December 31, 1996 compared to 31% at December 31, 1995. On May 28, 1996, the Company completed the sale of $200 million of 7 1/4% notes due May 15, 2006 (the "7 1/4% Notes"). Net proceeds of $197.8 million were used to repay amounts outstanding under the bank credit facilities discussed below. Interest on the 7 1/4% Notes is payable semi-annually on May 15 and November 15 of each year. The Company has bank credit facilities (the "Facilities") consisting of a $200 million term loan (the "Term Loan") and a $200 million revolving credit facility (the "Revolving Credit Facility"). The Term Loan is payable in equal quarterly installments through September 30, 2001. The Revolving Credit Facility matures on September 30, 2000. Amounts outstanding under the Facilities accrue interest at a variable rate ranging from 0.375% to 0.625% above a specified Eurodollar rate, depending on the Company's ratio of total debt to total capitalization. The applicable interest rate on amounts outstanding at December 31, 1996 was 6.0%. A commitment fee ranging from 0.15% to 0.225% per annum, depending on the Company's ratio of total debt to total capitalization, is payable quarterly on the unused portion of the Revolving Credit Facility. The Facilities agreement requires the Company to maintain certain financial ratios, including a maximum debt-to-capitalization ratio of 40%, and limits the Company's ability to incur indebtedness, make investments and dispose of assets. At December 31, 1996, the balance outstanding under the Term Loan was $96.0 million, and the Company had $200 million available to borrow under the Revolving Credit Facility and $16.3 million available for borrowing under working capital facilities of certain of its domestic and international subsidiaries. The Company also has various credit facilities available only for stand-by letters of credit and bid and performance bonds, pursuant to which funds are available to the Company to secure performance obligations and certain retrospective premium adjustments under insurance policies. The Company had a total of $18.0 million of letters of credit and bid and performance bonds outstanding at December 31, 1996. The Company conducts a portion of its business in currencies other than the U.S. dollar, including the Canadian dollar, major European currencies and certain Latin American currencies. Although most of the revenues of the Company's foreign operations are denominated in the local currency, the effects of foreign currency fluctuations are largely mitigated because local expenses of such foreign operations also generally are denominated in the same currency. Changes in the value of the U.S. dollar relative to these foreign currencies affect the weighted average currency exchange rates used to translate the statements of income of the Company's international subsidiaries into U.S. dollars. The impact of exchange rate fluctuations during 1996, 1995 and 1994 did not have a material effect on reported amounts of revenues or net income. The Company occasionally enters into forward exchange contracts only as a hedge against certain existing economic exposures, and not for speculative or trading purposes. These contracts reduce exposure to currency movements affecting existing assets and liabilities denominated in foreign currencies, such exposure resulting primarily from trade receivables and payables and intercompany loans. The future value of these contracts and the related currency positions are subject to offsetting market risk resulting from foreign currency exchange rate volatility. Settlement of forward exchange contracts resulted in net cash inflows totaling $1.1 million in 1996 and net cash outflows of $2.7 million during 1995. 18 19 Management believes the combination of working capital, the unused portion of existing credit facilities and cash flows from operations provide the Company with sufficient capital resources and liquidity to manage its routine operations. The Company continues to seek opportunities to enhance its competitiveness through strategic acquisitions. Management believes that any borrowings made in connection with any such acquisitions will not have a materially adverse impact on the Company's liquidity. Management believes that it is premature to provide specific information with respect to any such possible acquisitions because of the status of, and possible adverse impact on, negotiations, and because, in any event, there can be no assurance that any of such possible acquisitions will be consummated. Like most multinational oilfield service companies, the Company has operations in certain international areas, including parts of the Middle East, North and West Africa, Latin America, the Asia-Pacific Region and the Commonwealth of Independent States (the "CIS"), that are inherently subject to risks of war, political disruption, civil disturbance and policies that may disrupt oil and gas exploration and production activities, restrict the movement of funds, lead to U.S. government or international sanctions or limit access to markets for periods of time. Historically, the economic impact of such disruptions has been temporary and oil and gas exploration and production activities have eventually resumed in relation to market forces. Certain areas, including the CIS, Algeria, Nigeria and parts of the Middle East and Latin America, have been subjected to political disruption or social unrest in the past twelve months. Generally, business interruptions resulting from civil or political disruptions negatively impact near-term results of operations; however, management believes that it is unlikely that any specific business disruption caused by existing or foreseen civil or political instability will have a materially adverse impact on the financial condition or liquidity of the Company. The Company has not declared dividends on Common Stock since December 1982 and management does not anticipate paying dividends on Common Stock at any time in the foreseeable future. 19 20 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Weatherford Enterra, Inc.: We have audited the accompanying consolidated balance sheets of Weatherford Enterra, Inc. (a Delaware corporation) and subsidiaries (the "Company") as of December 31, 1996 and 1995, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1996. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Weatherford Enterra, Inc. and subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Houston, Texas February 12, 1997 20 21 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1996 AND 1995 (IN THOUSANDS EXCEPT SHARE AMOUNTS)
1996 1995 ---------- ---------- ASSETS CURRENT ASSETS: Cash and cash equivalents................................. $ 33,029 $ 32,800 Receivables, net of allowance of $16,241 and $15,942...... 272,816 231,125 Inventories, net.......................................... 163,302 165,383 Deferred tax assets....................................... 20,090 10,995 Prepayments and other..................................... 16,197 23,059 ---------- ---------- Total current assets.............................. 505,434 463,362 ---------- ---------- PROPERTY, PLANT AND EQUIPMENT, at cost: Land...................................................... 20,041 22,381 Buildings and improvements................................ 101,114 85,229 Rental and service equipment.............................. 1,017,866 965,603 Machinery and other equipment............................. 115,665 108,357 ---------- ---------- 1,254,686 1,181,570 Less -- Accumulated depreciation.......................... 693,496 667,025 ---------- ---------- 561,190 514,545 ---------- ---------- GOODWILL, net............................................... 290,474 259,450 ---------- ---------- OTHER ASSETS................................................ 40,625 21,503 ---------- ---------- $1,397,723 $1,258,860 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt and current portion of long-term debt..... $ 24,508 $ 36,976 Accounts payable.......................................... 65,713 52,157 Accrued compensation and employee benefits................ 29,885 31,353 Accrued income taxes...................................... 17,427 4,650 Accrued insurance......................................... 11,283 9,435 Other accrued liabilities................................. 62,543 61,411 ---------- ---------- Total current liabilities......................... 211,359 195,982 ---------- ---------- LONG-TERM DEBT.............................................. 291,266 292,290 ---------- ---------- DEFERRED TAX LIABILITIES.................................... 34,728 5,243 ---------- ---------- OTHER LONG-TERM LIABILITIES................................. 18,010 33,348 ---------- ---------- MINORITY INTERESTS.......................................... 752 1,154 ---------- ---------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, $1 par; shares authorized 1,000,000; none issued................................................. -- -- Common stock, $.10 par; shares authorized 80,000,000; issued 52,172,796 and 50,988,741....................... 5,217 5,099 Paid-in capital........................................... 639,679 602,231 Retained earnings......................................... 200,316 130,243 Cumulative translation adjustment......................... (2,768) (5,869) Treasury stock, 28,269 and 41,260 common shares, at cost................................................... (836) (861) ---------- ---------- Total stockholders' equity........................ 841,608 730,843 ---------- ---------- $1,397,723 $1,258,860 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 21 22 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996 (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996 1995 1994 -------- -------- -------- REVENUES: Services and rentals..................................... $746,180 $612,597 $495,947 Products................................................. 248,288 246,310 180,802 -------- -------- -------- Total revenues................................... 994,468 858,907 676,749 COSTS AND EXPENSES: Cost of services and rentals............................. 537,313 442,902 347,124 Cost of products......................................... 177,033 182,444 141,009 Selling, general and administrative expenses............. 140,614 137,959 115,978 Research and development................................. 7,154 4,954 4,735 Equity in earnings of unconsolidated affiliates.......... (2,078) (1,477) (1,169) Foreign currency gain, net............................... (49) (74) (2,205) Other expense, net....................................... 8,725 3,835 3,073 Acquisition-related costs and other unusual charges...... -- 88,182 2,500 -------- -------- -------- Total operating costs and expenses............... 868,712 858,725 611,045 -------- -------- -------- OPERATING INCOME........................................... 125,756 182 65,704 Interest expense........................................... 22,914 17,217 8,847 Interest income............................................ (2,005) (2,081) (1,959) -------- -------- -------- INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTERESTS... 104,847 (14,954) 58,816 Income tax provision (benefit)............................. 34,593 (4,616) 16,958 -------- -------- -------- INCOME (LOSS) BEFORE MINORITY INTERESTS.................... 70,254 (10,338) 41,858 Minority interests......................................... 181 220 (119) -------- -------- -------- NET INCOME (LOSS).......................................... $ 70,073 $(10,558) $ 41,977 ======== ======== ======== Weighted average common and common equivalent shares outstanding.............................................. 52,097 50,989 44,845 ======== ======== ======== INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE....... $ 1.35 $ (0.21) $ 0.94 ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 22 23 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996 (IN THOUSANDS)
CUMULATIVE COMMON PAID-IN RETAINED TRANSLATION TREASURY STOCK CAPITAL EARNINGS ADJUSTMENT STOCK TOTAL ------ -------- -------- ----------- -------- -------- BALANCE, December 31, 1993............... $4,089 $379,046 $ 98,824 $(7,044) $(442) $474,473 Shares issued under employee benefit plans.................................. 1 178 -- -- -- 179 Stock grants and options exercised....... 13 1,905 -- -- (359) 1,559 Issuance of Common Stock in acquisition............................ 955 212,615 -- -- -- 213,570 Currency translation adjustment.......... -- -- -- 2,876 -- 2,876 Net income............................... -- -- 41,977 -- -- 41,977 ------ -------- -------- ------- ----- -------- BALANCE, December 31, 1994............... 5,058 593,744 140,801 (4,168) (801) 734,634 Shares issued under employee benefit plans.................................. 1 187 -- -- -- 188 Stock grants and options exercised....... 40 8,300 -- -- (60) 8,280 Currency translation adjustment.......... -- -- -- (1,701) -- (1,701) Net loss................................. -- -- (10,558) -- -- (10,558) ------ -------- -------- ------- ----- -------- BALANCE, December 31, 1995............... 5,099 602,231 130,243 (5,869) (861) 730,843 Shares issued under employee benefit plans.................................. 3 1,367 -- -- 419 1,789 Stock grants and options exercised....... 40 9,636 -- -- (394) 9,282 Issuance of Common Stock in acquisition............................ 75 26,445 -- -- -- 26,520 Currency translation adjustment.......... -- -- -- 3,101 -- 3,101 Net income............................... -- -- 70,073 -- -- 70,073 ------ -------- -------- ------- ----- -------- BALANCE, December 31, 1996............... $5,217 $639,679 $200,316 $(2,768) $(836) $841,608 ====== ======== ======== ======= ===== ========
The accompanying notes are an integral part of these consolidated financial statements. 23 24 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1996 (IN THOUSANDS)
1996 1995 1994 --------- --------- --------- NET INCOME (LOSS)....................................... $ 70,073 $ (10,558) $ 41,977 Income items not requiring (providing) cash: Depreciation and amortization......................... 105,857 95,957 71,037 Non-cash portion of acquisition-related costs and other unusual charges.............................. -- 66,196 -- Deferred income tax provision (benefit)............... 12,103 (20,781) 649 Gain on sales of assets, net.......................... (14,058) (12,503) (9,559) Other non-cash items, net............................. (1,428) 409 (2,094) Increase (decrease) in operating cash flow resulting from: Receivables, net................................... (38,587) 16,277 (32,345) Inventories, net................................... (8,384) (12,603) (14,619) Payment of deferred loan costs..................... (4,820) (892) (818) Prepayments and other.............................. (922) (5,799) (477) Accounts payable and accrued liabilities........... 15,868 (46,307) 15,798 Other long-term liabilities........................ (7,024) 9,477 (1,980) --------- --------- --------- CASH PROVIDED BY OPERATING ACTIVITIES................... 128,678 78,873 67,569 --------- --------- --------- Purchases of property, plant and equipment.............. (148,656) (110,625) (114,018) Proceeds from sales of businesses....................... 40,481 9,493 -- Acquisitions, net of notes issued and cash acquired..... (16,278) (139,226) (105,850) Proceeds from sales of property, plant and equipment.... 20,215 31,137 19,810 Other net cash flows from investing activities.......... (15,388) (9,245) (1,502) --------- --------- --------- CASH USED IN INVESTING ACTIVITIES....................... (119,626) (218,466) (201,560) --------- --------- --------- Borrowings under credit facilities...................... 250,783 411,737 144,539 Repayment of borrowings................................. (271,565) (283,346) (45,299) Net cash flows from currency hedging transactions....... 1,133 (2,719) (1,036) Proceeds from stock option exercises, sales of stock to employee benefit plans and other...................... 11,046 6,268 1,693 --------- --------- --------- CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES......... (8,603) 131,940 99,897 --------- --------- --------- EFFECT OF EXCHANGE RATE CHANGES ON CASH................. (220) 4,347 66 --------- --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ 229 (3,306) (34,028) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.......... 32,800 36,106 70,134 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR................ $ 33,029 $ 32,800 $ 36,106 ========= ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year for: Interest.............................................. $ 12,826 $ 14,396 $ 6,380 Income taxes.......................................... 14,652 17,741 14,236 Purchases of equipment financed by debt................. -- -- 3,213
The accompanying notes are an integral part of these consolidated financial statements. 24 25 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- Basis of presentation. Weatherford Enterra, Inc. is a diversified international energy service and manufacturing company that provides a variety of services and equipment to the exploration, production and transmission sectors of the oil and gas industry. The accompanying consolidated financial statements include the accounts of Weatherford Enterra, Inc. and its subsidiaries (the "Company" or "Weatherford Enterra") after elimination of all significant intercompany accounts and transactions. The Company accounts for its 50% or less-owned affiliates using the equity method. Accounting estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. While actual results could differ from these estimates, management believes that the estimates are reasonable. Cash and cash equivalents. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The reported value of all financial instruments approximates market value. Prepayments and other current assets at December 31, 1996 and 1995 included cash of approximately $1,656,000 and $2,367,000, respectively, which was restricted as a result of exchange controls in certain foreign countries or cash collateral requirements for performance bonds, letters of credit and customs bonds. Inventories. Inventories, net of allowances, are valued at the lower of cost (first-in, first-out or average) or market and are summarized as follows (in thousands):
1996 1995 -------- -------- Spare parts and components.................................. $ 41,068 $ 34,911 Raw materials............................................... 28,734 44,494 Work in process............................................. 26,902 27,287 Finished goods.............................................. 66,598 58,691 -------- -------- $163,302 $165,383 ======== ========
Work in process and finished goods inventories include the costs of materials, labor and plant overhead. Property, plant and equipment. Property, plant and equipment is depreciated on a straight-line basis over the estimated useful lives of the assets. Estimated useful lives of assets are as follows: Buildings and improvements.................................. 5 - 45 years Rental and service equipment................................ 3 - 15 years Machinery and other equipment............................... 3 - 15 years
Expenditures for major additions and improvements are capitalized while minor replacements, maintenance and repairs are charged to expense as incurred. When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the related accounts, and any resulting gain or loss is included in the consolidated statements of income. Goodwill. Goodwill represents the excess of the aggregate price paid by the Company in acquisitions accounted for as purchases over the fair market value of the net assets acquired. Goodwill is amortized on a straight-line basis generally over a period of 40 years. Goodwill amortization expense totaled $7,044,000, $5,852,000 and $2,970,000 during 1996, 1995 and 1994, respectively. Accumulated amortization at December 31, 1996 and 1995 was $14,199,000 and $9,808,000, respectively. 25 26 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Income taxes. The Company applies the liability method of accounting for income taxes. Accordingly, deferred tax assets and liabilities are determined based on the estimated future tax effects of differences between the financial statement and tax bases of assets and liabilities given the provisions of enacted tax laws. The Company does not provide federal income taxes on the undistributed earnings of certain of its foreign subsidiaries because it believes these amounts are permanently invested outside the United States. The cumulative amount of such undistributed earnings on which federal taxes have not been provided was $204,793,000 at December 31, 1996. If these foreign earnings were to be ultimately remitted, certain foreign withholding taxes would be payable, and U.S. federal income taxes payable at that time would be reduced by foreign tax credits generated by the repatriation, net of operating loss carryforwards and tax credit carryforwards. Environmental expenditures. Environmental expenditures that relate to ongoing business activities are expensed or capitalized, in accordance with the Company's capitalization policy. Expenditures that relate to the remediation of an existing condition caused by past operations, and which do not contribute to current or future revenues, are expensed. Liabilities for these expenditures are recorded when it is probable that obligations have been incurred and the costs can be reasonably estimated. Estimates are based on currently available facts and technology, presently enacted laws and regulations and the Company's prior experience in remediation of contaminated sites. Liabilities included $10,263,000 and $17,743,000 of accrued environmental expenditures at December 31, 1996 and 1995, respectively. Foreign currency translation. The functional currency for most of the Company's international operations is the applicable local currency. The translation of the foreign currencies into U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for income statement accounts using a weighted average exchange rate for the period. The gains or losses resulting from such translation are included as a separate component of stockholders' equity. Gains or losses resulting from foreign currency transactions are included in the consolidated statements of income. Foreign exchange contracts. The Company occasionally enters into foreign exchange contracts only as a hedge against certain existing economic exposures, and not for speculative or trading purposes. These contracts reduce exposure to currency movements affecting existing assets and liabilities denominated in foreign currencies, such exposure resulting primarily from trade receivables and payables and intercompany loans. The future value of these contracts and the related currency positions are subject to offsetting market risk resulting from foreign currency exchange rate volatility. The counterparties to the Company's foreign exchange contracts are creditworthy multinational commercial banks. Management believes that the risk of counterparty nonperformance is immaterial. At December 31, 1996 and 1995, the Company had contracts maturing the following January to sell $50,942,000 and $56,594,000, respectively, in Norwegian kroner, U.K. pounds sterling and Dutch guilders. Had such respective contracts matured on December 31, 1996 and 1995, the Company's required cash outlay would have been immaterial. Revenue recognition. Revenues are recognized when services and rentals are provided and when products and equipment are shipped. Proceeds from customers for the cost of oilfield rental equipment that is damaged or lost downhole are reflected as revenues. Income (loss) per common and common equivalent share. Income (loss) per common and common equivalent share is computed on the basis of the weighted average number of shares of Common Stock and common stock equivalents, if dilutive, outstanding during the periods. Fully diluted income per share is equal to primary income per share in all periods presented. Concentration of credit risk. The Company grants credit to its customers, which are primarily in the oil and gas industry. Credit risk with respect to trade accounts receivable is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different countries. The Company performs periodic credit evaluations of its customers and generally does not require 26 27 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) collateral. The Company monitors its exposure for credit losses and maintains an allowance for anticipated losses (see Note 10). Impairment of long-lived assets. In 1995, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." SFAS No. 121 requires that long-lived assets and intangibles to be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The statement establishes the procedures for performing the review of recoverability and, if necessary, the measurement of impairment. SFAS No. 121 also requires that long-lived assets and intangibles to be disposed of be reported at the lower of carrying amount or fair value net of selling costs. Stock-based compensation. In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which establishes financial accounting and reporting standards for all stock-based compensation, including stock-based compensation to employees. Under this statement, costs for stock-based compensation to employees may be measured based on fair value at the date of grant as defined by SFAS No. 123, or based on the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"), the method historically applied by the Company. Entities electing to measure compensation cost under APB No. 25 must make pro forma disclosures of net income and earnings per share as if the fair value method had been applied. The Company has elected to continue to measure employee stock-based compensation under APB No. 25 (see Note 5). Reclassifications. Certain reclassifications were made to previously reported amounts in the consolidated financial statements and notes to make them consistent with the current presentation format. (2) ACQUISITIONS, MERGERS AND DIVESTITURES -- Results of operations for business combinations accounted for as purchases are included in the accompanying consolidated financial statements since the date of acquisition. With respect to business combinations accounted for as poolings of interests, the consolidated financial statements have been restated for all periods presented as if the companies had been combined since inception. Nodeco. On May 23, 1996, the Company acquired the business and assets of Nodeco AS, a Norwegian company, and its wholly-owned subsidiary, Aarbakke AS (collectively "Nodeco"), in a transaction accounted for as a purchase. Nodeco designs, manufactures, sells and rents oil and gas well completion products primarily consisting of liner hanger equipment and related services, as well as pump packers. Nodeco's primary markets for these products are the Norwegian and United Kingdom sectors of the North Sea. The Company paid cash of $14,393,000 net of cash acquired, issued 750,000 shares of its Common Stock and assumed all liabilities of Nodeco, totaling $12,109,000. Energy Industries. On December 15, 1995, the Company acquired substantially all of the assets of the natural gas compression business of Energy Industries, Inc. and Zapata Energy Industries, L.P. (collectively, "Energy Industries") in a transaction accounted for as a purchase. Energy Industries was engaged in the business of fabricating, selling, installing, renting and servicing natural gas compressor units used in the oil and gas industry. The Company paid approximately $130,000,000 in cash and assumed certain liabilities totaling approximately $12,485,000. 27 28 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following unaudited pro forma summary results of operations assume that the acquisitions of Nodeco and Energy Industries occurred on January 1 of the indicated period (in thousands except per share amounts):
1996 1995(1) ---------- -------- Revenues.................................................... $1,006,037 $948,010 Net income (loss)........................................... $ 70,591 $(12,401) Income (loss) per common and common equivalent share........ $ 1.35 $ (0.24)
- --------------- (1) Includes unusual charges of $88,182,000, or $1.17 per common share (see Note 8). The unaudited pro forma summary results of operations are not necessarily indicative of results of operations that would have occurred had the transactions taken place on January 1, 1996 or 1995, or of future results of operations of the combined businesses. Enterra. On October 5, 1995, the Company completed a merger with Enterra Corporation ("Enterra"), a worldwide provider of specialized services and products to the oil and gas industry through its oilfield, pipeline and gas compression services businesses. The Company issued approximately 23,668,000 shares of Common Stock in exchange for all the outstanding shares of Enterra common stock. The merger was accounted for as a pooling of interests. In connection with the Enterra merger, the Company recorded acquisition-related costs totaling $59,900,000 (see Note 8). H & H. On September 1, 1994, the Company completed a merger with H & H Oil Tool Co., Inc. ("H & H"), a rental and fishing tool company operating in California and the Rocky Mountain Region. The Company issued approximately 1,323,000 shares of Common Stock in exchange for all the outstanding shares of H & H common stock. The merger was accounted for as a pooling of interests. In connection with the H & H merger, the Company repaid indebtedness of H & H totaling $1,595,000, which included a $1,370,000 note payable to a shareholder of H & H. In addition, the Company recorded acquisition-related costs totaling $2,500,000, primarily representing transaction fees and employee termination and facility closure costs to consolidate the H & H operations into the Company. Total Energy. On August 12, 1994, Enterra acquired all of the outstanding common stock of Total Energy Services Company ("Total Energy") in exchange for shares of Enterra common stock valued, in the aggregate, at $213,570,000 in a transaction accounted for as a purchase. Total Energy was primarily engaged in the businesses of designing, fabricating, selling, installing and renting gas compressor units and of manufacturing and servicing specialized oilfield equipment for use in the oil and gas industry. Enterra also acquired the minority interests in two Total Energy subsidiaries for $23,000,000 in cash, paid transaction costs and employment-related obligations totaling approximately $15,000,000 and assumed Total Energy's long-term debt of $75,000,000. Odfjell Rental. On April 15, 1994, the Company acquired the rental assets and business of various companies comprising the Rental Division of Odfjell Drilling and Consulting Company (collectively, "Odfjell Rental") in a transaction accounted for as a purchase. Odfjell Rental was engaged in the rental of oilfield tools to the oil and gas industry in Norway, the United Kingdom, the Netherlands and Southeast Asia. The Company paid $56,200,000 in cash and assumed certain contractual rights and obligations. Other acquisitions. During 1996, 1995 and 1994, the Company acquired several businesses in addition to those mentioned above in transactions accounted for as purchases. The impact of these acquisitions on reported results of operations, on a pro forma basis, was not material to the Company's consolidated results of operations. Divestitures. During 1995, management of Enterra made strategic decisions to sell certain oilfield products businesses (see Note 8). Enterra sold substantially all of the fixed assets and inventory of one of 28 29 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) these businesses for cash of $9,493,000 in September 1995. The sales of the remaining businesses were completed during 1996 for aggregate cash proceeds of $19,168,000 and a note receivable of $1,011,000. On September 17, 1996, the Company announced that it was exploring the divestiture of certain non-core businesses, including CRC-Evans Pipeline International, Inc., Arrow Completion Systems, Inc. ("Arrow"), the American Aero Cranes division and Total Engineering Services Team, Inc. (see Note 9). The Company expects that proceeds from such divestitures would be used to repay debt and for general corporate purposes. Effective December 6, 1996, the Company sold the business and assets of Arrow for cash of $21,313,000, subject to a working capital adjustment, and the assumption by the purchaser of substantially all operating liabilities of Arrow. (3) DEBT -- Debt consisted of the following (in thousands):
1996 1995 -------- -------- 7 1/4% Notes................................................ $200,000 $ -- Term Loan................................................... 95,950 200,000 Revolving Credit Facility................................... -- 120,000 Foreign bank debt, denominated in foreign currencies........ 11,231 2,071 Other indebtedness.......................................... 8,593 7,195 -------- -------- 315,774 329,266 Less -- Amounts due within one year......................... 24,508 36,976 -------- -------- $291,266 $292,290 ======== ========
On May 28, 1996, the Company completed the sale of $200,000,000 of 7 1/4% Notes Due May 15, 2006 (the "7 1/4% Notes"). Net proceeds of $197,824,000 were used to repay amounts outstanding under the bank credit facilities discussed below. Interest on the 7 1/4% Notes is payable semi-annually on May 15 and November 15 of each year. The Company has bank credit facilities (the "Facilities") consisting of a $200,000,000 term loan (the "Term Loan") and a $200,000,000 revolving credit facility (the "Revolving Credit Facility"). The Term Loan is payable in equal quarterly installments through September 30, 2001. The Revolving Credit Facility matures on September 30, 2000. Amounts outstanding under the Facilities accrue interest at a variable rate, ranging from 0.375% to 0.625% above a specified Eurodollar rate, depending on the Company's ratio of total debt to total capitalization. The applicable interest rate on amounts outstanding at December 31, 1996 was 6.0%. A commitment fee ranging 0.15% to 0.225% per annum, depending on the Company's ratio of total debt to total capitalization, is payable quarterly on the unused portion of the Revolving Credit Facility. The Company is required under the Facilities agreement to maintain certain financial ratios, including a maximum debt-to-capitalization ratio of 40%, and limits the Company's ability to incur indebtedness, make investments and dispose of assets. 29 30 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Maturities of the Company's long-term debt at December 31, 1996 were as follows (in thousands): 1997........................................................ $ 24,508 1998........................................................ 30,704 1999........................................................ 20,930 2000........................................................ 20,764 2001........................................................ 15,757 Thereafter.................................................. 203,111 -------- $315,774 ========
At December 31, 1996, the Company had $200,000,000 available to borrow under the Revolving Credit Facility and $16,307,000 available for borrowing under working capital facilities of certain of the Company's domestic and international subsidiaries. In addition, the Company has various credit facilities available only for stand-by letters of credit and bid and performance bonds, pursuant to which funds are available to the Company to secure performance obligations and certain retrospective premium adjustments under insurance policies. The Company had a total of $18,031,000 of letters of credit and bid and performance bonds outstanding at December 31, 1996. (4) INCOME TAXES -- The components of income (loss) before income taxes and minority interests were as follows (in thousands):
1996 1995 1994 -------- -------- ------- Foreign............................................. $ 52,529 $ 23,853 $35,233 United States....................................... 52,318 (38,807) 23,583 -------- -------- ------- $104,847 $(14,954) $58,816 ======== ======== =======
The income tax provision (benefit) was comprised of the following (in thousands):
1996 1995 1994 ------- -------- ------- Current: Foreign............................................ $18,548 $ 15,219 $13,790 U.S. alternative minimum taxes and state income taxes........................................... 3,942 946 2,519 ------- -------- ------- Total current.............................. 22,490 16,165 16,309 ------- -------- ------- Deferred: Foreign............................................ 478 3,038 847 U.S. Federal....................................... 11,625 (23,819) (198) ------- -------- ------- Total deferred............................. 12,103 (20,781) 649 ------- -------- ------- $34,593 $ (4,616) $16,958 ======= ======== =======
30 31 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The consolidated provision for income taxes differs from the provision computed at the statutory U.S. federal income tax rate of 35% for the following reasons (in thousands):
1996 1995 1994 ------- -------- ------- Tax provision (benefit) at U.S. statutory rate....... $36,696 $ (5,234) $20,399 Foreign income, taxed at more than U.S. statutory rate............................................... 715 7,687 2,448 Intercompany dividends............................... -- 557 1,479 Benefit of U.S. NOL carryforwards and other credits............................................ (9,550) (15,299) (8,869) Nondeductible goodwill............................... 1,601 1,601 692 Nondeductible expenses related to acquisitions....... -- 3,307 -- U.S. alternative minimum taxes and state income taxes.............................................. 3,942 946 517 Other................................................ 1,189 1,819 292 ------- -------- ------- $34,593 $ (4,616) $16,958 ======= ======== =======
On the accompanying consolidated balance sheets, current deferred tax assets and liabilities are netted within each tax jurisdiction. The components of the net deferred tax assets (liabilities) shown on the consolidated balance sheets are as follows (in thousands):
1996 1995 -------- ------- Current deferred tax assets................................. $ 22,450 $20,850 Valuation allowance, current................................ (2,360) (9,855) Non-current deferred tax assets............................. 26,806 11,299 Valuation allowance, non-current............................ (7,864) (6,644) -------- ------- Total deferred tax assets......................... 39,032 15,650 -------- ------- Current deferred tax liabilities............................ (2,867) (117) Non-current deferred tax liabilities........................ (34,728) (5,627) -------- ------- Total deferred tax liabilities.................... (37,595) (5,744) -------- ------- Net deferred tax assets (liabilities)....................... $ 1,437 $ 9,906 ======== =======
The change in the valuation allowance in 1996 and 1995 primarily relates to utilization of U.S. operating loss ("NOL") and tax credit carryforwards and management's assessment that future taxable income will be sufficient to enable the Company to utilize remaining NOL and tax credit carryforwards. The tax effects of significant temporary differences giving rise to deferred tax assets (liabilities) are as follows (in thousands):
1996 1995 -------- -------- NOL and tax credit carryforwards............................ $ 24,990 $ 40,056 Depreciation and amortization............................... (18,939) (39,378) Financial reserves and accruals not yet deductible.......... 19,426 16,804 Other differences between financial and tax bases of assets and liabilities........................................... (13,816) 8,923 Valuation allowances........................................ (10,224) (16,499) -------- -------- $ 1,437 $ 9,906 ======== ========
The Company has U.S. alternative minimum tax credit carryforwards of approximately $3,756,000 which do not expire and can be used to reduce regular tax to the extent it exceeds alternative minimum tax liability in future years. The Company also has U.S. NOL carryforwards available to reduce future U.S. taxable income of $14,027,000 expiring between 1999 and 2009 and general business credit carryforwards available to reduce future U.S. federal income taxes payable of $5,785,000 expiring between 1997 and 2000. 31 32 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (5) STOCK-BASED COMPENSATION PLANS -- Stock Option Plans. The Company has a number of stock option plans pursuant to which officers and other key employees may be granted options to purchase shares of Common Stock. At December 31, 1996, there were 2,078,478 shares available for issuance under the plans, at fair market value. Options generally become exercisable in three annual installments, beginning one year after the date of grant. Unexercised options expire five or ten years after the date of grant. The Company has a Non-Employee Director Stock Option Plan (the "Director Option Plan") pursuant to which each non-employee director receives upon initial election as a director an option to purchase 2,500 shares and, at each annual meeting thereafter, an additional option to purchase 500 shares of Common Stock, in each case at fair market value. At December 31, 1996, there were 48,500 shares available for issuance under the Director Option Plan. Options become exercisable six months after the date of grant, and unexercised options expire ten years after the date of grant. Enterra had a similar plan, pursuant to which directors of Enterra received immediately exercisable options to purchase shares of Enterra common stock, at fair market value. All outstanding options under the Enterra director plan were exercised prior to the Enterra merger. The following table summarizes activity related to stock option plans of the Company:
NUMBER OF SHARES -------------------------- NON-EMPLOYEE WEIGHTED AVERAGE EMPLOYEES DIRECTORS EXERCISE PRICE --------- ------------- ---------------- Outstanding, December 31, 1993............ 966,943 38,025 $14.75 Granted................................... 156,201 29,575 19.80 Exercised................................. (84,188) (8,450) 9.50 Terminated................................ (60,021) -- 12.56 --------- ------- Outstanding, December 31, 1994............ 978,935 59,150 16.06 Granted................................... 953,985 57,575 20.89 Exercised................................. (220,284) (88,725) 16.02 Terminated................................ (424,404) -- 17.03 --------- ------- Outstanding, December 31, 1995............ 1,288,232 28,000 18.72 Granted................................... 325,650 3,000 31.59 Exercised................................. (238,665) (11,500) 19.09 Terminated................................ (376,977) -- 21.93 --------- ------- Outstanding, December 31, 1996............ 998,240 19,500 $21.79 ========= ======= Exercisable, December 31, 1994............ 536,433 59,150 $13.13 Exercisable, December 31, 1995............ 432,494 20,500 15.49 Exercisable, December 31, 1996............ 398,569 19,500 15.92
The following table summarizes information about stock options outstanding at December 31, 1996:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ---------------------------------- ---------------------- AVERAGE WEIGHTED WEIGHTED RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE ---------------- ----------- --------- -------- ----------- -------- $ 6.75 to $15.75 217,794 5.0 $12.13 213,783 $12.14 17.50 to 19.75 244,867 7.4 19.04 118,644 19.22 21.30 to 24.70 263,129 3.0 21.56 82,642 22.22 31.56 to 35.50 291,950 9.1 31.59 3,000 -- --------- ------- $ 6.75 to $35.50 1,017,740 6.3 $21.79 418,069 $15.92 ========= =======
32 33 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The weighted average fair values of options granted during 1996 and 1995 were $14.46 per share and $8.53 per share, respectively. The fair values were estimated using the Black-Scholes option-pricing model with the following weighted average assumptions for 1996 and 1995, respectively: expected volatility of 50% and 52% (38% for options issued by Enterra prior to the merger), risk free interest rates of 5.13% and 6.85% (7% for options issued by Enterra prior to the merger), expected lives of 4 years and zero dividend yield. If the fair value based method of accounting under SFAS No. 123 had been applied, the Company's pro forma net income (loss) and earnings (loss) per share would have been $68,412,000 and $1.31 in 1996, and $(11,926,000) and $(0.23) in 1995. As the disclosure requirements of SFAS No. 123 are not applicable to options granted prior to 1995, the pro forma effects for 1996 and 1995 are not indicative of the pro forma effects in future years. In addition to the options in the above table, the Company granted options to purchase 84,500, 45,337 and 34,200 shares of Common Stock in 1995, 1994 and 1991, respectively, to former directors and former employees of acquired companies and to a former officer of the Company. These options were granted pursuant to separate agreements and are not covered by an option plan. Exercises of such options totaled 16,483, 40,334 and 5,600 shares in 1996, 1995 and 1994, respectively, and 97,200 of such options were outstanding and exercisable at December 31, 1996 at a weighted average exercise price of $23.85 per share. Stock Appreciation Rights Plan. The Company has a Stock Appreciation Rights Plan (the "SAR Plan") pursuant to which certain officers and other key employees were granted stock appreciation units ("SAR's"). The SAR Plan was amended in 1992 to provide that no additional grants would be made. SAR's were awarded in connection with stock options granted under one of the Company's stock option plans and can be exercised only if the related stock option is exercised. Compensation expense is recorded based on the increase in the market price of the Company's Common Stock since the date of grant. At December 31, 1996, there were 52,542 SAR's outstanding, all of which were vested, at an average price of $10.45 per SAR. During 1996, 1995 and 1994, the Company recognized compensation expense of $225,000, $121,000 and $350,000, respectively, in connection with SAR's. Stock Bonus Plan. The Company has a stock bonus plan (the "Bonus Plan") pursuant to which officers and certain other key employees of the Company may be granted shares of Common Stock. The market value of shares granted under the Bonus Plan is recorded as compensation expense on the date of grant. With respect to the Bonus Plan, the Company granted 21,391 and 9,875 shares in 1996 and 1994, respectively, and recognized compensation expense of $675,000 and $195,000 during 1996 and 1994, respectively. The Company granted no shares under the Bonus Plan in 1995. There were 3,788 shares available for future grants under the Bonus Plan at December 31, 1996. 33 34 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Restricted Stock Plan. The Company has a restricted stock plan for certain officers of the Company (the "Restricted Plan"), pursuant to which shares of Common Stock may be granted. Shares granted under the Restricted Plan are subject to certain restrictions on ownership and transferability when granted. Restrictions lapse in part based on continued employment and in part based on Company performance. The compensation related to the restricted stock grants is deferred and amortized to expense on a straight-line basis over the period of time the restrictions are in place, and the unamortized portion is classified as a reduction of paid-in capital in the accompanying consolidated balance sheets. The following table provides a summary of activity related to the Restricted Plan:
NUMBER OF SHARES --------- Outstanding, December 31, 1993.............................. 83,138 Granted (market price: $19.75 per share).................... 25,450 Forfeited................................................... (2,438) Restrictions terminated..................................... (52,318) ---------- Outstanding, December 31, 1994.............................. 53,832 Granted (market price: $18.50 per share).................... 29,500 Restrictions terminated..................................... (47,193) ---------- Outstanding, December 31, 1995.............................. 36,139 Granted (market price: $31.56 per share).................... 31,000 Restrictions terminated..................................... (37,735) ---------- Outstanding, December 31, 1996.............................. 29,404 ========== Shares available for future grants at December 31, 1996..... 129,437 ========== Compensation expense: 1996........................................................ $ 418,000 1995........................................................ 392,000 1994........................................................ 512,000 Deferred compensation at December 31: 1996........................................................ $1,445,000 1995........................................................ 884,000
Stock Purchase Plan. The Company has an Employee Stock Purchase Plan (the "ESPP"), pursuant to which eligible employees can purchase shares of Common Stock through payroll deductions. The Company matches a specified percentage of the employee contributions made to the ESPP. Company matching contributions to the ESPP totaled $88,000, $48,000 and $45,000 during 1996, 1995 and 1994, respectively. There were 63,323 shares available for future purchases under the ESPP at December 31, 1996. (6) RETIREMENT AND EMPLOYEE BENEFIT PLANS -- The Company has defined benefit and defined contribution pension plans covering substantially all U.S. employees and certain international employees. Plan benefits are generally based on years of service and average compensation levels. The Company's funding policy is to contribute, at a minimum, the annual amount required under applicable governmental regulations. With respect to certain international plans, the Company has purchased irrevocable annuity contracts to settle certain benefit obligations. Plan assets are invested primarily in equity and fixed income mutual funds. 34 35 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Pension expense related to the Company's defined contribution pension plans totaled $3,200,000, $4,489,000 and $3,691,000 in 1996, 1995 and 1994, respectively. Pension expense related to the Company's defined benefit pension plans included the following components (in thousands):
1996 1995 1994 ------ ----- ------ Service cost -- benefits earned during the period......... $1,248 $ 692 $1,071 Interest cost on projected benefit obligation............. 427 365 310 Actual return on plan assets.............................. (466) (354) (47) Net amortization and deferral............................. 213 115 (121) ------ ----- ------ $1,422 $ 818 $1,213 ====== ===== ======
The following table sets forth the funded status of the Company's defined benefit pension plans and the assumptions used in computing such information (in thousands, except percentages):
U.S. PLANS NON-U.S. PLANS ---------------- -------------------- 1996 1995 1996 1995 ------ ------ -------- -------- Actuarial present value of benefit obligations: Vested benefit obligation.................... $1,257 $ 941 $ 2,933 $ 2,591 ====== ====== ======== ======== Accumulated benefit obligation............... $1,902 $1,441 $ 3,388 $ 2,939 ====== ====== ======== ======== Projected benefit obligation................. $2,026 $2,042 $ 4,192 $ 3,735 Plan assets at fair value.................... 1,383 1,130 2,194 1,729 ------ ------ -------- -------- Projected benefit obligation in excess of plan assets................................ (643) (912) (1,998) (2,006) Unrecognized prior service cost.............. (637) 10 158 183 Unrecognized net (gain) loss................. 592 481 (775) (732) Unrecognized transition obligation........... -- -- 125 160 ------ ------ -------- -------- Unfunded accrued pension cost................ (688) (421) (2,490) (2,395) Adjustment for minimum liability............. (9) (21) -- -- ------ ------ -------- -------- Pension liability............................ $ (697) $ (442) $ (2,490) $ (2,395) ====== ====== ======== ======== Assumed discount rates....................... 7.25% 7.25% 6.5-8.0% 6.8-8.0% Assumed rates of increase in compensation levels..................................... 4.0% 4.0% 3.7-5.0% 4.0-5.0% Assumed expected long-term rate of return on plan assets................................ 8.0% 8.0% 8.0% 8.0%
(7) COMMITMENTS AND CONTINGENCIES -- Aggregate minimum rental commitments under noncancelable operating leases with lease terms in excess of one year as of December 31, 1996 were as follows (in thousands): 1997........................................................ $10,359 1998........................................................ 8,010 1999........................................................ 6,813 2000........................................................ 5,705 2001........................................................ 5,033 Thereafter.................................................. 31,833 ------- $67,753 =======
35 36 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company incurred total rental expense under operating leases of $21,197,000, $18,499,000 and $15,329,000 in 1996, 1995 and 1994, respectively. The Company is involved in certain claims and lawsuits arising in the normal course of business. In the opinion of management, the likelihood that uninsured losses, if any, resulting from the ultimate resolution of these matters will have a material adverse effect on the financial position, results of operations or liquidity of the Company is remote. (8) ACQUISITION-RELATED COSTS AND OTHER UNUSUAL CHARGES -- During the second quarter of 1995, management of Enterra made certain strategic decisions which resulted in $28,282,000 of unusual charges. Such charges included a $10,041,000 writedown to fair value, based on management's estimation of net sales price, related to three businesses to be sold. The remaining second quarter unusual charges of $18,241,000 consisted primarily of asset writedowns related to certain excess facilities, equipment and inventories, as well as estimated costs in connection with the closure of certain pipeline businesses and the consolidation of certain oilfield service administrative and operating facilities. This restructuring resulted in reductions of approximately 120 employees. During the fourth quarter of 1995, the Company recorded expenses of $59,900,000 related to the merger with Enterra and the financial impact of management decisions related to the future operations of the combined company. The acquisition-related costs primarily consisted of transaction costs, severance and termination agreements with former officers and employees, facility closure costs primarily to consolidate the oilfield service operations and administrative functions (reducing approximately 600 employees), and the reduction in recorded value of certain assets that had diminished future value in the operations of the combined company. A summary of the 1995 acquisition-related costs and other unusual charges follows (in thousands): Enterra merger transaction-related costs.................... $18,800 Severance and termination costs............................. 12,488 Facility closure and consolidation costs.................... 20,943 Writedowns of assets to be sold............................. 12,281 Other asset writedowns...................................... 21,972 Other....................................................... 1,698 ------- $88,182 =======
The Company recorded acquisition-related costs of $2,500,000 in 1994 related to the H & H merger, consisting primarily of transaction costs, employee terminations and facility closure costs to consolidate the operations of H & H into the Company. (9) SEGMENT INFORMATION -- The Company is a diversified international energy service and manufacturing company that provides a variety of services and equipment to the exploration, production and transmission sectors of the oil and gas industry. The Company operates in three industry segments -- oilfield services, oilfield products and gas compression. During 1995 and 1996, management of the Company made strategic decisions to dispose of certain non-core businesses, which are presented separately. Industry segment disclosures for 1995 and 1994 have been restated to conform with this presentation. Revenues by industry segment and geographic area include both revenues from unaffiliated customers and intersegment revenues from related companies. The price at which intercompany sales are made is 36 37 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) generally based on the selling price to unaffiliated customers less a discount or the direct product cost plus a mark-up. Indirect expenses have been allocated to industry segments in proportion to outside revenues. Export sales from the United States to unaffiliated customers in other geographic areas were as follows (in thousands):
1996 1995 1994 ------- ------- ------- Europe/Commonwealth of Independent States............. $27,523 $10,904 $16,443 Canada................................................ 11,334 14,729 10,557 Africa................................................ 26,079 17,792 9,605 Middle East........................................... 7,494 3,843 4,209 Asia-Pacific.......................................... 12,364 11,242 17,047 Latin America......................................... 7,247 5,552 4,969 Other................................................. 2,714 1,403 381 ------- ------- ------- $94,755 $65,465 $63,211 ======= ======= =======
Information with respect to industry and geographic segments follows (in thousands):
CORPORATE OILFIELD OILFIELD GAS OTHER AND SERVICES PRODUCTS COMPRESSION BUSINESSES ELIMINATIONS CONSOLIDATED -------- -------- ----------- ---------- ------------ ------------ 1996: Outside revenues................... $520,195 $149,713 $154,503 $170,057 $ -- $ 994,468 Intersegment revenues.............. -- 31,020 -- -- (31,020) -- Operating income (loss)............ 93,644 23,388 7,833 8,849 (7,958) 125,756 Identifiable assets................ 646,915 187,002 414,969 97,646 51,191 1,397,723 Depreciation and amortization ..... 70,552 6,264 23,554 4,787 700 105,857 Capital expenditures............... 99,570 10,569 30,392 8,125 -- 148,656 1995: Outside revenues................... $470,085 $115,399 $ 94,386 $179,037 $ -- $ 858,907 Intersegment revenues.............. -- 20,537 -- 49 (20,586) -- Acquisition-related costs and other unusual charges.................. 31,715 15,745 -- 11,711 29,011 88,182 Operating income (loss)............ 41,849 (13,253) 7,788 2,010 (38,212) 182 Identifiable assets................ 556,125 120,777 396,465 121,177 64,316 1,258,860 Depreciation and amortization ..... 65,217 5,519 14,421 9,070 1,730 95,957 Capital expenditures............... 83,849 2,731 16,246 7,657 142 110,625 1994: Outside revenues................... $420,981 $ 86,580 $ 46,145 $123,043 $ -- $ 676,749 Intersegment revenues.............. -- 11,748 -- -- (11,748) -- Acquisition-related costs.......... 2,500 -- -- -- -- 2,500 Operating income (loss)............ 49,484 16,918 4,047 694 (5,439) 65,704 Identifiable assets................ 581,628 127,594 267,988 132,177 44,583 1,153,970 Depreciation and amortization ..... 54,521 3,120 4,969 6,584 1,843 71,037 Capital expenditures............... 94,520 4,132 10,857 4,347 162 114,018
37 38 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CORPORATE UNITED OTHER AND STATES CANADA EUROPE AFRICA INTERNATIONAL ELIMINATIONS CONSOLIDATED -------- -------- -------- ------- ------------- ------------ ------------ 1996: Outside revenues........... $579,024 $ 78,497 $145,126 $72,457 $119,364 $ -- $ 994,468 Intersegment revenues...... 27,966 566 9,848 5,452 1,860 (45,692) -- Operating income (loss).... 72,042 12,557 19,470 15,028 14,617 (7,958) 125,756 Identifiable assets........ 828,930 69,391 201,137 67,856 179,218 51,191 1,397,723 Capital expenditures....... 85,729 12,105 15,955 9,437 25,430 -- 148,656 1995: Outside revenues........... $471,672 $106,491 $110,065 $57,450 $113,229 $ -- $ 858,907 Intersegment revenues...... 10,091 167 6,049 -- 1,638 (17,945) -- Acquisition-related costs and other unusual charges.................. 43,276 2,850 4,302 624 8,119 29,011 88,182 Operating income (loss).... 5,745 11,382 3,088 13,912 4,267 (38,212) 182 Identifiable assets........ 790,625 73,368 141,673 40,299 148,579 64,316 1,258,860 Capital expenditures....... 59,474 9,953 9,605 5,655 25,796 142 110,625 1994: Outside revenues........... $383,076 $ 75,809 $ 84,830 $41,574 $ 91,460 $ -- $ 676,749 Intersegment revenues...... 17,499 287 5,104 -- 1,372 (24,262) -- Acquisition-related costs.................... 2,500 -- -- -- -- -- 2,500 Operating income (loss).... 28,924 15,502 3,023 11,204 12,490 (5,439) 65,704 Identifiable assets........ 706,175 89,462 125,365 38,708 149,677 44,583 1,153,970 Capital expenditures....... 68,903 8,989 12,309 1,581 22,099 137 114,018
(10) VALUATION ALLOWANCES -- Activity in the Company's allowance for doubtful accounts, deducted from receivables in the consolidated balance sheets, was as follows (in thousands):
1996 1995 1994 ------- ------- ------- Balance at beginning of year.......................... $15,942 $11,240 $11,747 Additions charged to costs and expenses............... 4,122 6,499 2,702 Deductions for uncollectible receivables written off................................................. (4,842) (1,878) (3,437) Translation and other, net............................ 1,019 81 228 ------- ------- ------- $16,241 $15,942 $11,240 ======= ======= =======
Activity in the Company's allowance for obsolete or slow moving inventories, deducted from inventories in the consolidated balance sheets, was as follows (in thousands):
1996 1995 1994 ------- ------- ------- Balance at beginning of year.......................... $23,760 $16,470 $14,634 Additions charged to costs and expenses............... 897 10,683 2,754 Deductions for inventories written off................ (3,632) (3,520) (1,175) Translation and other, net............................ 236 127 257 ------- ------- ------- $21,261 $23,760 $16,470 ======= ======= =======
38 39 WEATHERFORD ENTERRA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (11) UNAUDITED QUARTERLY FINANCIAL DATA (IN THOUSANDS EXCEPT PER SHARE AMOUNTS) --
FIRST SECOND THIRD FOURTH QUARTER QUARTER(1) QUARTER QUARTER(2) YEAR(3) -------- ---------- -------- ---------- -------- 1996: Revenues.................................. $218,841 $233,782 $259,070 $282,775 $994,468 Gross profit.............................. 60,319 62,727 76,545 80,531 280,122 Operating income.......................... 23,784 26,936 35,864 39,172 125,756 Income before income taxes and minority interests.............................. 19,281 21,892 30,153 33,521 104,847 Net income................................ 13,477 14,898 19,828 21,870 70,073 Net income per share...................... $ 0.26 $ 0.29 $ 0.38 $ 0.42 $ 1.35 1995: Revenues.................................. $219,289 $211,079 $220,375 $208,164 $858,907 Gross profit.............................. 61,898 55,239 62,456 53,968 233,561 Acquisition-related costs and other unusual charges........................ -- 28,282 -- 59,900 88,182 Operating income (loss)................... 24,324 (9,163) 25,227 (40,206) 182 Income (loss) before income taxes and minority interests..................... 20,580 (12,902) 21,352 (43,984) (14,954) Net income (loss)......................... 14,439 (3,145) 13,148 (35,000) (10,558) Net income (loss) per share............... $ 0.29 $ (0.06) $ 0.26 $ (0.68) $ (0.21)
- --------------- (1) Includes unusual charges in 1995 of $28,282,000, or $0.24 per common share (see Note 8). (2) Includes acquisition-related costs in 1995 of $59,900,000, or $0.93 per common share (see Note 8). (3) Includes acquisition-related costs and other unusual charges in 1995 of $88,182,000, or $1.17 per common share (see Note 8). Due to changes in the weighted average common shares outstanding, the sum of the quarterly per share amounts for 1995 does not equal net loss per share for the year. 39 40 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE MATTERS. None. ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. For certain information concerning directors of the Company, reference is made to the information included under the caption "Election of Directors" included in the definitive Proxy Statement, which relates to the Annual Meeting of Stockholders of the Company to be held on May 15, 1997 (the "Proxy Statement"), which information is incorporated herein by such reference. For certain information concerning executive officers of the Company, see the caption "Executive Officers" in Item 1 elsewhere in this Report. ITEM 11. EXECUTIVE COMPENSATION. For information concerning this Item, reference is made to the caption "Executive Compensation" in the Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. For information concerning this Item, reference is made to the caption "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. For information concerning this Item, reference is made to the caption "Executive Compensation" in the Proxy Statement. P A R T I V ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a)1. Consolidated Financial Statements of Weatherford Enterra, Inc. and Subsidiaries: Report of Arthur Andersen LLP, Independent Public Accountants, dated February 12, 1997. Consolidated Balance Sheets -- December 31, 1996 and 1995. Consolidated Statements of Income for Each of the Three Years in the Period Ended December 31, 1996. Consolidated Statements of Stockholders' Equity for Each of the Three Years in the Period Ended December 31, 1996. Consolidated Statements of Cash Flows for Each of the Three Years in the Period Ended December 31, 1996. Notes to Consolidated Financial Statements. 2. Exhibits:
EXHIBIT NUMBER DESCRIPTION ------- ----------- 2.1 -- Agreement and Plan of Merger dated as of June 23, 1995, as amended by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28, 1995, between Weatherford International Incorporated and Enterra Corporation (incorporated by reference to Exhibit 2.1 to the Company's Registration Statement on Form S-4 (Registration No. 33-62195)).
40 41
EXHIBIT NUMBER DESCRIPTION ------- ----------- 2.2 -- Amendment No. 2 to Agreement and Plan of Merger dated as of October 5, 1995, between Weatherford International Incorporated and Enterra Corporation (incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K dated October 5, 1995 (File No. 1-7867)). 2.3 -- Agreement dated as of September 20, 1995, among Zapata Corporation, Energy Industries, Inc., Zapata Energy Industries, L.P., Enterra Corporation and Enterra Compression Company (incorporated by reference to Exhibit 2 to Enterra Corporation's Current Report on Form 8-K dated October 2, 1995 (File No. 1-8153)). 3.1 -- Corrected Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 1-7867)). 3.2 -- Amended and Restated Bylaws of the Company. 4.1 -- Credit Agreement dated as of October 5, 1995 among Weatherford Enterra, Inc., Weatherford Enterra U.S., Inc., Weatherford/Lamb, Inc., Bank of America Illinois, as Documentation Agent, Texas Commerce Bank National Association, as Administrative Agent, Credit Lyonnais New York Branch, ABN Amro Bank, N.V., Bank of Montreal, First Interstate Bank of Texas, N.A., Arab Banking Corporation (B.S.C.) and the financial institutions listed on the signature pages thereto (incorporated by reference to Exhibit 4.1 to the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1995 (File No. 1-7867)). 4.2 -- First Amendment to Credit Agreement dated as of December 29, 1995 among Weatherford Enterra, Inc., Weatherford Enterra U.S., Inc., Weatherford/Lamb, Inc., Weatherford Enterra U.S., Limited Partnership, Bank of America Illinois, as Documentation Agent, Texas Commerce Bank National Association, as Administrative Agent, Credit Lyonnais New York Branch, ABN Amro Bank, N.V., Bank of Montreal, First Interstate Bank of Texas, N.A., Arab Banking Corporation (B.S.C.) and the financial institutions listed on the signature pages thereto (incorporated by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 1-7867)). 4.3 -- Agreement dated as of June 23, 1995, as amended as of August 28, 1995 (the "Stockholders Agreement"), among Weatherford International Incorporated and American Gas & Oil Investors, Limited Partnership, AmGO II, Limited Partnership, AmGO III, Limited Partnership, First Reserve Secured Energy Assets Fund, Limited Partnership, First Reserve Fund V, Limited Partnership, First Reserve Fund V-2, Limited Partnership, and First Reserve Fund VI, Limited Partnership (collectively, the "First Reserve Funds"), and First Reserve Corporation (incorporated by reference to Exhibit 4.6 to the Company's Registration Statement on Form S-4 (Registration No. 33-62195)). 4.4 -- Letters dated January 29, 1997, adding William E. Macaulay and John A. Hill, respectively, as parties to the Stockholders Agreement. 4.5 -- Indenture dated May 17, 1996, between the Company and Bank of Montreal Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated May 28, 1996 (File No. 1-7867)). 4.6 -- Form of the Company's 7 1/4% Notes Due May 15, 2006 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated May 28, 1996 (File No. 1-7867)). 4.7 -- Form of the Company's Common Stock certificate.
41 42 10.1* -- Amended and Restated Change of Control Agreements with James R. Burke, M.E. Eagles, Jon Nicholson, Norman W. Nolen and H. Suzanne Thomas. 10.2* -- Indemnification Agreements with Thomas N. Amonett, William E. Greehey, Robert K. Moses, Jr. and H. Suzanne Thomas (incorporated by reference to Exhibit 10.10 to the Company's Form 10-K Annual Report for the year ended December 31, 1987 (File No. 1-7867)); Philip Burguieres and Norman W. Nolen (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q Quarterly Report for the quarter ended June 30, 1991 (File No. 1-7867)); James R. Burke and John W. Johnson (incorporated by reference to Exhibit 10.9 to the Company's Form 10-K Annual Report for the year ended December 31, 1991 (File No. 1-7867)); M.E. Eagles (incorporated by reference to Exhibit 10.8 to the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No. 1-7867)); John A. Hill, William E. Macaulay, R. Rudolph Reinfrank and Roger M. Widmann (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1995 (File No. 1-7867)); and Thomas J. Edelman and Jon Nicholson. 10.3* -- 1987 Stock Option Plan, as amended and restated. 10.4* -- 1991 Stock Option Plan, as amended and restated. 10.5* -- Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.5 to the Company's Form 10-K Annual Report for the year ended December 31, 1990 (File No. 1-7867)) and First Amendment to Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.3 to the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)). 10.6* -- Restricted Stock Incentive Plan, as amended and restated. 10.7* -- Executive Incentive Stock Bonus Plan, as amended. 10.8* -- Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.10 to the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No. 1-7867)); and First Amendment, Second Amendment and Third Amendment to Supplemental Executive Retirement Plan. 10.9* -- Supplemental Savings Plan (incorporated by reference to Exhibit 10.11 to the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)); and First Amendment and Second Amendment to Supplemental Savings Plan. 10.10* -- Non-Employee Director Retirement Plan (incorporated by reference to Exhibit 10.12 to the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No. 1-7867)). 10.11* -- Defer Compensation Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.12 to the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)). 10.12* -- Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.13 to the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)). 10.13* -- Consulting Agreement dated October 5, 1995 between Weatherford Enterra, Inc. and D. Dale Wood (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1995 (File No. 1-7867)).
42 43
EXHIBIT NUMBER DESCRIPTION ------- ----------- 10.14* -- Employment Agreement dated as of October 17, 1996 between Weatherford Enterra, Inc. and Philip Burguieres. 10.15* -- Consulting Agreement dated as of July 26, 1996 between Thomas N. Amonett and Weatherford Enterra, Inc.; and First Amendment to Consulting Agreement dated as of January 1, 1997. 21 -- Subsidiaries of the Company 23 -- Consent of Independent Public Accountants 27 -- Article 5 Financial Data Schedule
- --------------- * Management contract or compensatory plan or arrangement The Company will furnish to the Commission upon request a copy of each other instrument with respect to the long-term debt of the Company and its subsidiaries that defines the rights of holders of such debt or includes provisions that provide for cross default under such instruments. The Company will furnish a copy of any exhibit described above to the beneficial holder of its securities upon receipt of a written request therefor, provided that such request sets forth a good faith representation that as of March 31, 1997, the record date for the Company's 1997 Annual Meeting of Stockholders, such beneficial holder is entitled to vote at such meeting, and provided further that such holder pays to the Company a fee compensating the Company for its reasonable expenses in furnishing such exhibits. (b) Reports on Form 8-K: None 43 44 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 25, 1997. WEATHERFORD ENTERRA, INC. By: /s/ THOMAS N. AMONETT ---------------------------------- Thomas N. Amonett Acting President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ THOMAS N. AMONETT Acting President and Chief March 25, 1997 - ----------------------------------------------------- Executive Officer (Principal (Thomas N. Amonett) Executive Officer) /s/ NORMAN W. NOLEN Senior Vice President, Chief March 25, 1997 - ----------------------------------------------------- Financial Officer and (Norman W. Nolen) Treasurer (Principal Financial and Accounting Officer) /s/ PHILIP BURGUIERES Chairman of the Board and March 25, 1997 - ----------------------------------------------------- Director (Philip Burguieres) /s/ THOMAS J. EDELMAN Director March 25, 1997 - ----------------------------------------------------- (Thomas J. Edelman) /s/ WILLIAM E. GREEHEY Director March 25, 1997 - ----------------------------------------------------- (William E. Greehey) /s/ JOHN A. HILL Director March 25, 1997 - ----------------------------------------------------- (John A. Hill) /s/ JOHN W. JOHNSON Director March 25, 1997 - ----------------------------------------------------- (John W. Johnson) /s/ WILLIAM E. MACAULAY Director March 25, 1997 - ----------------------------------------------------- (William E. Macaulay) /s/ ROBERT K. MOSES, JR. Director March 25, 1997 - ----------------------------------------------------- (Robert K. Moses, Jr.) /s/ R. RUDOLPH REINFRANK Director March 25, 1997 - ----------------------------------------------------- (R. Rudolph Reinfrank) /s/ ROGER M. WIDMANN Director March 25, 1997 - ----------------------------------------------------- (Roger M. Widmann)
44 45 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION ------- ----------- 2.1 -- Agreement and Plan of Merger dated as of June 23, 1995, as amended by Amendment No. 1 to Agreement and Plan of Merger dated as of August 28, 1995, between Weatherford International Incorporated and Enterra Corporation (incorporated by reference to Exhibit 2.1 to the Company's Registration Statement on Form S-4 (Registration No. 33-62195)). 2.2 -- Amendment No. 2 to Agreement and Plan of Merger dated as of October 5, 1995, between Weatherford International Incorporated and Enterra Corporation (incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K dated October 5, 1995 (File No. 1-7867)). 2.3 -- Agreement dated as of September 20, 1995, among Zapata Corporation, Energy Industries, Inc., Zapata Energy Industries, L.P., Enterra Corporation and Enterra Compression Company (incorporated by reference to Exhibit 2 to Enterra Corporation's Current Report on Form 8-K dated October 2, 1995 (File No. 1-8153)). 3.1 -- Corrected Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 1-7867)). 3.2 -- Amended and Restated Bylaws of the Company. 4.1 -- Credit Agreement dated as of October 5, 1995 among Weatherford Enterra, Inc., Weatherford Enterra U.S., Inc., Weatherford/Lamb, Inc., Bank of America Illinois, as Documentation Agent, Texas Commerce Bank National Association, as Administrative Agent, Credit Lyonnais New York Branch, ABN Amro Bank, N.V., Bank of Montreal, First Interstate Bank of Texas, N.A., Arab Banking Corporation (B.S.C.) and the financial institutions listed on the signature pages thereto (incorporated by reference to Exhibit 4.1 to the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1995 (File No. 1-7867)). 4.2 -- First Amendment to Credit Agreement dated as of December 29, 1995 among Weatherford Enterra, Inc., Weatherford Enterra U.S., Inc., Weatherford/Lamb, Inc., Weatherford Enterra U.S., Limited Partnership, Bank of America Illinois, as Documentation Agent, Texas Commerce Bank National Association, as Administrative Agent, Credit Lyonnais New York Branch, ABN Amro Bank, N.V., Bank of Montreal, First Interstate Bank of Texas, N.A., Arab Banking Corporation (B.S.C.) and the financial institutions listed on the signature pages thereto (incorporated by reference to Exhibit 4.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1995 (File No. 1-7867)). 4.3 -- Agreement dated as of June 23, 1995, as amended as of August 28, 1995 (the "Stockholders Agreement"), among Weatherford International Incorporated and American Gas & Oil Investors, Limited Partnership, AmGO II, Limited Partnership, AmGO III, Limited Partnership, First Reserve Secured Energy Assets Fund, Limited Partnership, First Reserve Fund V, Limited Partnership, First Reserve Fund V-2, Limited Partnership, and First Reserve Fund VI, Limited Partnership (collectively, the "First Reserve Funds"), and First Reserve Corporation (incorporated by reference to Exhibit 4.6 to the Company's Registration Statement on Form S-4 (Registration No. 33-62195)). 4.4 -- Letters dated January 29, 1997, adding William E. Macaulay and John A. Hill, respectively, as parties to the Stockholders Agreement.
46 4.5 -- Indenture dated May 17, 1996, between the Company and Bank of Montreal Trust Company, as Trustee (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated May 28, 1996 (File No. 1-7867)). 4.6 -- Form of the Company's 7 1/4% Notes Due May 15, 2006 (incorporated by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K dated May 28, 1996 (File No. 1-7867)). 4.7 -- Form of the Company's Common Stock certificate. 10.1* -- Amended and Restated Change of Control Agreements with James R. Burke, M.E. Eagles, Jon Nicholson, Norman W. Nolen and H. Suzanne Thomas. 10.2* -- Indemnification Agreements with Thomas N. Amonett, William E. Greehey, Robert K. Moses, Jr. and H. Suzanne Thomas (incorporated by reference to Exhibit 10.10 to the Company's Form 10-K Annual Report for the year ended December 31, 1987 (File No. 1-7867)); Philip Burguieres and Norman W. Nolen (incorporated by reference to Exhibit 10.4 to the Company's Form 10-Q Quarterly Report for the quarter ended June 30, 1991 (File No. 1-7867)); James R. Burke and John W. Johnson (incorporated by reference to Exhibit 10.9 to the Company's Form 10-K Annual Report for the year ended December 31, 1991 (File No. 1-7867)); M.E. Eagles (incorporated by reference to Exhibit 10.8 to the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No. 1-7867)); John A. Hill, William E. Macaulay, R. Rudolph Reinfrank and Roger M. Widmann (incorporated by reference to Exhibit 10.2 to the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1995 (File No. 1-7867)); and Thomas J. Edelman and Jon Nicholson. 10.3* -- 1987 Stock Option Plan, as amended and restated. 10.4* -- 1991 Stock Option Plan, as amended and restated. 10.5* -- Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.5 to the Company's Form 10-K Annual Report for the year ended December 31, 1990 (File No. 1-7867)) and First Amendment to Stock Appreciation Rights Plan (incorporated by reference to Exhibit 10.3 to the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)). 10.6* -- Restricted Stock Incentive Plan, as amended and restated. 10.7* -- Executive Incentive Stock Bonus Plan, as amended. 10.8* -- Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.10 to the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No. 1-7867)); and First Amendment, Second Amendment and Third Amendment to Supplemental Executive Retirement Plan. 10.9* -- Supplemental Savings Plan (incorporated by reference to Exhibit 10.11 to the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)); and First Amendment and Second Amendment to Supplemental Savings Plan. 10.10* -- Non-Employee Director Retirement Plan (incorporated by reference to Exhibit 10.12 to the Company's Form 10-K Annual Report for the year ended December 31, 1992 (File No. 1-7867)). 10.11* -- Defer Compensation Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.12 to the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)).
47 10.12* -- Non-Employee Director Stock Option Plan (incorporated by reference to Exhibit 10.13 to the Company's Form 10-K Annual Report for the year ended December 31, 1994 (File No. 1-7867)). 10.13* -- Consulting Agreement dated October 5, 1995 between Weatherford Enterra, Inc. and D. Dale Wood (incorporated by reference to Exhibit 10.3 to the Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1995 (File No. 1-7867)). 10.14* -- Employment Agreement dated as of October 17, 1996 between Weatherford Enterra, Inc. and Philip Burguieres. 10.15* -- Consulting Agreement dated as of July 26, 1996 between Thomas N. Amonett and Weatherford Enterra, Inc.; and First Amendment to Consulting Agreement dated as of January 1, 1997. 21 -- Subsidiaries of the Company 23 -- Consent of Independent Public Accountants 27 -- Article 5 Financial Data Schedule
- --------------- * Management contract or compensatory plan or arrangement EX-3.2 2 AMENDED & RESTATED BYLAWS OF THE COMPANY 1 EXHIBIT 3.2 BY-LAWS OF WEATHERFORD ENTERRA, INC. (as amended through December 12, 1996) ARTICLE I OFFICES SECTION 1.1. Registered Office. The registered office of the corporation in the State of Delaware shall be in the City of Wilmington, County of New Castle, and the name of its registered agent shall be CSC Networks/Prentice Hall Legal & Financial Services. SECTION 1.2. Other Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 2.1. Place of Meeting. All meetings of stockholders for the election of directors shall be held at such place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. SECTION 2.2. Annual Meeting. The annual meeting of stockholders shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. SECTION 2.3. Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present. SECTION 2.4. Special Meeting. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation of the corporation, may be called only by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors. The Board of Directors shall fix the time and any place, either within or without the State of Delaware, as the place for holding such meeting. - 1 - 2 SECTION 2.5. Notice of Meeting. Written notice of the annual and each special meeting of stockholders, stating the time, place and purpose or purposes thereof, shall be given to each stockholder entitled to vote thereat not less than (i) 10 nor more than 50 days before any annual meeting; and (ii) 30 nor more than 60 days before any special meeting. SECTION 2.6. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation of the corporation. Notwithstanding the other provisions of the Certificate of Incorporation of the corporation or these by- laws, the holders of a majority of the shares of capital stock entitled to vote thereat, present in person or represented by proxy, whether or not a quorum is present, shall have power to adjourn the meeting from time to time, without notice or other announcement at the meeting, until a quorum shall be present or represented. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. SECTION 2.7. Voting. When a quorum is present at any meeting of the stockholders, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of statute, the Certificate of Incorporation of the corporation or these by-laws, a different vote is required, in which case such express provision shall govern and control the decision of such question. Every stockholder having the right to vote shall be entitled to vote (i) in person or (ii) by proxy appointed by an instrument in writing subscribed by such stockholder, bearing a date not more than three years prior to voting, unless such instrument provides for a longer period, and filed with the Secretary of the corporation before, or at the time of, the meeting. If such instrument shall designate two or more persons to act as proxies, unless such instrument shall provide the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all of the powers of voting or giving consents thereby conferred, or if only one be present, then such powers may be exercised by that one; or, if an even number attend and a majority do not agree on any particular issue, each proxy so attending shall be entitled to exercise such powers in respect of the same portion of the shares as such proxy is of the proxies representing such shares. SECTION 2.8. No Consent of Stockholders. Any action required or permitted to be taken by the stockholders of the corporation must be effected at a duly called annual or special meeting of stockholders of the corporation and may not be effected by any consent in writing by such stockholders. SECTION 2.9. Voting of Stock of Certain Holders. Shares standing in the name of another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the by-laws of such corporation may prescribe, or in the absence of such provision, as the Board of Directors of such corporation may determine. Shares standing in the name of a deceased person may be voted by the executor or administrator of such deceased person, either in person or by - 2 - 3 proxy. Shares standing in the name of a guardian, conservator or trustee may be voted by such fiduciary, either in person or by proxy, but no such fiduciary shall be entitled to vote shares held in such fiduciary capacity without a transfer of such shares into the name of such fiduciary. Shares standing in the name of a receiver may be voted by such receiver. A stockholder whose shares are pledged shall be entitled to vote such shares, unless in the transfer by the pledgor on the books of the corporation, such stockholder has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or such pledgee's proxy, may vote thereon. SECTION 2.10. Treasury Stock. The corporation shall not vote, directly or indirectly, shares of its own stock owned by it; and such shares shall not be counted in determining the total number of outstanding shares. SECTION 2.11. Fixing Record Date. The Board of Directors may fix in advance a date, not exceeding 60 days preceding the date of any meeting of stockholders, or the date for payment of any dividend or distribution, or the date for the allotment of rights, or the date when any change, conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining a consent, as a record date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, or entitled to receive payment of any such dividend or distribution, or to receive any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, as the case may be, and in such case stockholders and only such stockholders as shall be stockholders of record on the date so fixed shall be entitled to such notice of, and to vote at, any such meeting and any adjournment thereof, or to receive payment of such dividend or distribution, or to receive such allotment of rights, or to exercise such rights in respect of any change, conversion or exchange of capital stock, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the corporation after any such record date fixed as aforesaid. SECTION 2.12. Notice of Business. (a) No business shall be conducted at an annual meeting of stockholders unless such business is properly brought before the meeting in accordance with the procedures hereinafter set forth in this Section 2.12; provided, however, nothing in this Section 2.12 shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting in accordance with said procedures. (b) To be properly brought before the meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors or (iii) otherwise properly brought before the meeting by a stockholder who (A) is a stockholder of record on the date of the giving of the notice provided for below and on the record date for the determination of stockholders entitled to vote at such annual meeting and (B) gives timely notice of such business in writing to the Secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for date that is not within 30 days before or after such anniversary date, notice by the - 3 - 4 stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or public disclosure of the annual meeting date was made, whichever occurs first. A stockholder's notice to the Secretary of the corporation shall set forth (i) a brief description of the each matter desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the corporation that are beneficially owned by the stockholder, (iv) any material interest of the stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. (c) Any adjournment or postponement of the original meeting whereby the meeting will reconvene within 30 days from the original date shall be deemed for purposes of notice to be a continuation of the original meeting and no business may be brought before any such reconvened meeting unless timely notice of such business was given to the Secretary of the corporation for the meeting as originally scheduled. (d) If the Chairman of an annual meeting of stockholders determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. (e) For purpose of this Section 2.12, the term "public disclosure" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. (f) Notwithstanding anything contained in this Section 2.12 to the contrary, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 2.12. Nothing in this Section 2.12 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the corporation's proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended. SECTION 2.13. Amendment. Notwithstanding anything contained in these by-laws to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the corporation entitled to vote for the election of directors shall be required to amend or repeal or to adopt any provision inconsistent with Sections 2.4, 2.5(ii), 2.8, or 2.12 or this Section 2.13 of this Article II. ARTICLE III BOARD OF DIRECTORS SECTION 3.1. Powers. The business and affairs of the corporation shall be managed by its Board of Directors, which may exercise all such powers of the corporation and do all such lawful - 4 - 5 acts and things as are not by statute or by the Certificate of Incorporation of the corporation or by these by-laws expressly directed or required to be exercised or done by the stockholders. SECTION 3.2. Number, Election and Terms. The number of directors which shall constitute the whole Board shall not be less than six nor more than fifteen. Such number of directors shall from time to time be fixed and determined by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors and shall be set forth in the notice of any meeting of stockholders held for the purpose of electing directors. The directors shall be elected at the annual meeting of stockholders, except as provided in Section 3.3. The directors shall be divided into three classes, as nearly equal in number as possible. At each annual meeting of stockholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. Directors need not be residents of the State of Delaware or stockholders of the corporation. SECTION 3.3. Vacancies, Additional Directors and Removal from Office. Subject to the provisions of the Certificate of Incorporation of the corporation, if any vacancy occurs in the Board of Directors caused by death, resignation, retirement, disqualification or removal from office of any director, or otherwise, or if any new directorship is created by an increase in the authorized number of directors, a majority of the directors then in office, though less than a quorum, or a sole remaining director, may choose a successor or fill the newly-created directorship. Any directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Any director or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the corporation entitled to vote for the election of directors. SECTION 3.4. Regular Meeting. A regular meeting of the Board of Directors shall be held each year, without notice other than this by-law, at the place of, and immediately following, the annual meeting of stockholders; and other regular meetings of the Board of Directors may be held during a year, at such time and place as the Board of Directors may provide, by resolution, either within or without the State of Delaware, without notice other than such resolution. SECTION 3.5. Special Meeting. A special meeting of the Board of Directors may be called by the Chairman of the Board or by the President and shall be called by the Secretary on the written request of any two directors. The Chairman or President so calling, or the directors so requesting, any such meeting shall fix the time and any place, either within or without the State of Delaware, as the place for holding such meeting. SECTION 3.6. Notice of Special Meeting. Written notice of special meetings of the Board of Directors shall be given to each director at least 48 hours prior to the time of such meeting. Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such - 5 - 6 meeting, except that notice shall be given of any proposed amendment to the by-laws if it is to be adopted at any special meeting or with respect to any other matter where notice is required by statute. SECTION 3.7. Quorum. Except as may be otherwise specifically provided by statute, by the Certificate of Incorporation of the corporation or by these by-laws, which express provisions shall be controlling, a majority of the Board of Directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. SECTION 3.8. Action Without Meeting. Unless otherwise specified by the Certificate of Incorporation of the corporation or these by-laws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof as provided in Article IV of these by-laws, may be taken without a meeting, if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of proceedings of the Board of Directors or of such committee. SECTION 3.9. Compensation. Directors, as such, shall not be entitled to any stated salary for their services unless such a salary is approved by the stockholders or the Board of Directors; but, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the Board of Directors or any meeting of a committee of directors. No provision of these by-laws shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor. SECTION 3.10. Nomination of Directors. (a) Only persons who are nominated in accordance with the procedures set forth in this Section 3.10 shall be eligible for election as directors of the corporation. (b) Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders only (i) by or at the direction of the Board of Directors or (ii) by a stockholder who (A) is a stockholder of record on the date of the giving of the notice provided for below and on the record date for the determination of stockholders entitled to vote at such annual meeting and (B) gives timely notice in writing to the Secretary of the corporation of such nomination. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for date that is not within 30 days before or after such anniversary date, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or public disclosure of the annual meeting date was made, whichever occurs first. A stockholder's notice to the Secretary of the corporation shall set forth (i) as to each person - 6 - 7 whom the stockholder proposes to nominate for election or re-election as director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended, or any successor regulation thereto, (ii) the name and record address of the stockholder proposing such business, (iii) the class and number of shares of the corporation that are beneficially owned by the stockholder, (iv) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination or nominations are to be made by such stockholder and (v) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in the notice. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. (c) Any adjournment or postponement of the original meeting whereby the meeting will reconvene within 30 days from the original date shall be deemed for purposes of notice to be a continuation of the original meeting and no nominations by a stockholder of persons to be elected as directors of the corporation may be made at any such reconvened meeting unless timely notice of such nominations was given to the Secretary of the corporation for the meeting as originally scheduled. (d) If the Chairman of a meeting of stockholders determines that a nomination was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was not properly brought before the meeting and such nomination shall be disregarded. (e) For purpose of this Section 3.10, the term "public disclosure" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended. (f) Notwithstanding anything contained in this Section 3.10 to the contrary, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder with respect to the matters set forth in this Section 3.10. Nothing in this Section 3.10 shall be deemed to affect any rights of the holders of any series of preferred stock of the corporation to elect directors under specified circumstances. SECTION 3.11. Amendment. Notwithstanding anything contained in these by-laws to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the corporation entitled to vote for the election of director shall be required to amend or repeal, or to adopt any provision inconsistent with, Section 3.2, Section 3.3 (other than the first sentence of Section 3.3), the first sentence of Section 3.6, Section 3.10 or this Section 3.11 of this Article III. - 7 - 8 ARTICLE IV COMMITTEE OF DIRECTORS SECTION 4.1. Designation, Powers and Name. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more committees, including, if they shall so determine, an Executive Committee, each such committee to consist of two or more of the directors of the corporation. The committee shall have and may exercise such of the powers of the Board of Directors in the management of the business and affairs of the corporation as may be provided in such resolution. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not such director or directors constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Such committee or committees shall have such name or names and such limitations of authority as may be determined from time to time by resolution adopted by the Board of Directors. SECTION 4.2. Minutes. Each committee of directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. SECTION 4.3. Compensation. Members of special or standing committees may be allowed compensation for attending committee meetings, if the Board of Directors shall so determine. ARTICLE V NOTICE SECTION 5.1. Methods of Giving Notice. Whenever under the provisions of statute, the Certificate of Incorporation of the corporation or these by-laws, notice is required to be given to any director, member of any committee or stockholder, such notice shall be in writing and delivered personally or mailed to such director, member or stockholder; provided that in the case of a director or a member of any committee such notice may be given orally or by telephone, facsimile, telex or telegram. If mailed, notice to a director, member of a committee or stockholder shall be deemed to be given when deposited in the United States first class mail in a sealed envelope, with postage thereon prepaid, addressed, in the case of a stockholder, to the stockholder at the stockholder's address as it appears on the records of the corporation or, in the case of a director or a member of a committee, to such person at his business address. If sent by facsimile or telex, notice to a director or member of a committee shall be deemed to be given when confirmation of transmission of the facsimile or telex is received by the corporation. If sent by telegraph, notice to a director or member of a committee shall be deemed to be given when the telegram, so addressed, is delivered to the telegraph company. SECTION 5.2. Written Waiver. Whenever any notice is required to be given under the provisions of statute, the Certificate of Incorporation of the corporation or these by-laws, a waiver - 8 - 9 thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VI OFFICERS SECTION 6.1. Officers. The officers of the corporation shall be a Chairman of the Board (if such office is created by the Board), a President, one or more Vice Presidents, any one or more of which may be designated Executive Vice President or Senior Vice President, a Secretary and a Treasurer. The Board of Directors may by resolution create the office of Vice Chairman of the Board and define the duties of such office. The Board of Directors may appoint such other officers and agents, including Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined by the Board of Directors. Any two or more offices, other than the offices of President and Secretary, may be held by the same person. No officer shall execute, acknowledge, verify or countersign any instrument on behalf of the corporation in more than one capacity, if such instrument is required by law, by these by-laws or by any act of the corporation to be executed, acknowledged, verified or countersigned by two or more officers. The Chairman of the Board and Vice Chairman of the Board shall be elected from among the directors. With the foregoing exceptions, none of the other officers need be a director, and none of the officers need be a stockholder of the corporation. SECTION 6.2. Election and Term of Office. The officers of the corporation shall be elected annually by the Board of Directors at its regular meeting held after each annual meeting of stockholders or as soon thereafter as conveniently possible. Each officer shall hold office until a successor shall have been chosen and shall have qualified or until such officer's death or the effective date of such officer's resignation or removal, or until such officer shall cease to be a director in the case of the Chairman of the Board or Vice Chairman of the Board. SECTION 6.3. Removal and Resignation. Any officer or agent elected or appointed by the Board of Directors may be removed without cause by the affirmative vote of a majority of the Board of Directors whenever, in its judgment, the best interests of the corporation shall be served thereby, but such removal shall be without prejudice to the contractual rights, if any, of the person so removed. Any officer may resign at any time by giving written notice to the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. SECTION 6.4. Vacancies. Any vacancy occurring in any office of the corporation by death, resignation, removal or otherwise, may be filled by the Board of Directors for the unexpired portion of the term of such office. SECTION 6.5. Salaries. The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors or pursuant to its direction; and no officer shall be prevented from receiving such salary because such officer is also a director. - 9 - 10 SECTION 6.6. Chairman of the Board. The Chairman of the Board (if such office is created by the Board of Directors) shall preside at all meetings of the Board of Directors and the stockholders of the corporation. In the Chairman of the Board's absence, such duties shall be attended to by the Vice Chairman of the Board. The Chairman of the Board shall formulate and submit to the Board of Directors or the Executive Committee matters of general policy for the corporation and shall perform such other duties as usually appertain to the office or as may be prescribed by the Board of Directors or the Executive Committee. SECTION 6.7. President. The President shall be the Chief Executive Officer of the corporation unless the Board of Directors has designated the Chairman of the Board as the Chief Executive Officer in which case the President shall be the Chief Operating Officer. In the absence of the Chairman of the Board or the Vice Chairman of the Board (if such offices are created by the Board), the President shall preside at all meetings of the Board of Directors and of the stockholders. He may also preside at any such meeting attended by the Chairman of the Board or Vice Chairman of the Board if he is so designated by the Chairman of the Board, or in the Chairman of the Board's absence by the Vice Chairman of the Board. He may sign with the Secretary, or any other officer of the corporation thereunto authorized by the Board of Directors, certificates for shares of the corporation and any deeds, bonds, mortgages, contracts, checks, notes, drafts or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof has been expressly delegated by these by-laws or by the Board of Directors to some other officer or agent of the corporation, or shall be required by law to be otherwise executed. The President shall vote, or give a proxy to any other officer of the corporation to vote, all shares of stock of any other corporation standing in the name of the corporation and in general shall perform all other duties normally incident to the office of President and such other duties as may be prescribed by the stockholders, the Board of Directors or the Executive Committee from time to time. SECTION 6.8. Chief Executive Officer. The Chief Executive Officer shall have, subject to the control of the Board of Directors, supervision and control of the business and affairs of the corporation and shall have the power to appoint and remove subordinate officers, agents and employees, except those elected or appointed by the Board of Directors. The Chief Executive Officer shall keep the Board of Directors and the Executive Committee fully informed and shall consult them concerning the business of the corporation. SECTION 6.9. Chief Operating Officer. The Chief Operating Officer (if such office is created by the Board of Directors) shall have, subject to the control of the Board of Directors, general and active management of the day-to- day operations of the corporation and, together with the Chief Executive Officer, shall see that all orders and resolutions of the Board of Directors are carried into effect. SECTION 6.10. Vice Presidents. In the absence of the President, or in the event of his inability or refusal to act, the Executive Vice President (or in the event there shall be no Vice President designated Executive Vice President, any Vice President designated by the Board) shall perform the duties and exercise the powers of the President. Any Vice President may sign, with the Secretary or Assistant Secretary, certificates for shares of the corporation. The Vice Presidents shall - 10 - 11 perform such other duties as from time to time may be assigned to them by the President, the Board of Directors or the Executive Committee. SECTION 6.11. Secretary. The Secretary shall (a) keep the minutes of the meetings of the stockholders, the Board of Directors and committees of directors; (b) see that all notices are duly given in accordance with the provisions of these by-laws and as required by law; (c) be custodian of the corporate records and of the seal of the corporation, and see that the seal of the corporation or a facsimile thereof is affixed to all certificates for shares prior to the issue thereof and to all documents, the execution of which on behalf of the corporation under its seal is duly authorized in accordance with the provisions of these by-laws; (d) keep or cause to be kept a register of the address of each stockholder which shall be furnished by such stockholder; (e) sign with the President, or an Executive Vice President or Vice President, certificates for share of the corporation, the issue of which shall have been authorized by resolution of the Board of Directors; (f) have general charge of the stock transfer books of the corporation; and (g) in general, perform all duties normally incident to the office of Secretary and such other duties as from time to time may be assigned to him by the President, the Board of Directors or the Executive Committee. SECTION 6.12. Treasurer. The Treasurer shall (a) have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for moneys due and payable to the corporation from any source whatsoever and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as the Board of Directors may select; (b) prepare, or cause to be prepared, for submission at each regular meeting of the Board of Directors, at each annual meeting of the stockholders, and at such other times as may be required by the Board of Directors, the President or the Executive Committee, a statement of financial condition of the corporation in such detail as may be required; and (c) in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the President, the Board of Directors or the Executive Committee. SECTION 6.13. Assistant Secretary or Assistant Treasurer. The Assistant Secretaries and Assistant Treasurers shall, in general, perform such duties as shall be assigned to them by the Secretary or the Treasurer, respectively, or by the President, the Board of Directors or the Executive Committee. The Assistant Secretaries and Assistant Treasurers shall, in the absence of the Secretary or Treasurer, respectively, perform all functions and duties which such absent officers may delegate, but such delegation shall not relieve the absent officer from the responsibilities and liabilities of such office. The Assistant Secretaries may sign, with the President or a Vice President, certificates for shares of the corporation, the issue of which shall have been authorized by a resolution of the Board of Directors. ARTICLE VII CONTRACTS, CHECKS AND DEPOSITS SECTION 7.1. Contracts. Subject to the provisions of Section 6.1 of these by-laws, the Board of Directors may authorize any officer, officers, agent or agents to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances. - 11 - 12 SECTION 7.2. Checks, etc. All checks, demands, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation shall be signed by such officer or officers or such agent or agents of the corporation, and in such manner, as shall be determined by the Board of Directors. SECTION 7.3. Deposits. All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may select. ARTICLE VIII CERTIFICATES OF STOCK SECTION 8.1. Issuance. Each stockholder of the corporation shall be entitled to a certificate or certificates showing the number of shares of stock registered in the name of such stockholder on the books of the corporation. The certificates shall be in such form as may be determined by the Board of Directors, shall be issued in numerical order and shall be entered in the books of the corporation as they are issued. They shall exhibit the holder's name and number of shares and shall be signed by the President or a Vice President and by the Secretary or an Assistant Secretary. If any certificate is countersigned (1) by a transfer agent other than the corporation or any employee of the corporation, or (2) by a registrar other than the corporation or any employee of the corporation, any other signature on the certificate may be a facsimile. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class of stock; provided that, except as otherwise provided by statute, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish to each stockholder who so requests the designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights. All certificates surrendered to the corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in the case of a lost, stolen, destroyed or mutilated certificate a new one may only be issued in accordance with Section 8.2. Unless otherwise provided in the resolutions of the Board of Directors providing for the issuance of Preferred Stock of the corporation of a particular series, certificates shall not be issued representing fractional shares of stock. SECTION 8.2. Lost, Stolen or Destroyed Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require or to give the corporation an indemnity, including without - 12 - 13 limitation a bond, against any claim that may be made against the corporation with respect to the certificate or certificates alleged to have been lost, stolen or destroyed, or both. SECTION 8.3 Transfers. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Transfers of shares shall be made only on the books of the corporation by the registered holder thereof, or by his attorney thereunto authorized by power of attorney and filed with the Secretary of the corporation or the transfer agent for shares of the corporation. SECTION 8.4 Registered Stockholders. The corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. ARTICLE IX DIVIDENDS SECTION 9.1. Declaration. Subject to the provisions of law and the Certificate of Incorporation of the corporation, dividends upon the capital stock of the corporation may be declared by the Board of Directors at any regular or special meeting. Dividends may be paid in cash, in property or in shares of capital stock, subject to the provisions of the Certificate of Incorporation of the corporation. SECTION 9.2. Reserve. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserve to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the Board of Directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ARTICLE X INDEMNIFICATION SECTION 10.1. Third Party Actions. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably - 13 - 14 believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was unlawful. SECTION 10.2 Actions by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper. SECTION 10.3. Determination of Conduct. The determination that an officer, director, employee or agent has met the applicable standard of conduct set forth in Sections 10.1 and 10.2 of these by-laws (unless indemnification is ordered by a court) shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such quorum is not obtainable, or even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders. SECTION 10.4. Payment of Expenses in Advance. Expenses (including attorneys' fees) incurred by an officer, director, employee or agent in defending a civil, criminal, administrative or investigative action, suit or proceeding for which such person may be entitled to indemnity under this Article X shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall ultimately be determined that such officer is not entitled to be indemnified by the corporation as authorized in this Article X. SECTION 10.5. Definition. For purposes of this Article X, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such - 14 - 15 constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article X, with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. SECTION 10.6. Indemnity Not Exclusive. The indemnification and advancement of expenses provided hereunder shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any other by-law, statute, agreement, vote of stockholders or disinterested directors, insurance arrangement or otherwise, both as to action in such a person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. SECTION 10.7. No Further Authorization Required. This Article X is intended to make mandatory the indemnification permitted by Section 145 of the Delaware General Corporation Law, as amended from time to time. This Article X shall be deemed to constitute the authorization required by subsection (d) of said Section 145, and no further authorization by the Board of Directors or the stockholders of the corporation shall be necessary in any specific case if the indemnification or advancement of expenses referred to in this Article X is, by the terms of this Article X, required to be afforded in that case. Further, this Article X is intended to make mandatory any other indemnification permitted by the Delaware General Corporation Law, as amended from time to time. ARTICLE XI BUSINESS COMBINATIONS A. Higher Vote Required for Approval of Certain Business Combinations. (1) Higher Vote for Certain Business Combinations. In addition to any affirmative vote required by law, the Certificate of Incorporation of the corporation or these by-laws, and except as otherwise expressly provided in this Article XI: (a) any merger or consolidation of the corporation or any Subsidiary (as hereinafter defined) with (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Stockholder; or (b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the corporation or any Subsidiary having an aggregate Fair Market Value (as hereinafter defined) of $1,000,000 or more; or - 15 - 16 (c) the issuance or transfer by the corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value of $1,000,000 or more; or (d) the adoption of any plan or proposal for the liquidation or dissolution of the corporation proposed by or on behalf of an Interested Stockholder or any Affiliate of any Interested Stockholder; or (e) any reclassification of securities (including any reverse stock split), or recapitalization of the corporation, or any merger or consolidation of the corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder; shall require the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors (the "Voting Stock"), voting together as a single class (it being understood that for purposes of this Article XI, each share of the Voting Stock shall have the number of votes granted to it pursuant to Article FOURTH of the Certificate of Incorporation of the corporation, including any resolution of the Board of Directors providing for the designation of any series of the Serial Preferred Stock, par value $1.00 per share, of the corporation ("Serial Preferred Stock"). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. (2) Definition of "Business Combination". The term "Business Combination" as used in this Article XI shall mean any transaction which is referred to in any one or more of clauses (a) through (e) of subparagraph A(1). B. When Higher Vote is not Required. The provisions of paragraph A of this Article XI shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law and any other provisions of the Certificate of Incorporation of the corporation, if all of the conditions specified in either of the following paragraphs (1) or (2) are met: (1) Approval by Continuing Directors. The Business Combination shall have been approved by a majority of the Continuing Directors (as hereinafter defined). (2) Price and Procedure Requirements. All of the following conditions shall have been met: - 16 - 17 (a) The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of Common Stock, par value $.10 per share, of the corporation ("Common Stock") in such Business Combination shall be at least equal to the highest of the following: (i) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers fees) paid by the Interested Stockholder for any shares of Common Stock acquired by it (A) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the "Announcement Date") or (B) in the transaction in which it became an Interested Stockholder, whichever is higher; (ii) the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became and Interested Stockholder (such latter date is referred to in this Article XI as the "Determination Date"), whichever is higher; and (iii) (if applicable) the price per share equal to the Fair Market Value per share of Common Stock determined pursuant to subparagraph B(2)(a)(ii) above, multiplied by the ratio of (A) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers fees) paid by the Interested Stockholder for any shares of Common Stock acquired by it within the two- year period immediately prior to the Announcement Date to (B) the Fair Market Value per share of Common Stock on the first day in such two-year period upon which the Interested Stockholder acquired any shares of Common Stock. (b) The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of any other class of outstanding Voting Stock (other than Institutional Voting Stock (as hereinafter defined)) shall be at least equal to the highest of the following (it being intended that the requirements of this subparagraph B(2)(b) shall be required to be met with respect to every class of outstanding Voting Stock (other than Institutional Voting Stock), whether or not the Interested Stockholder has previously acquired any shares of a particular class of Voting Stock): (i) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it (A) within the two-year period immediately prior to the Announcement Date or (B) in the transaction in which it became an Interested Stockholder, whichever is higher; (ii) (if applicable) the highest preferential amount per share to which the holders of shares of such class of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the corporation; - 17 - 18 (iii) the Fair Market Value per share of such class of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher; and (iv) (if applicable) the price per share equal to the Fair Market Value per share of such class of Voting Stock determined pursuant to subparagraph B(2)(b)(iii) above, multiplied by the ratio of (A) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it within the two-year period immediately prior to the Announcement Date to (B) the Fair Market Value per share of such class of Voting Stock on the first day in such two-year period upon which the Interested Stockholder acquired any shares of such class of Voting Stock. (c) The consideration to be received by holders of a particular class of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class of Voting Stock. If the Interested Stockholder has paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration for such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock previously acquired by it. (d) After such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such Business Combination: (i) except as approved by a majority of the Continuing Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on the outstanding Serial Preferred Stock; (ii) there shall have been (A) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Continuing Directors, and (B) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Continuing Directors; and (iii) such Interested Stockholder shall not have become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Stockholder becoming an Interested Stockholder. (e) After such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the corporation, whether in anticipation of or in connection with such Business Combination or otherwise. (f) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934, - 18 - 19 as amended, and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to stockholders of the corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). C. Certain Definitions. For the purposes of this Article XI: (1) A "person" shall mean any individual, firm, corporation or other entity. (2) "Interested Stockholder" shall mean any person (other than the corporation or any Subsidiary) who or which: (a) is the beneficial owner, directly or indirectly, of more than 20% of the voting power of the outstanding Voting Stock; or (b) is an Affiliate of the corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 20% or more of the voting power of the then outstanding Voting Stock; or (c) is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933, as amended. (3) A person shall be a "beneficial owner" of any Voting Stock: (a) which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns, directly or indirectly; or (b) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding; or (c) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. (4) For purposes of subparagraph C(2), the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of subparagraph C(3) but shall not include any other shares of Voting Stock which may be issuable pursuant to any - 19 - 20 agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. (5) "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on May 27, 1983. (6) "Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in subparagraph C(2), the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the corporation. (7) "Continuing Director" means any member of the Board of Directors of the corporation who is unaffiliated with the Interested Stockholder and was a member of the Board of Directors prior to the time that the Interested Stockholder became an Interested Stockholder, and any successor of a Continuing Director who is unaffiliated with the Interested Stockholder and is recommended to succeed a Continuing Director by a majority of Continuing Directors then on the Board of Directors. (8) "Fair Market Value" means: (a) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange listed stocks, or, if such stock is not quoted on the Composite Tape on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board of Directors in good faith; and (b) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the Board of Directors in good faith. (9) "Institutional Voting Stock" shall mean any class of Voting Stock which was issued to and continues to be held solely by one or more insurance companies, pension funds, commercial banks, savings banks or similar financial institutions or institutional investors. (10) In the event of any Business Combination in which the corporation survives, the phrase "consideration other than cash" as used in subparagraphs B(2)(a) and (b) shall include the shares of Common Stock or the shares of any other class of outstanding Voting Stock retained by the holders of such shares. D. Determination by Directors. Notwithstanding anything to the contrary in this Article XI, the directors of the corporation shall have the power to determine for the purposes of this Article XI, on the basis of information known to them after reasonable inquiry, (1) whether a person - 20 - 21 is an Interested Stockholder, (2) the number of shares of Voting Stock beneficially owned by any person, (3) whether a person is an Affiliate or Associate of any person, (4) whether a class of Voting Stock is Institutional Voting Stock, and (5) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $1,000,000 or more. E. No Effect on Fiduciary Obligations of Interested Stockholders. Nothing contained in this Article XI shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. F. Election to Not be Governed by Delaware "Anti-Takeover" Bill. The corporation shall not be governed by Section 203 of the Delaware General Corporation Law. G. Amendment, Repeal, etc. Notwithstanding any other provisions of the Certificate of Incorporation of the corporation or these by-laws (and notwithstanding the fact that a lesser percentage may be specified by law, the Certificate of Incorporation of the corporation or these by-laws), the affirmative vote of the holders of 80% or more of the voting power of the shares of the then outstanding Voting Stock, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, this Article XI of these by-laws. ARTICLE XII MISCELLANEOUS SECTION 12.1. Seal. The corporate seal shall have inscribed thereon the name of the corporation and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. SECTION 12.2. Books. The books of the corporation may be kept (subject to any provision contained in statute) outside the State of Delaware at the offices of the corporation at Houston, Texas, or at such other place or places as may be designated from time to time by the Board of Directors. ARTICLE XIII AMENDMENT Except as may be otherwise expressly provided by these by-laws, which express provisions shall be controlling, these by-laws may be altered, amended or repealed at any regular meeting of the Board of Directors without prior notice, or at any special meeting of the Board of Directors if notice of such alteration, amendment or repeal is contained in the notice of such special meeting. - 21 - EX-4.4 3 LETTERS-MACAULAY & HILL TO STOCKHOLDERS AGREEMENT 1 EXHIBIT 4.4 William E. Macaulay 7 Hill Road Greenwich, CT 06830 January 29, 1997 Board of Directors Weatherford Enterra, Inc. 1360 Post Oak Blvd., Suite 1360 Houston TX 77056 Attn.: Corporate Secretary RE: AGREEMENT DATED AS OF JUNE 23, 1995 Gentlemen: Section 4.2(iii) of the Agreement dated as of June 23, 1995 among Weatherford International Incorporated ("Weatherford"), American Gas & Oil Investors, AMGO II, AMGO III, First Reserve Secured Energy Assets Fund, L.P., First Reserve Fund V, L. P., First Reserve Fund V-2, L.P. and First Reserve Fund VI, L.P. (collectively, the "First Reserve Funds") and First Reserve Corporation ("FRC", the First Reserve Funds and FRC called the "FRC Group"), a copy of which is attached hereto and made a part hereof for all purposes (the "Agreement"), provides that members of the FRC Group may distribute Weatherford Voting Securities (as defined in the Agreement) to any partner of a First Reserve Fund; provided that any distributee that is a member of the FRC Group has signed the Agreement. Accordingly, I hereby agree to be made a party to the Agreement and to be bound by the terms of the Agreement. Very truly yours, /s/ William E. Macaulay William E. Macaulay attachment (1) 2 John A. Hill 33 Avon Road Bronxville, NY 10708 January 29, 1997 Board of Directors Weatherford Enterra, Inc. 1360 Post Oak Blvd., Suite 1360 Houston TX 77056 Attn.: Corporate Secretary RE: AGREEMENT DATED AS OF JUNE 23, 1995 Gentlemen: Section 4.2(iii) of the Agreement dated as of June 23, 1995 among Weatherford International Incorporated ("Weatherford"), American Gas & Oil Investors, AMGO II, AMGO III, First Reserve Secured Energy Assets Fund, L.P., First Reserve Fund V, L. P., First Reserve Fund V-2, L.P. and First Reserve Fund VI, L.P. (collectively, the "First Reserve Funds") and First Reserve Corporation ("FRC", the First Reserve Funds and FRC called the "FRC Group"), a copy of which is attached hereto and made a part hereof for all purposes (the "Agreement"), provides that members of the FRC Group may distribute Weatherford Voting Securities (as defined in the Agreement) to any partner of a First Reserve Fund; provided that any distributee that is a member of the FRC Group has signed the Agreement. Accordingly, I hereby agree to be made a party to the Agreement and to be bound by the terms of the Agreement. Very truly yours, /s/ John A. Hill John A. Hill attachment (1) EX-4.7 4 FORM OF COMMON STOCK CERTIFICATE 1 EXHIBIT 4.7 COMMON STOCK COMMON STOCK PAR VALUE $.10 PAR VALUE $.10 NUMBER SHARES HU INCORPORATED UNDER THE CUSIP 947071 10 6 LAWS OF THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS WEATHERFORD ENTERRA, INC. THIS CERTIFIES THAT is the owner of FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK OF Weatherford Enterra, Inc. transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby are issued and shall be subject to all the provisions of the Certificate of Incorporation of the Corporation (copies of which are on file with the Transfer Agent) as now or hereafter amended, to all of which the holder hereof by acceptance hereof assents. This Certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated [SEAL] H. SUZANNE THOMAS President Secretary Courtesigned and Registered: AMERICAN STOCK TRANSFER & TRUST COMPANY Transfer Agent and Registrant By Authorized Signature 2 WEATHERFORD ENTERRA, INC. The Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof of the Corporation, and the qualifications, limitations, or restrictions of such preferences and/or rights. Such request may be made to the Corporation or the Transfer Agent. Keep this certificate in a safe place. If it is lost, stolen or destroyed the Corporation may require a bond of indemnity as a condition to the issuance of a replacement certificate. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations.
TEN COM -- as tenants in common UNIF GIFT MIN ACT -- .......... Custodian .......... TEN ENT -- as tenants by the entireties (Cust) (Minor) JT TEN -- as joint tenants with right of under Uniform Gifts to Minors survivorship and not as tenants Act........................ in common (State)
Additional abbreviations may also be used though not in the above list. For Value Received, the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _________________________________________ | | _________________________________________ _______________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE) _______________________________________________________________________ _______________________________________________________________________ ________________________________________________________________ Shares of the stock represented by the within certificate, and do hereby irrevocably constitute and appoint _____________________________________________________________ Attorney to transfer the said same on the books of the within named Corporation with full power of substitution in the premises. Dated ______________________________________________________ NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER EX-10.1 5 CHANGE OF CONTROL AGREEMENTS 1 EXHIBIT 10.1 AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENTS Weatherford Enterra, Inc. and each of the following individuals have entered into the form of agreement attached hereto for the periods indicated:
Protected Period Multiple of Pay ================================================================================ James R. Burke 3 3 - -------------------------------------------------------------------------------- M. E. Eagles 3 3 - -------------------------------------------------------------------------------- Jon Nicholson 3 3 - -------------------------------------------------------------------------------- Norman W. Nolen 3 3 - -------------------------------------------------------------------------------- H. Suzanne Thomas 3 3 - --------------------------------------------------------------------------------
2 AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT This Amended and Restated Change of Control Agreement (this "Agreement") by and between Weatherford Enterra, Inc., a Delaware corporation (the "Company"), and FIELD(1) (the "Executive"), is effective as of August 16, 1996. RECITALS: A. The Board of Directors of the Company (the "Board") has previously determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication of the Executive, notwithstanding the possibility, threat or occurrence of a Change of Control (as defined below) of the Company. The Board believes it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal uncertainties and risks created by a pending or threatened Change of Control and to encourage the Executive's full attention and dedication to the Company currently and in the event of any threatened or pending Change of Control, and to provide the Executive with compensation and benefits arrangements upon a Change of Control which ensure that the compensation and benefits expectations of the Executive, which are competitive with those of executives at other corporations, will be satisfied. B. The Company, formerly known as Weatherford International Incorporated, and the Executive have previously entered into that certain Change of Control Agreement dated FIELD(2), as amended (the "Previous Agreement"), establishing various matters related to the Executive's compensation and benefits in the event of a Change of Control (as defined in Section 2 of the Previous Agreement). The Company and the Executive wish to amend the provisions of the Previous Agreement, and this Agreement amends and restates the Previous Agreement in its entirety, except as otherwise provided herein. C. To accomplish these objectives, the Board has caused the Company to enter into this Agreement. NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS: 1. Certain Definitions. (a) The "Effective Date" shall mean the first date during the Change of Control Period (as defined in Section 1(b)) on which a Change of Control (as defined in Section 1(c)) occurs. Anything in this Agreement to the contrary notwithstanding, if a Change of Control occurs and if the Executive's employment with the Company is terminated prior to the date on which the Change of Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request - 1 - 3 of a third party who has taken steps reasonably calculated to effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change of Control, then for all purposes of this Agreement the "Effective Date" shall mean the date immediately prior to the date of such termination of employment. (b) The "Change of Control Period" shall mean the period commencing on the date hereof and ending on the FIELD(3) anniversary of the date hereof; provided, however, that commencing on the date one year after the date hereof, and on each annual anniversary of such date (such date and each annual anniversary thereof shall be hereinafter referred to as the "Renewal Date"), unless previously terminated, the Change of Control Period shall be automatically extended so as to terminate FIELD(4) year(s) after such Renewal Date, unless at least 60 days prior to the Renewal Date the Company shall give notice to the Executive that the Change of Control Period shall not be so extended. (c) A "Change of Control" shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent or more of either (A) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however that for purposes of this subsection (i), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 1(c); or (ii) Individuals, who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved - 2 - 4 by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction") in each case, unless, following such Corporate Transaction, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 60 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 20 percent or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (C) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. (d) The "Merger" shall mean the October 5, 1995 merger of Enterra Corporation with and into Weatherford International Incorporated, the latter entity being the surviving entity and being renamed Weatherford Enterra, Inc., such Merger constituting a Change of Control under the Previous Agreement. (e) The "Previous Employment Period Expiration Date" shall mean October 5, 199 FIELD(5). - 3 - 5 2. Transition Period. (a) If no Change of Control other than the Merger has occurred prior to the Previous Employment Period Expiration Date, the provisions of Section 4(b)(ii) hereof shall not apply and, in lieu thereof, the Executive shall be eligible, for each fiscal year during the period commencing on the Effective Date and ending on the Previous Employment Period Expiration Date, an annual bonus (for purposes of this Section 2, the "Annual Bonus") in cash or Common Stock of the Company, or a combination thereof, at the Company's discretion, under the Company's annual incentive program applicable generally to the Executive's peer executives of the Company and its affiliated companies, but in no event shall such program provide the Executive with incentive opportunities less favorable than the most favorable of those provided by the Company and its affiliated companies for the Executive under any such program as in effect at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to the Executive's peer executives of the Company and its affiliated companies. Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus. (b) In the event the Executive's employment is terminated as provided in Section 5(c) hereof prior to the Previous Employment Period Expiration Date and no Change of Control other than the Merger has occurred prior to that date, then the Executive shall receive the benefits provided for in Section 6(a) of the Previous Agreement in lieu of the benefits provided for in Section 6(a) hereof. For purposes of Section 6(a)(i)(A) of the Previous Agreement, "Recent Annual Bonus" shall mean the Executive's highest bonus paid or payable (whether in cash or Common Stock of the Company) under the Company's annual incentive program for the last three full fiscal years prior to the Effective Date (annualized in the event the Executive was not employed by the Company for the whole of such fiscal year) and "Annual Bonus" shall have the definition given in subsection 2(a) above. (c) In the event the Executive's employment continues beyond the Previous Employment Period Expiration Date, then the Previous Agreement shall terminate in all respects as of the Previous Employment Period Expiration Date and shall be of no further force and effect, and this Agreement shall be the only agreement between the parties with respect to the subject matter hereof. (d) In the event a Change of Control (as defined in Section 1(c) hereof) occurs after the effective date of this Agreement, then the Previous Agreement shall terminate in all respects as of the date of the Change of Control and shall be of no further - 4 - 6 force and effect, and this Agreement shall be the only agreement between the parties with respect to the subject matter hereof. (e) The Company and the Executive agree that this Agreement amends the Previous Agreement in its entirety, except as otherwise provided herein. 3. Employment Period. The Company hereby agrees that the Company or an affiliated company will continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of the Company or an affiliate subject to the terms and conditions of this Agreement, for the period commencing on the Effective Date and ending on the FIELD(6) anniversary of such date (the "Employment Period"). 4. Terms of Employment. (a) Position and Duties. (i) During the Employment Period, (A) the Executive's position (including status, offices, titles and reporting requirements, authority, duties and responsibilities) shall be at least commensurate in all material respects with the most significant of those held, exercised and assigned at any time during the 120-day period immediately preceding the Effective Date and (B) the Executive's services shall be performed at the location where the Executive was employed immediately preceding the Effective Date or any office or location less than 35 miles from such location. (ii) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive's reasonable best efforts to perform faithfully and efficiently such responsibilities. During the Employment Period it shall not be a violation of this Agreement for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive's responsibilities as an employee of the Company in accordance with this Agreement. It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive's responsibilities to the Company. (b) Compensation. - 5 - 7 (i) Base Salary. During the Employment Period, the Executive shall receive an annual base salary ("Annual Base Salary"), which shall be paid at a monthly rate, at least equal to 12 times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company and/or its affiliated companies in respect of the 12-month period immediately preceding the month in which the Effective Date occurs. During the Employment Period, the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase awarded to the Executive prior to the Effective Date and thereafter at least annually; provided, however, that a salary increase shall not necessarily be awarded as a result of such review. Any increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase other than a reduction that is part of a general salary reduction implemented Company-wide or by the Executive's employer consistently applied with respect to all or substantially all employees. The term Annual Base Salary as utilized in this Agreement shall refer to Annual Base Salary as so increased or decreased. As used in this Agreement, the term "affiliated companies" shall include any company controlled by, controlling or under common control with the Company. (ii) Annual Bonus. Except as provided in Section 2 hereof, in addition to Annual Base Salary, the Executive shall be awarded, for each fiscal year ending during the Employment Period, an annual bonus (the "Annual Bonus") in cash at least equal to the Executive's highest bonus (whether in cash or Common Stock of the Company) paid or payable under the Company's annual incentive program for the last three full fiscal years prior to the Effective Date (annualized in the event that the Executive was not employed by the Company for the whole of such fiscal year) (the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no later than the end of the third month of the fiscal year next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall elect to defer the receipt of such Annual Bonus. (iii) Incentive, Savings and Retirement Plans. During the Employment Period, the Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs applicable generally to the Executive's peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with incentive opportunities (measured with respect to both regular and special incentive opportunities, to the extent, if any, that such distinction is applicable), savings opportunities and retirement benefit opportunities, in each case, less favorable, in the aggregate, than the most favorable of those provided by the Company and its affiliated companies for the Executive under such plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to the Executive's peer executives of the Company and its affiliated companies. - 6 - 8 (iv) Welfare Benefit Plans. During the Employment Period, the Executive and/or the Executive's family, as the case may be, shall be eligible to participate in and shall receive all benefits under welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, disability, salary continuance, employee life, group life, accidental death and travel accident insurance plans and programs) to the extent applicable generally to the Executive's peer executives of the Company and its affiliated companies, but in no event shall such plans, practices, policies and programs provide the Executive with benefits which are less favorable, in the aggregate, than the most favorable of such plans, practices, policies and programs in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, those provided generally at any time after the Effective Date to the Executive's peer executives of the Company and its affiliated companies. (v) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the most favorable policies, practices and procedures of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to the Executive's peer executives of the Company and its affiliated companies. (vi) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits (including, without limitation, financial planning services, payment of club dues, a car allowance or use of an automobile and payment of related expenses, as appropriate) in accordance with the most favorable plans, practices, programs and policies of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to the Executive's peer executives of the Company and its affiliated companies. (vii) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation in accordance with the most favorable plans, policies, programs and practices of the Company and its affiliated companies in effect for the Executive at any time during the 120-day period immediately preceding the Effective Date or, if more favorable to the Executive, as in effect generally at any time thereafter with respect to the Executive's peer executives of the Company and its affiliated companies. (viii) Options/SARs. Upon the occurrence of a Change of Control pursuant to which the Company is not the survivor (or survives only as a subsidiary of another entity), the surviving corporation shall issue to the Executive options and tandem stock appreciation rights ("SARs"), if applicable, in substitution or replacement of all - 7 - 9 outstanding options or SARs previously issued pursuant to a Company stock option plan or the Company's Stock Appreciation Rights Plan, respectively, any such options and SARs to have terms and conditions similar to the terms of any such original options and SARs. 5. Termination of Employment. (a) Death or Disability. The Executive's employment shall terminate automatically upon the Executive's death during the Employment Period. If the Company determines in good faith that the Disability of the Executive has occurred during the Employment Period (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with Section 12(b) of this Agreement of its intention to terminate the Executive's employment. In such event, the Executive's employment with the Company shall terminate effective 30 days after receipt of such notice by the Executive (the "Disability Effective Date"), provided that within the 30-day period after such receipt, the Executive shall not have returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Disability" shall mean the absence of the Executive from the Executive's duties with the Company on a full-time basis for 180 calendar days as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executive's legal representative. (b) Cause. The Company may terminate the Executive's employment during the Employment Period for Cause. For purposes of this Agreement, "Cause" shall mean: (i) the willful and continued failure of the Executive to perform substantially the Executive's duties with the Company or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Chief Executive Officer of the Company which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive's duties, or (ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Company. For purposes of this provision, no act, or failure to act, on the part of the Executive shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive's action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or of a senior officer of the Company or based upon the - 8 - 10 advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail. (c) Good Reason. The Executive's employment may be terminated by the Executive during the Employment Period for Good Reason. For purposes of this Agreement, "Good Reason" shall mean: (i) the assignment to the Executive of any duties inconsistent in any respect with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 4(a) of this Agreement, or any other action by the Company which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive; (iii) the Company's requiring the Executive to be based at any office or location other than as provided in Section 4(a)(i)(B) hereof or the Company's requiring the Executive to travel on Company business to a substantially greater extent than required immediately prior to the Effective Date; (iv) any purported termination by the Company of the Executive's employment otherwise than as expressly permitted by this Agreement; or (v) any failure by the Company to comply with and satisfy Section 11(c) of this Agreement. For purposes of this Section 5(c), any good faith determination of "Good Reason" made by the Executive shall be conclusive. - 9 - 11 (d) Notice of Termination. Any termination during the Employment Period by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 12(b) of the Agreement. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 30 days after the giving of such notice). The failure by the Executive or the Company to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, respectively, from asserting such fact or circumstance in enforcing the Executive's or the Company's rights hereunder. (e) Date of Termination. "Date of Termination" shall mean: (i) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be; (ii) if the Executive's employment is terminated by the Company other than for Cause, death or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination; and (iii) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. 6. Obligations of the Company upon Termination. (a) Good Reason; Other than for Cause, Death or Disability. If, during the Employment Period, the Company shall terminate the Executive's employment other than for Cause, death or Disability, or the Executive shall terminate employment for Good Reason: (i) The Company shall pay to the Executive in a lump sum in cash within 30 days after the Date of Termination the aggregate of the following amounts: A. the sum of (1) the Executive's Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or payable, - 10 - 12 including any bonus or portion thereof which has been earned but deferred (and annualized for any fiscal year consisting of less than 12 full months or during which the Executive was employed for less than 12 full months), for the most recently completed fiscal year during the Employment Period, if any (such higher amount being referred to as the "Highest Annual Bonus") and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the Date of Termination, and the denominator of which is 365, and (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2) and (3) shall be hereinafter referred to as the "Accrued Obligations"), and B. the amount equal to the product of (1) FIELD(8) times (2) the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual Bonus, and C. an amount equal to the excess of (a) the actuarial equivalent of the benefit under the Company's qualified defined benefit retirement plan, if any, in which the Executive participates (the "Retirement Plan") (utilizing actuarial assumptions no less favorable to the Executive than those in effect under the Retirement Plan immediately prior to the Effective Date, if applicable), and any excess or supplemental retirement plan related to the Retirement Plan in which the Executive participates (together, the "SERP"), which the Executive would receive if the Executive's employment continued for FIELD(9) year(s) after the Date of Termination assuming for this purpose that all accrued benefits are fully vested, and assuming that the Executive's compensation in each of the FIELD(10) year(s) is that required by Sections 4(b)(i) and 4(b)(ii), over (b) the actuarial equivalent of the Executive's actual benefit (paid or payable), if any, under the Retirement Plan and the SERP as of the Date of Termination, and D. an amount equal to FIELD(11) times the total of the Employer Matching Contribution credited to the Executive under the Company's 401(k) Savings Plan (the "401(k) Plan") and the Supplemental Matching Accrual credited under the Company's Supplemental Savings Plan (the "Excess Plan") during the 12-month period immediately preceding the month of the Executive's Date of Termination, such amount to be grossed up so that the amount the Executive actually receives after payment of any federal or state taxes payable thereon equals the amount first described above; (ii) For FIELD(12) year(s) after the Executive's Date of Termination, or such longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue benefits to the Executive and/or the Executive's family equal to those which would have been provided to them in accordance with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if the Executive's employment had not been terminated; provided, however, that - 11 - 13 with respect to any of such plans, programs, practices or policies requiring an employee contribution, the Executive shall continue to pay the monthly employee contribution for same, and provided further, that if the Executive becomes reemployed by another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under such other plan during such applicable period of eligibility; (iii) The Company shall, at its sole expense as incurred, provide the Executive with outplacement services, the scope and provider of which shall be selected by the Executive in his sole discretion; (iv) With respect to all options to purchase Common Stock held by the Executive pursuant to a Company stock option plan on or prior to the Date of Termination, irrespective of whether such options are then exercisable, the Executive shall have the right, during the 60-day period after the Date of Termination, to elect to surrender all or part of such options in exchange for a cash payment by the Company to the Executive in an amount equal the number of shares of Common Stock subject to the Executive's option multiplied by the difference between (x) and (y) where (y) equals the purchase price per share covered by the option and (x) equals the highest reported sale price of a share of Common Stock in any transaction reported on the New York Stock Exchange during the 60-day period prior to and including the Executive's Date of Termination; and with respect to all SARs held by the Executive granted under the Company's Stock Appreciation Rights Plan on or prior to the Date of Termination, irrespective of whether such SARs are then exercisable, the Executive shall have the right, during the 60-day period after the Date of Termination, to elect to surrender all or part of such SARs in exchange for a cash payment by the Company to the Executive in an amount equal to the number of SARs held by the Executive multiplied by the difference between (a) and (b) where (b) equals the fair market value of such SARs on the date on which such SARs were awarded and (a) equals the price of a share of Common Stock set forth in clause (x) above. Such cash payments shall be made within 30 days after the date of the Executive's election; provided, however, that if the Executive's Date of Termination is within six months after the date of grant of a particular option or SAR held by the Executive and the Executive is subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, any cash payments related thereto shall be made on the date which is six months and one day after the date of grant of such option or SAR. Notwithstanding the foregoing, if any right granted pursuant to the foregoing would make a Change of Control transaction ineligible for pooling of interests accounting treatment under APB No. 16 that but for this Section 6(a)(iv) would otherwise be eligible for such accounting treatment, the Executive shall receive shares of Common Stock with a Fair Market Value equal to the cash that would otherwise be payable hereunder in substitution for the cash, provided that any such shares of Common Stock so granted to the Executive shall be registered under the Securities Act of 1933, as amended; any options or SARs outstanding as of the Date of Termination and not then exercisable - 12 - 14 shall become fully exercisable as of the Executive's Date of Termination, and to the extent the Executive does not elect to surrender same for a cash payment (or the equivalent number of shares of Common Stock) as provided above, such options and SARs shall remain exercisable for seven months after the Executive's Date of Termination or until the stated expiration of the stated term thereof, whichever is shorter; restrictions applicable to any shares of Common Stock granted to the Executive under the Company's Restricted Stock Incentive Plan shall lapse, as of the date of the Executive's Date of Termination; (v) All country club memberships, luncheon clubs and other memberships which the Company was providing for the Executive's use at the time Notice of Termination is given shall, to the extent possible, be transferred and assigned to the Executive at no cost to the Executive (other than income taxes owed), the cost of transfer, if any, to be borne by the Company; (vi) The Company shall either transfer to the Executive ownership and title to the Executive's Company car at no cost to the Executive (other than income taxes owed) or, if the Executive receives a monthly car allowance in lieu of a Company car, pay the Executive a lump sum in cash within 30 days after the Executive's Date of Termination equal to FIELD(13) times the Executive's annual car allowance; (vii) All benefits under the Retirement Plan, the SERP, the 401(k) Plan and the Excess Plan, and any other similar plans, not already vested shall be 100% vested, to the extent such vesting is permitted under the Code (as defined below); and (viii) To the extent not theretofore paid or provided, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"). (b) Death. If the Executive's employment is terminated by reason of the Executive's death during the Employment Period, this Agreement shall terminate without further obligations to the Executive's legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive's estate or beneficiaries, as applicable, in a lump sum in cash within 30 days after the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall include, without limitation, and the Executive's estate and/or beneficiaries shall be entitled to receive, benefits at least equal to the most favorable benefits provided by the Company and affiliated companies to the estates and beneficiaries of the Executive's peer executives of the Company and such affiliated companies under such plans, programs, practices and policies relating to death benefits, if any, in effect at any time during the 120-day period - 13 - 15 immediately preceding the Effective Date or, if more favorable, those in effect on the date of the Executive's death. (c) Disability. If the Executive's employment is terminated by reason of the Executive's Disability during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days after the Date of Termination. With respect to the provision of Other Benefits, the term Other Benefits as utilized in this Section 6(c) shall include, without limitation, and the Executive shall be entitled after the Disability Effective Date to receive, disability and other benefits at least equal to the most favorable benefits generally provided by the Company and its affiliated companies to the Executive's disabled peer executives and/or their families in accordance with such plans, programs, practices and policies relating to disability, if any, in effect generally at any time during the 120-day period immediately preceding the Effective Date or, if more favorable, those in effect at the time of the Disability. (d) Cause; Other than for Good Reason. If the Executive's employment is terminated for Cause during the Employment Period, this Agreement shall terminate without further obligations to the Executive, other than the obligation to pay to the Executive (x) his or her Annual Base Salary through the Date of Termination, (y) the amount of any compensation previously deferred by the Executive, and (z) Other Benefits, in each case to the extent theretofore unpaid. If the Executive voluntarily terminates employment during the Employment Period, excluding a termination for Good Reason, this Agreement shall terminate without further obligations to the Executive, other than for Accrued Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid to the Executive in a lump sum in cash within 30 days after the Date of Termination. 7. Other Rights. Except as provided hereinafter, nothing in this Agreement shall prevent or limit the Executive's continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies and for which the Executive may qualify, nor, subject to Section 12(f), shall anything herein limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Except as provided hereinafter, amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan, policy, practice or program of or any contract or agreement with the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program or contract or agreement. It is expressly agreed by the Executive that he or she shall have no right to receive, and hereby waives any entitlement to, any severance pay or similar benefit under any other plan, policy, practice or program of the Company. In addition, if the Executive - 14 - 16 has an employment or similar agreement with the Company at the Date of Termination, he or she agrees that he or she shall have the right to receive all of the benefits provided under this Agreement or such other agreement, whichever one, in its entirety, the Executive chooses, but not both agreements, and when the Executive has made such election, the other agreement shall be superseded in its entirety and shall be of no further force and effect. The Executive also agrees that to the extent he or she may be eligible for any severance pay or similar benefit under any laws providing for severance or termination benefits, such other severance pay or similar benefit shall be coordinated with the benefits owed hereunder, such that the Executive shall not receive duplicate benefits. 8. Full Settlement. (a) No Rights of Offset. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others. (b) No Mitigation Required. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. (c) Legal Fees. The Company agrees to pay as incurred, to the full extent permitted by law, all legal fees and expense which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof) by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereto (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), plus in each case interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal Revenue Code of 1986, as amended (the "Code"). 9. Certain Additional Payments by the Company. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 9) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (a - 15 - 17 "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section 9(a), if it shall be determined that the Executive is entitled to a Gross-Up Payment, but that the Executive, after taking into account the Payments and the Gross-Up Payment, would not receive a net after-tax benefit of at least $50,000 (taking into account both income taxes and any Excise Tax) as compared to the net after-tax proceeds to the Executive resulting from an elimination of the Gross-Up Payment and a reduction of the Payments, in the aggregate, to an amount (the "Reduced Amount") such that the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up Payment shall be made to the Executive and the Payments, in the aggregate, shall be reduced to the Reduced Amount. (b) Subject to the provisions of Section 9(c), all determinations required to be made under this Section 9, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Executive (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days after the receipt of notice from the Executive that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by the Company to the Executive within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. - 16 - 18 (c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Executive is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim the Executive shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 9(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of - 17 - 19 the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Company's complying with the requirements of Section 9(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section 9(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Company does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 10. Confidential Information. The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies, and their respective businesses, which shall have been obtained by the Executive during the Executive's employment by the Company or any of its affiliated companies, provided that it shall not apply to information which is or shall become public knowledge (other than by acts by the Executive or representatives of the Executive in violation of this Agreement), information that is developed by the Executive independently of such information, or knowledge or data or information that is disclosed to the Executive by a third party under no obligation of confidentiality to the Company. After termination of the Executive's employment with the Company, the Executive shall not, without the prior written consent of the Company or as may otherwise be required by law or legal process, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it. In no event shall an asserted violation of the provisions of this Section 10 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 11. Successors. (a) This Agreement is personal to the Executive and without the prior written consent of the Company shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. - 18 - 20 (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. (c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise. 12. Miscellaneous. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives. (b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: FIELD(14) If to the Company: Weatherford Enterra, Inc. 1360 Post Oak Blvd., Suite 1000 Houston, TX 77056 Attention: General Counsel or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee. (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. (d) The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. - 19 - 21 (e) The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including without limitation, the right of the Executive to terminate employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement. (f) The Executive and the Company acknowledge that, except as may otherwise be provided under any other written agreement between the Executive and the Company, the employment of the Executive by the Company is "at will" and, subject to Section 1(a) hereof, prior to the Effective Date, the Executive's employment and/or this Agreement may be terminated by either the Executive or the Company at any time prior to the Effective Date, in which case the Executive shall have no further rights under this Agreement. From and after the Effective Date this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof. IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written. -------------------------------------- FIELD(1) WEATHERFORD ENTERRA, INC. By: ------------------------------ - 20 - EX-10.2 6 INDEMNIFICATION AGREEMENTS 1 EXHIBIT 10.2 INDEMNIFICATION AGREEMENT This AGREEMENT, effective as of March 11, 1997 is between Weatherford Enterra, Inc., a Delaware corporation (the "Company"), and Thomas J. Edelman (the "Director"), a director of the Company; WHEREAS, in recognition of Director's need for substantial protection against personal liability in order to enhance Director's continued service to the Company in an effective manner and of Director's reliance on the provisions of the Company's By-Laws requiring indemnification of the Director under certain circumstances, and in part to provide Director with specific contractual assurance that the protection promised by such By-Laws will be available to Director (regardless of, among other things, any amendment to or revocation of such By-Laws, any change in the composition of the Company's board of Directors or any acquisition transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Director to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Director under the Company's directors' and officers' liability insurance policies. NOW THEREFORE, in consideration of the premises and of Director agreeing to serve or continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. BASIC INDEMNIFICATION ARRANGEMENT (a) In the event Director was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim (as defined hereinafter) by reason of (or arising in part out of) an Indemnifiable Event (as defined hereinafter), the Company shall indemnify Director to the fullest extent permitted by law as soon as practicable, but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses (as defined hereinafter), judgments, fines, penalties and amounts paid in settlement of such Claim. If so requested by Director, the Company shall advance (within ten business days after such written request) any and all Expenses to Director an "Expense Advance". Notwithstanding anything in this Agreement to the contrary, and except as provided in Section 3 hereof, prior to a Change in Control (as defined hereinafter), Director shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Director against the Company or any director or officer of the Company, unless the Company has joined in or consented to the initiation of such Claim. (b) Notwithstanding the foregoing, (i) the obligations of the Company under Section 1(a) shall be subject to the condition that the Reviewing Party (as defined hereinafter) 2 shall not have determined (in a written opinion, in any case in which the special independent counsel referred to in Section 2 hereof is involved) that Director would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an Expense Advance pursuant to Section 1(a) shall be subject to the condition that, if when and to the extent that the Reviewing Party determines that Director would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Director (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Director has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Director should be indemnified under applicable law, any determination made by the Reviewing Party that Director would not be permitted to be indemnified under applicable law shall not be binding and Director shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has not been a Change in Control, the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control, the Reviewing Party shall be the special independent counsel referred to in Section 2 hereof. If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Director substantively would not be permitted to be indemnified in whole or in part under applicable law, Director shall have the right to commence litigation in any court in the states of Texas or Delaware having subject matter jurisdiction thereof and in which venue is proper, seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Director. 2. CHANGE IN CONTROL. The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control), then with respect to all matters thereafter arising concerning the rights of Director to indemnity payments and Expense Advances under this Agreement or any other agreement or Company By-Law now or hereafter in effect relating to Claims for Indemnifiable Events, the Company shall seek legal advice only from special independent counsel selected by Director and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company or Director within the last five years (other than in connection with such matters). Such counsel, among other things, shall render its written opinion to the Company and Director as to whether and to what extent Director would be permitted to be indemnified under applicable law. The Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses - 2 - 3 (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. 3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall indemnify Director against any and all expenses (including attorneys' fees) and, if requested by Director, shall (within ten business days after such written request) advance such expenses to Director, which are incurred by Director in connection with any claim asserted against or action brought by Director for (i) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or Company By-Law now or hereafter in effect relating to Claims for Idemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Director ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be. 4. PARTIAL INDEMNITY, ETC. If Director is entitled under any provision of this Agreement to indemnification by the Company of some or a portion of the Expenses, judgments, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Director for the portion thereof to which Director is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Director has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Director shall be indemnified against all Expenses incurred in connection therewith. In connection with any determination by the Reviewing Party or otherwise as to whether Director is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that Director is not so entitled. 5. NO PRESUMPTION. For purposes of this Agreement, the termination of any action, suit or proceeding by judgment, order, settlement (whether with or without court approval), conviction, or plea of nolo contendere, or its equivalent, shall not create a presumption that director did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 6. NON-EXCLUSIVITY, ETC. The rights of Director hereunder shall be in addition to any other rights Director may have under the Company's By-Laws or the Delaware General Corporation Law or otherwise. To the extent that a change in the Delaware General Corporation Law (whether by statute or judicial decision) or the Company's By-Laws permits greater indemnification by agreement than would be afforded currently under the Company's By-Laws and this Agreement, it is the intent of the parties hereto that Director shall enjoy by this Agreement the greater benefits so - 3 - 4 afforded by such change. 7. LIABILITY INSURANCE. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Director shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company director. 8. CERTAIN DEFINITIONS. (a) CHANGE IN CONTROL: shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 20% or more of the total voting power represented by the Company's then outstanding Voting Securities (as defined hereinafter), or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two- thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (b) CLAIM: any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation whether conducted by the Company or any other party, whether civil, criminal, administrative or investigative. (c) EXPENSES: include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, be a witness in or participate in any Claim relating to any Indemnifiable Event. - 4 - 5 (d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact that Director is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Director in any such capacity. (e) REVIEWING PARTY: any appropriate person or body consisting of a member or members of the Company's Board of Directors or any other person or body appointed by the Board (including the special independent counsel referred to in Section 2) who is not a party to the particular Claim for which Director is seeking indemnification. (f) VOTING SECURITIES: any securities of the Company which vote generally in the election of directors. 9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 10. SUBROGATION. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Director, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Director to the extent Director has otherwise actually received payment (under any insurance policy, By-Law or otherwise) of the amounts otherwise indemnifiable hereunder. 12. BINDING EFFECT, ETC. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Director continues to serve as a director (or in one of the capacities enumerated in Section 8(d) hereof) of the Company or of any other enterprise at the Company's request. 13. SEVERABILITY. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, - 5 - 6 paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 14. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed as of March 11, 1997. WEATHERFORD ENTERRA, INC. By: /s/ H. Suzanne Thomas ------------------------------------ Name: H. Suzanne Thomas Title: Senior Vice President, Secretary and General Counsel /s/ Thomas J. Edelman ---------------------------------------- Thomas J. Edelman - 6 - 7 INDEMNIFICATION AGREEMENT This AGREEMENT, effective as of October 5, 1995 is between Weatherford Enterra, Inc., a Delaware corporation (the "Company"), and Jon Nicholson (the "Officer"), an officer of the Company; WHEREAS, in recognition of Officer's need for substantial protection against personal liability in order to enhance Officer's continued service to the Company in an effective manner and of Officer's reliance on the provisions of the Company's By-Laws requiring indemnification of the Officer under certain circumstances, and in part to provide Officer with specific contractual assurance that the protection promised by such By-Laws will be available to Officer (regardless of, among other things, any amendment to or revocation of such By-Laws, any change in the composition of the Company's Board of Directors or any acquisition transaction relating to the Company), the Company wishes to provide in this Agreement for the indemnification of, and the advancing of expenses to, Officer to the fullest extent (whether partial or complete) permitted by law and as set forth in this Agreement, and, to the extent insurance is maintained, for the continued coverage of Officer under the Company's directors' and officers' liability insurance policies. NOW THEREFORE, in consideration of the premises and of Officer agreeing to serve or continuing to serve the Company directly or, at its request, with another enterprise, and intending to be legally bound hereby, the parties hereto agree as follows: 1. BASIC INDEMNIFICATION ARRANGEMENT (a) In the event Officer was, is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, a Claim (as defined hereinafter) by reason of (or arising in part out of) an Indemnifiable Event (as defined hereinafter), the Company shall indemnify Officer to the fullest extent permitted by law as soon as practicable, but in any event no later than 30 days after written demand is presented to the Company, against any and all Expenses (as defined hereinafter), judgments, fines, penalties and amounts paid in settlement of such Claim. If so requested by Officer, the Company shall advance (within ten business days after such written request) any and all Expenses to Officer (an "Expense Advance"). Notwithstanding anything in this Agreement to the contrary, and except as provided in Section 3 hereof, prior to a Change in Control (as defined hereinafter), Officer shall not be entitled to indemnification pursuant to this Agreement in connection with any Claim initiated by Officer against the Company or any director or officer of the Company, unless the Company has joined in or consented to the initiation of such Claim. 8 (b) Notwithstanding the foregoing, (I) the obligations of the Company under Section 1(a) shall be subject to the condition that the Reviewing Party (as defined hereinafter) shall not have determined (in a written opinion, in any case in which the special independent counsel referred to in Section 2 hereof is involved) that Officer would not be permitted to be indemnified under applicable law, and (ii) the obligation of the Company to make an Expense Advance pursuant to Section 1(a) shall be subject to the condition that, if, when and to the extent that the Reviewing Party determines that Officer would not be permitted to be so indemnified under applicable law, the Company shall be entitled to be reimbursed by Officer (who hereby agrees to reimburse the Company) for all such amounts theretofore paid; provided, however, that if Officer has commenced legal proceedings in a court of competent jurisdiction to secure a determination that Officer should be indemnified under applicable law, any determination made by the Reviewing Party that Officer would not be permitted to be indemnified under applicable law shall not be binding and Officer shall not be required to reimburse the Company for any Expense Advance until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed). If there has not been a Change in Control, the Reviewing Party shall be selected by the Board of Directors, and if there has been such a Change in Control, the Reviewing Party shall be the special independent counsel referred to in Section 2 hereof. If there has been no determination by the Reviewing Party or if the Reviewing Party determines that Officer substantively would not be permitted to be indemnified in whole or in part under applicable law, Officer shall have the right to commence litigation in any court in the states of Texas or Delaware having subject matter jurisdiction thereof and in which venue is proper, seeking an initial determination by the court or challenging any such determination by the Reviewing Party or any aspect thereof, and the Company hereby consents to service of process and to appear in any such proceeding. Any determination by the Reviewing Party otherwise shall be conclusive and binding on the Company and Officer. 2. CHANGE IN CONTROL. The Company agrees that if there is a Change in Control of the Company (other than a Change in Control which has been approved by a majority of the Company's Board of Directors who were directors immediately prior to such Change in Control), then with respect to all matters thereafter arising concerning the rights of Officer to indemnity payments and Expense Advances under this Agreement or any other agreement or Company By-Law now or hereafter in effect relating to Claims for Indemnifiable Events, the Company shall seek legal advice only from special independent counsel selected by Officer and approved by the Company (which approval shall not be unreasonably withheld), and who has not otherwise performed services for the Company or Officer within the last five years (other than in connection with such matters). Such counsel, among other things, shall render its written opinion to the Company and Officer as to whether and to what extent Officer would be permitted to be indemnified under applicable law. The 2 9 Company agrees to pay the reasonable fees of the special, independent counsel referred to above and to fully indemnify such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. 3. INDEMNIFICATION FOR ADDITIONAL EXPENSES. The Company shall indemnify Officer against any and all expenses (including attorneys' fees) and, if requested by Officer, shall (within ten business days after such written request) advance such expenses to Officer, which are incurred by Officer in connection with any claim asserted against or action brought by Officer for (I) indemnification or advance payment of Expenses by the Company under this Agreement or any other agreement or Company By-Law now or hereafter in effect relating to Claims for Indemnifiable Events and/or (ii) recovery under any directors' and officers' liability insurance policies maintained by the Company, regardless of whether Officer ultimately is determined to be entitled to such indemnification, advance expense payment or insurance recovery, as the case may be. 4. PARTIAL INDEMNITY, ETC. If Officer is entitled under any provision of this Agreement to indemnification by the Company of some or a portion of the Expenses, judgments, fines, penalties and amounts paid in settlement of a Claim but not, however, for all of the total amount thereof, the Company shall nevertheless indemnify Officer for the portion thereof to which Officer is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Officer has been successful on the merits or otherwise in defense of any or all Claims relating in whole or in part to an Indemnifiable Event or in defense of any issue or matter therein, including dismissal without prejudice, Officer shall be indemnified against all Expenses incurred in connection therewith. In connection with any determination by the Reviewing Party or otherwise as to whether Officer is entitled to be indemnified hereunder, the burden of proof shall be on the Company to establish that Officer is not so entitled. 5. NO PRESUMPTION. For purposes of this Agreement, the termination of any action, suit or proceeding by judgment, order, settlement (whether with or without court approval), conviction, or plea of nolo contendere, or its equivalent, shall not create a presumption that Officer did not meet any particular standard of conduct or have any particular belief or that a court has determined that indemnification is not permitted by applicable law. 6. NON-EXCLUSIVITY, ETC. The rights of Officer hereunder shall be in addition to any other rights Officer may have under the Company's By-Laws or the Delaware General Corporation Law or otherwise. To the extent that a change in the Delaware General Corporation Law (whether by statute or judicial decision) or the Company's By-Laws permits greater indemnification by agreement than would be afforded 3 10 currently under the Company's By-Laws and this Agreement, it is the intent of the parties hereto that Officer shall enjoy by this Agreement the greater benefits so afforded by such change. 7. LIABILITY INSURANCE. To the extent the Company maintains an insurance policy or policies providing directors' and officers' liability insurance, Officer shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any Company officer. 8. CERTAIN DEFINITIONS. (a) CHANGE IN CONTROL: shall be deemed to have occurred if (I) any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 20% or more of the total voting power represented by the Company's then outstanding Voting Securities (as defined hereinafter), or (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, or (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation or the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all the Company's assets. (b) CLAIM: any threatened, pending or completed action, suit or proceeding, or any inquiry or investigation whether conducted by the Company or any other party, whether civil, criminal, administrative or investigative. (c) EXPENSES: include attorneys' fees and all other costs, expenses and obligations paid or incurred in connection with investigating, defending, being a witness in or 4 11 participating in (including on appeal), or preparing to defend, be a witness in or participate in any Claim relating to any Indemnifiable Event. (d) INDEMNIFIABLE EVENT: any event or occurrence related to the fact that Officer is or was a director, officer, employee, agent or fiduciary of the Company, or is or was serving at the request of the Company as a director, officer, employee, trustee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or by reason of anything done or not done by Officer in any such capacity. (e) REVIEWING PARTY: any appropriate person or body consisting of a member or members of the Company's Board of Directors or any other person or body appointed by the Board (including the special independent counsel referred to in Section 2) who is not a party to the particular Claim for which Officer is seeking indemnification. (f) VOTING SECURITIES: any securities of the Company which vote generally in the election of directors. 9. AMENDMENTS AND WAIVER. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 10. SUBROGATION. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Officer, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 11. NO DUPLICATION OF PAYMENTS. The Company shall not be liable under this Agreement to make any payment in connection with any claim made against Officer to the extent Officer has otherwise actually received payment (under any insurance policy, By-Law or otherwise) of the amounts otherwise indemnifiable hereunder. 12. BINDING EFFECT, ETC. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors, assigns, including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company, spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether Officer continues to serve as a director or officer (or in one of the capacities enumerated in Section 8(d) hereof) of the Company or of any other enterprise at the Company's request. 5 12 13. SEVERABILITY. The provisions of this Agreement shall be severable in the event that any of the provisions hereof (including any provision within a single section, paragraph or sentence) are held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, and the remaining provisions shall remain enforceable to the fullest extent permitted by law. 14. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. Executed as of October 5, 1995. WEATHERFORD ENTERRA, INC. By: /s/ Philip Burguieres ------------------------------------ Name: Philip Burguieres Title: Chairman, President and Chief Executive Officer /s/ Jon Nicholson --------------------------------------- Jon Nicholson 6 EX-10.3 7 1987 STOCK OPTION PLAN, AS AMENDED & RESTATED 1 EXHIBIT 10.3 WEATHERFORD ENTERRA, INC. 1987 STOCK OPTION PLAN AS AMENDED AND RESTATED THROUGH OCTOBER 5, 1995 1. PURPOSE. This 1987 Stock Option Plan (the "Plan") of Weatherford Enterra, Inc. (the "Company"), for executive officers and other key employees (who may be members of the Board of Directors) of the Company and of certain related corporations, and others providing services to the Company and such related corporations (an "Optionee"), is intended to advance the best interest of the Company and those related corporations by providing those persons who have a substantial responsibility for its management and growth with additional incentive and by increasing their proprietary interest in the success of the Company and those related corporations--thereby encouraging them to continue their employment or affiliation. 2. ADMINISTRATION. The Plan shall be administered by a committee to be appointed by the Board of Directors of the Company (hereinafter called the "Committee"); and all questions of interpretation and application of the Plan, or of options granted hereunder (hereinafter called the "Options") shall be subject to the determination, which shall be final and binding, of the Committee. The Committee shall consist of not less than three members of the Board of Directors, all of whom shall be "disinterested persons". A "disinterested person" is a person who at the time he exercises discretion with respect to the grant of any Option is not, and for at least one year prior to that time has not been, eligible to receive options under the Plan or under other similar plans of the Company. A majority of its members will constitute a quorum. All determinations of the Committee will be made by a majority of its members. Any decision or determination reduced to writing and signed by a majority of the members will be as effective as if it had been made by a majority vote at a meeting properly called and held. The Plan shall be administered in such a manner as to permit the Options granted hereunder which are designated as such to qualify as "incentive stock options" ("Incentive Options") as described in section 422A of the Internal Revenue Code of 1986, as amended (the "Code"). 3. (a) SHARES AVAILABLE. The stock subject to the Options and other provisions of the Plan shall be shares of the Company's Common Stock, $0.10 par value (the "Stock"). The total amount of the Stock with respect to which Options may be granted shall not exceed in the aggregate 69,401 shares; provided, that such aggregate number of shares shall be subject to adjustment in accordance with the provisions of Paragraph 18 hereof. Such shares may be treasury shares or authorized but unissued shares. (b) MAXIMUM AWARD. The maximum aggregate number of shares of Stock available for Options to any one Optionee during any 12-month period is 200,000. 2 (c) SHARE COUNTING. For purposes of determining at any time the number of shares that remain available for grant under this Plan, the number of shares then authorized pursuant to Section 3 of the Plan shall be (i) decreased by the "gross" number of shares issued pursuant to exercised Options, (ii) decreased by the "gross" number of shares issuable pursuant to outstanding unexercised Options, and (iii) increased by the difference between the "gross" number of Shares and the "net" number of shares issued pursuant to exercised Options. As used herein, the "gross" number of shares refers to the maximum number of shares that may be issued upon the exercise of an Option. The "net" number of shares refers to the net number of shares actually issued to an Optionee upon exercise of an Option, after reducing the "gross" number of shares by the number of shares tendered back to the Company in payment of the Option Price (as defined hereinafter) for the satisfaction of any tax payment obligation. If an Optionee shall forfeit, voluntarily surrender or otherwise permanently lose his or her right to exercise an Option under any provision of this Plan or otherwise, or if any Option shall terminate or expire pursuant to its terms, the shares subject to the Option shall once again be available to be awarded and issued under this Plan pursuant to a new Option grant hereunder. 4. AUTHORITY TO GRANT OPTIONS. The Committee may grant from time to time to such eligible individuals as it shall from time to time determine an Option, or Options, to buy a stated number of shares of Stock under the terms and conditions of the Plan. With respect to each Option, the Committee shall specify whether such Option shall constitute an Incentive Option or an Option not intended to qualify as an Incentive Option (a "Nonqualified Option"). Subject only to any applicable limitations set forth elsewhere in the Plan, the number of shares of Stock to be covered by any Option shall be as determined by the Committee. 5. ELIGIBILITY. The individuals who shall be eligible to receive Incentive Options shall be such executive officers and other key employees (who may be members of the Board of Directors) of the Company, or of any parent or subsidiary corporation, as the Committee shall determine from time to time. With respect to Incentive Options, any reference to a parent or subsidiary corporation shall mean a parent corporation within the meaning of section 425(e) of the Code or a subsidiary corporation within the meaning of section 425(f) of the Code. The individuals who shall be eligible to receive Nonqualified Options shall be such executive officers and other key employees (who may be members of the Board of Directors) of the Company, or of any parent or subsidiary corporation, or any other person performing services for the Company or any parent or subsidiary corporation, as the Committee shall determine from time to time. With respect to Nonqualified Options, any reference to a parent corporation shall mean a corporation which has actual control of the Company through its direct or indirect ownership of not less than 51 percent of each class of voting stock of the Company; and any reference to a subsidiary corporation shall mean a corporation of which the Company owns, directly or indirectly, not less than 40 percent of each class of voting stock. 2 3 6. OPTION PRICE. The price at which shares may be purchased pursuant to an Option (the "Option Price") shall be determined by the Committee at the time each Option is granted but shall not be less than 100 percent of the Fair Market Value (as defined hereinafter) of the shares of Stock on the date the Option is granted. In the case of any employee of the Company or a parent or subsidiary corporation who owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the corporation employing the employee or of its parent or subsidiary corporation, the price at which shares may be so purchased under an Incentive Option shall be not less than 110 percent of the Fair Market Value of the Stock on the date the Incentive Option is granted. "Fair Market Value" for purposes of this Plan means the average of the high and low reported sales prices per share of Stock (as reported on the New York Stock Exchange) as of the relevant measuring date, or if there is no sale on the New York Stock Exchange on that date, then as of the next following day on which there is a sale. 7. DURATION OF OPTIONS. Each Option shall expire on the tenth (10th) anniversary date of its grant. In the case of any employee of the Company who owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the corporation employing the employee or of its parent or subsidiary corporation, no Incentive Option shall be exercisable after the expiration of five years after the date such Incentive Option is granted. The Committee in its discretion may provide that an Option shall be exercisable during such 10-year period or five-year period, as the case may be, or during any lesser period of time. 8. MAXIMUM VALUE OF STOCK SUBJECT TO INCENTIVE OPTIONS. Notwithstanding any other provisions of the Plan to the contrary, the aggregate Fair Market Value (determined as of the date the Incentive Option is granted) of the Stock with respect to which Incentive Options are exercisable for the first time by the Optionee in any calendar year (under this Plan and any other incentive stock option plan(s) of the Company and any parent and subsidiary corporation) shall not exceed $100,000. 9. AMOUNT EXERCISABLE. Each Option may be exercised, so long as it is valid and outstanding, from time to time, in whole or in part, in such manner and subject to such conditions, as the Committee in its discretion may provide in the option agreement (described in Paragraph 22 hereof). 10. EXERCISE OF OPTIONS. (a) NOTICE. Options shall be exercised by the delivery of written notice (the "Exercise Notice") to the Secretary of the Company setting forth the number of shares with respect to which the Option is to be exercised and the address to which the certificates representing shares of the Stock issuable upon the exercise of such Option shall be mailed (the "Exercise Date"). The date on which the Exercise Notice is delivered to the Company is the "Notice Date". 3 4 (b) PAYMENT. Unless otherwise prescribed by the Committee, the Optionee shall tender to the Company on, or within three business days after, the Exercise Date full payment of the Option Price for the shares of Stock, together with any federal, state or local taxes required to be collected or withheld by the Company in connection with the exercise of the Option ("Taxes"), in cash (by personal check, cashier's check, certified check, bank draft or postal or express money order payable to the order of the Company or by payroll deduction). Alternatively, subject to the provisions of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), payment of the Option Price and any Taxes may be made by the Optionee's delivering to the Company the Exercise Notice together with irrevocable instructions to a broker to promptly deliver to the Company an amount equal to the Option Price of such shares of Stock and any Taxes, such amount being either from loan proceeds or from the sale of the shares of Stock to be issued to the Optionee. Alternatively, unless otherwise provided in the option agreement, payment of the Option Price and any Taxes may be made in whole or in part in shares of Stock previously issued to the Optionee, if at the time of delivery of the Exercise Notice (i) the Company has unrestricted earned surplus in an amount not less than the Option Price of such shares, (ii) all accrued cumulative preferential dividends and other current preferential dividends on all outstanding preferred stock of the Company have been fully paid, (iii) the reacquisition or exchange by the Company of its own shares for the purpose of enabling such Optionee to exercise such Option is otherwise permitted by applicable law and without any vote or consent of any shareholder of the Company and would not result in the Company's being in violation of any agreement by which it is bound, and (iv) there shall have been adopted, and there is in full force and effect, a resolution of the Board of Directors of the Company authorizing the reacquisition by the Company of its own shares for such purpose. If payment is made in whole or in part in shares of Stock, then the Optionee shall deliver to the Company, in payment of the Option Price of the shares with respect of which such Option is exercised, (i) certificates registered in the name of such Optionee representing a number of shares of Stock legally and beneficially owned by such Optionee, free of all liens, claims, and encumbrances of every kind, and having a Fair Market Value on the date of delivery of such notice that is not greater than the Option Price of the shares with respect to which such Option is to be exercised, such certificates to be accompanied by stock powers duly endorsed in blank by the record holder of the shares represented by such certificates, with the signature of such record holder guaranteed by a national banking association, and (ii) if the Option Price of the shares with respect to which such Option is to be exercised exceeds the Fair Market Value of such certificates, payment of the difference shall be made as provided above. Notwithstanding the foregoing provisions of this Paragraph 10, the Committee, in its sole discretion, may refuse to accept shares of Stock in payment of the Option Price of the shares with respect to which such Option is to be exercised and, in that event, any certificates representing shares of Stock which were delivered to the Company with such written notice shall be returned to such Optionee together with notice by the Company to such Optionee of the refusal of the Committee to accept such shares of Stock. 4 5 (c) STOCK PURCHASE AGREEMENT. In its sole and absolute discretion, the Committee may require, as an additional condition to the issuance of Stock upon exercise of an Option, that the Optionee furnish the Committee with an executed copy of a stock purchase agreement, in such form as may be required by the Committee, at the time the Exercise Notice is delivered to the Company or within three business days after the proposed agreement is presented to the Optionee, if later. (d) SHARE CERTIFICATES. As promptly as practicable after the receipt by the Company of (i) the Exercise Notice from the Optionee setting forth the number of shares with respect to which such Option is to be exercised, (ii) payment of the Option Price of such shares in the form required by the foregoing provisions of this Paragraph 10, and (iii) a fully executed stock purchase agreement in the form required by the Committee, if any is so required, the Company shall cause to be delivered to such Optionee (or to a specified escrow agent, if so required under the terms of any applicable stock purchase agreement) certificates representing the number of shares of Stock with respect to which such Option has been so exercised, such certificates to be registered in the name of such Optionee, provided that such delivery shall be considered to have been made when such certificates shall have been mailed, postage prepaid, to such Optionee at the address specified for such purpose in the Exercise Notice from the Optionee to the Company. (e) VALUATION. Any calculation with respect to an Optionee's income, required tax withholding or otherwise shall be made using the Fair Market Value of such shares of Stock on the Notice Date, whether or not the Exercise Notice is delivered to the Company before or after the close of trading on that date, unless otherwise specified by the Committee. 11. TRANSFERABILITY OF OPTIONS. Options shall not be transferable by the Optionee otherwise than by will or under the laws of descent and distribution, and shall be exercisable, during his lifetime, only by the Optionee. 12. TERMINATION OF EMPLOYMENT OR AFFILIATION OF OPTIONEE. Except as may be otherwise expressly provided in this Paragraph 12 or elsewhere in the Plan, if the Optionee's employment with the Company is terminated, the Optionee shall have the right to exercise the Option, to the extent to which he was entitled to exercise such Option immediately prior to such termination, at any time during the period ending the earlier of 30 days after such termination and the expiration of the Option. Whether authorized leave of absence, or absence on military or government service, shall constitute severance of the employment or affiliation relationship between the Company and the Optionee shall be determined by the Committee at the time thereof. In the event of the death of the Optionee while affiliated with or in the employ of the Company, or within three months after his retirement or termination due to age or disability as provided below, such Option shall terminate on the earlier of one year following the date of such death and the expiration of the Option. After the death of the Optionee, the time for exercise of the Option shall be accelerated and the Option shall be 5 6 exercisable in full, and the Optionee's executors, administrators or any persons to whom his Option may be transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to such termination, to exercise the Option, in whole or in part, without regard to any limitations set forth in or imposed pursuant to Paragraph 9 hereof. If, before the date of expiration of the Option, the Optionee shall be retired in good standing from the employ of the Company, or the affiliation shall be severed for reasons of age or disability under the then established rules of the Company, the Option shall terminate on the earlier of three months after the date of such retirement or severance and the expiration of the Option. In the event of such retirement or severance, the Optionee shall have the right prior to the termination of such Option to exercise the Option to the extent to which he was entitled to exercise such Option immediately prior to such retirement or severance. For the purpose of determining the employment relationship or other affiliation between the Company and the Optionee, employment by or affiliation with any parent or subsidiary corporation shall be considered employment by or affiliation with the Company. 13. REQUIREMENTS OF LAW. The Company shall not be required to sell or issue any shares of Stock under any Option if the issuance of such shares shall constitute or result in a violation by the Optionee or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically in connection with the Securities Act of 1933, as now in effect or hereafter amended (the "Securities Act"), upon exercise of any Option, the Company shall not be required to issue such shares unless the Committee has received evidence satisfactory to it to the effect that the Optionee will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Committee shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register the shares of Stock covered hereby pursuant to the Securities Act. In the event the shares of Stock issuable on exercise of an Option are not registered under the Securities Act, the Company may imprint the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act: "The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any State and may not be sold or transferred except upon such registration or upon receipt by the Corporation of an opinion of counsel satisfactory to the Corporation, in form and substance satisfactory to the Corporation, that registration is not required for such sale or transfer." The Company shall not be obligated to take any other affirmative action in order to cause the exercise of an Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. 6 7 14. NO RIGHTS AS STOCKHOLDER. No Optionee shall have rights as a stockholder with respect to shares of Stock covered by his Option until the date of issuance of a stock certificate for such shares; and, except as otherwise provided in Paragraph 18 hereof, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such certificate. 15. EMPLOYMENT OR AFFILIATION OBLIGATION. The granting of an Option shall not impose upon the Company or any parent or subsidiary corporation any obligation to employ or become affiliated with, or continue to employ or be affiliated with, any Optionee; and the right of the Company or any parent or subsidiary corporation to terminate the employment or affiliation of any person shall not be diminished or affected by reason of the fact that an Option has been granted to him. 16. FORFEITURE FOR COMPETITION. Notwithstanding any other provision of the Plan, if at any time during the term of an Option granted hereunder the Committee finds by a majority vote, after full consideration of the facts presented on behalf of the Company and the Optionee, that such Optionee, without the written consent of the Company, directly or indirectly owns, operates, manages, controls or participates in the ownership, management, operation or control of, or is employed by or is paid as a consultant or as an independent contractor by a business which competes with the Company or any parent or subsidiary corporation in the trade area served by the Company or any parent or subsidiary corporation at any time during the term of the Option but prior to its exercise in full and in which area the Optionee had performed services for the Company or any parent or subsidiary corporation while employed by it, the Optionee shall forfeit all unexercised Options and all exercised Options under which the Company has not yet delivered the certificates and which had been granted to the Optionee by the Committee earlier. The preceding provisions of this Paragraph 16 shall not be deemed to have been violated solely by reason of the Optionee's ownership of a stock or securities of any publicly owned corporation, provided that such ownership does not result in effective control of such corporation, and provided further that written notice of such ownership, if in excess of one percent of the outstanding stock of said corporation, is given to the Committee within 60 days after the later of (i) the date on which the Optionee is notified of the award of an Option, or (ii) the date on which such ownership is acquired. 17. FORFEITURE FOR DISHONESTY. Notwithstanding anything to the contrary in the Plan, if the Committee finds by a majority vote, after full consideration of the facts presented on behalf of both the Company and the Optionee, that the Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his employment by or affiliation with the Company or any parent or subsidiary corporation which damaged the Company or any parent or subsidiary corporation, or for disclosing trade secrets of the Company or any parent or subsidiary corporation, the Optionee shall forfeit all unexercised Options and all exercised Options under which the Company has not yet delivered the certificates and which had been granted the Optionee by the Committee earlier. 7 8 The decision of the Committee as to the cause of an Optionee's discharge and the damage done to the Company or any parent or subsidiary corporation shall be final. No decision of the Committee, however, shall affect the finality of the discharge of such Optionee by the Company or any parent or subsidiary corporation in any manner. 18. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of outstanding Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. If the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of Stock outstanding, without receiving compensation therefor in money, services or property, then (a) the number, class and per share price of shares of Stock subject to outstanding Options hereunder shall be appropriately adjusted in such a manner as to entitle an Optionee to receive upon exercise of an Option, for the same aggregate cash consideration, the same total number and class of shares as he would have received had he exercised his Option in full immediately prior to the event requiring the adjustment; and (b) the number and class of shares then reserved for issuance under the Plan shall be adjusted by substituting for the total number and class of shares of Stock then reserved that number and class of shares of stock that would have been received by the owner of an equal number of outstanding shares of each class of stock as the result of the event requiring the adjustment; provided in each case that with respect to Incentive Stock Options and Nonqualified Options intended to be qualified as performance-based compensation under Section 162(m)(4)(C) of the Code, no adjustment shall be authorized to the extent that the adjustment would cause the Plan to violate Section 422(b)(1) of the Code or would cause any part of such Option to fail to qualify under Section 162(m) of the Code, as the case may be, or any successor provisions thereto, and provided further, that the number of shares of Stock subject to any Option shall always be a whole number. After a merger of one or more corporations into the Company or after a consolidation of the Company and one or more corporations in which the Company shall be the surviving corporation, without regard to any limitations set forth or imposed pursuant to Paragraph 9 hereof, each holder of an outstanding Option shall, at no additional cost, be entitled upon exercise of such Option to receive (subject to any required action by stockholders) in lieu of the number and class of shares as to which such Option shall then be so exercisable, the number and class of shares of stock or other securities to which such Optionee would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately prior to such merger or consolidation, such Optionee had been 8 9 the holder of record of the number and class of shares of Stock equal to the number and class of shares as to which such Option shall be so exercised. Notwithstanding any other provision of this Paragraph 18, if (i) the Company merges or consolidates with any other corporation (other than a wholly owned subsidiary) and is not the surviving corporation (or survives only as a subsidiary of another corporation), (ii) the Company sells all or substantially all of its assets to any other person or entity (other than a wholly owned subsidiary), (iii) the Company is dissolved or liquidated, or (iv) there is a Change of Control (as hereinafter defined) of the Company that is not approved, recommended or supported by the Board of Directors of the Company in actions taken prior to, and with respect to, such Change of Control, the Optionee shall have the right, within 30 days after the approval by the stockholders of the Company of such merger or consolidation, sale of assets or dissolution or the occurrence of such Change of Control, to elect to surrender all or part of such Options outstanding, irrespective of whether such Options are then exercisable, in exchange for a cash payment by the Company in an amount equal to the number of shares of Stock subject to the Option held by such Optionee multiplied by the difference between the Change of Control Price (as defined below) and the Option Price of a particular Option; provided, however, that if the occurrence of an event specified herein is within six months after the date of grant of a particular Option held by an Optionee who is subject to Section 16(b) of the Exchange Act, any cash payment to the Optionee shall be made on the day which is six months and one day after the date of grant of such Option. Notwithstanding the foregoing, if any right granted pursuant to the foregoing would make any of the occurrences specified above ineligible for pooling of interests accounting treatment under APB No. 16 that but for this provision would otherwise be eligible for such accounting treatment, the Optionee shall receive shares of Stock with a Fair Market Value equal to the cash that would otherwise be payable hereunder in substitution for the cash. If an Optionee does not elect to surrender all outstanding Options for a cash payment (or shares of Stock) as provided above, such Options, or replacement or substitution Options to be issued by the surviving or acquiring corporation, shall become fully exercisable, to the extent they are not, and shall remain exercisable for three months after the Optionee's termination of employment or until the stated expiration of the term of the Option, whichever is shorter. In the event that the consideration offered to stockholders of the Company in any transaction described in this paragraph consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash. For purpose of this Plan, "Change of Control" means: a) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") acquires of beneficial ownership of 20 percent or more of either (i) the then outstanding shares of Stock or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (a), a Person shall not include the Company or any subsidiary or any employee benefit plan (or related trust) sponsored or maintained by 9 10 the Company or any subsidiary; or b) as a result of, or in connection with, a contested election for directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board of Directors of the Company. The Committee shall determine whether a Change of Control has occurred within the herein meaning and shall determine whether any such Change of Control has been approved, recommended or supported by the Board of Directors of the Company, and its determination shall be final and conclusive. For purposes of this Plan, "Change of Control Price" means the higher of (i) the highest reported sales price of a share of Stock in any transaction reported on the New York Stock Exchange during the 60-day period prior to and including the date of the approval by the stockholders of the Company of such merger, sale of assets or dissolution or the occurrence of the Change of Control and (ii) if the Change of Control is the result of a tender or exchange offer, the highest price per share of Stock paid in such tender or exchange offer; provided, however, that in the case of an Option which is held by an Optionee who is subject to Section 16(b) of the Exchange Act and was granted within six months of the occurrence of an event specified herein, then the Change of Control Price for such Option shall be the Fair Market Value of the Stock on the date such Option is cancelled. Except as hereinbefore expressly provided, the issue by the Company of shares of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, class or price of shares of Stock then subject to outstanding Options. 19. SUBSTITUTION OPTIONS. Options may be granted under this Plan from time to time in substitution for stock options held by employees of other corporations who are about to become employees of or affiliated with the Company or any parent or subsidiary corporation as the result of a merger or consolidation of the employing corporation with the Company or any parent or subsidiary corporation, or the acquisition by the Company or any parent or subsidiary corporation of the assets of the employing corporation, or the acquisition by the Company or any parent or subsidiary corporation of stock of the employing corporation as the result of which it becomes a subsidiary of the Company. The terms and conditions of the substitute Options so granted may vary from the terms and conditions set forth in this Plan to such extent as the Board of Directors of the Company at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted. 20. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may modify, revise or terminate this Plan at any time and from time to time; provided, however, that without the further approval of the holders of at least a majority of the outstanding shares of Stock, the Board of Directors may not (i) materially increase the benefits accruing to 10 11 participants under the Plan; (ii) change the aggregate number of shares of Stock which may be issued under Options pursuant to the provisions of the Plan; (iii) reduce the Option Price at which Options may be granted to an amount less than the Fair Market Value per share at the time the Option is granted; or (iv) change the class of employees eligible to receive Options; provided, however, that the Board shall have the power to make such changes in the Plan and in the regulations and administrative provisions hereunder or in any outstanding Incentive Option as in the opinion of counsel for the Company may be necessary or appropriate from time to time to enable any Incentive Option granted pursuant to the Plan to qualify as an incentive stock option or such other stock option as may be defined under the Code so as to receive preferential federal income tax treatment. 21. INTENTIONALLY OMITTED. 22. WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied in a written option agreement, which shall be subject to the terms and conditions prescribed above and shall be signed by the Optionee and by an authorized officer of the Company for and in the name and on behalf of the Company. Such an option agreement shall contain such other provisions as the Committee in its discretion shall deem advisable. 23. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With respect to administration of the Plan, the Company shall indemnify each present and future member of the Committee and the Board of Directors against, and each member of the Committee and the Board of Directors shall be entitled without further act on his part to indemnity from the Company for, all expenses (including the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a member of the Committee and the Board of Directors, whether or not he continues to be such member of the Committee and the Board of Directors at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such member of the Committee and the Board of Directors (i) in respect of matters as to which he shall be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as such member of the Committee and the Board of Directors, or (ii) in respect of any matter in which any settlement is effected, to an amount in excess of the amount approved by the Company on the advice of its legal counsel; and provided further, that no right of indemnification under the provisions set forth herein shall be available to or enforceable by any such member of the Committee and the Board of Directors unless, within 60 days after institution of any such action, suit or proceeding, he shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Committee and the Board of Directors and shall be in addition to all 11 12 other rights to which such member of the Committee and the Board of Directors may be entitled as a matter of law, contract or otherwise. 24. EFFECT OF AMENDMENTS. This 1987 Stock Option Plan, as amended through October 5, 1995, constitutes a complete amendment and restatement of such Plan. Any Option granted under the Plan shall be subject to the terms of the Plan as in effect at the time the Option is granted; provided, however, that by agreement between the Committee and the Optionee, any such Option may be amended to incorporate and become subject to the provisions of the Plan as amended through a date which is subsequent to the date on which the Option was granted. 25. EFFECTIVE DATE OF PLAN. The Plan became effective March 18, 1987. No Option shall be granted pursuant to this Plan after March 17, 1997. 12 EX-10.4 8 1991 STOCK OPTION PLAN, AS AMENDED & RESTATED 1 EXHIBIT 10.4 WEATHERFORD ENTERRA, INC. 1991 STOCK OPTION PLAN AS AMENDED AND RESTATED THROUGH OCTOBER 5, 1995 1. PURPOSE. This 1991 Stock Option Plan (the "Plan") of Weatherford Enterra, Inc. (the "Company"), for executive officers and other key employees (who may be members of the Board of Directors) of the Company and of certain related corporations, and others providing services to the Company and such related corporations (an "Optionee"), is intended to advance the best interest of the Company and those related corporations by providing those persons who have a substantial responsibility for its management and growth with additional incentive and by increasing their proprietary interest in the success of the Company and those related corporations--thereby encouraging them to continue their employment or affiliation. 2. ADMINISTRATION. The Plan shall be administered by a committee to be appointed by the Board of Directors of the Company (hereinafter called the "Committee"); and all questions of interpretation and application of the Plan, or of options granted hereunder (hereinafter called the "Options") shall be subject to the determination, which shall be final and binding, of the Committee. The Committee shall consist of not less than three members of the Board of Directors, all of whom shall be "disinterested persons". A "disinterested person" is a person who at the time he exercises discretion with respect to the grant of any Option is not, and for at least one year prior to that time has not been, eligible to receive options under the Plan or under other similar plans of the Company. A majority of its members will constitute a quorum. All determinations of the Committee will be made by a majority of its members. Any decision or determination reduced to writing and signed by a majority of the members will be as effective as if it had been made by a majority vote at a meeting properly called and held. The Plan shall be administered in such a manner as to permit the Options granted hereunder which are designated as such to qualify as "incentive stock options" ("Incentive Options") as described in section 422A of the Internal Revenue Code of 1986, as amended (the "Code"). 3. (a) SHARES AVAILABLE. The stock subject to the Options and other provisions of the Plan shall be shares of the Company's Common Stock, $0.10 par value (the "Stock"). The total amount of the Stock with respect to which Options may be granted shall not exceed in the aggregate 1,814,894 shares; provided, that such aggregate number of shares shall be subject to adjustment in accordance with the provisions of Paragraph 18 hereof. Such shares may be treasury shares or authorized but unissued shares. - 1 - 2 (b) MAXIMUM AWARD. The maximum aggregate number of shares of Stock available for Options to any one Optionee during any 12-month period is 200,000. (c) SHARE COUNTING. For purposes of determining at any time the number of shares that remain available for grant under this Plan, the number of shares then authorized pursuant to Section 3 of the Plan shall be (i) decreased by the "gross" number of shares issued pursuant to exercised Options, (ii) decreased by the "gross" number of shares issuable pursuant to outstanding unexercised Options, and (iii) increased by the difference between the "gross" number of Shares and the "net" number of shares issued pursuant to exercised Options. As used herein, the "gross" number of shares refers to the maximum number of shares that may be issued upon the exercise of an Option. The "net" number of shares refers to the net number of shares actually issued to an Optionee upon exercise of an Option, after reducing the "gross" number of shares by the number of shares tendered back to the Company in payment of the Option Price (as defined hereinafter) for the satisfaction of any tax payment obligation. If an Optionee shall forfeit, voluntarily surrender or otherwise permanently lose his or her right to exercise an Option under any provision of this Plan or otherwise, or if any Option shall terminate or expire pursuant to its terms, the shares subject to the Option shall once again be available to be awarded and issued under this Plan pursuant to a new Option grant hereunder. 4. AUTHORITY TO GRANT OPTIONS. The Committee may grant from time to time to such eligible individuals as it shall from time to time determine an Option, or Options, to buy a stated number of shares of Stock under the terms and conditions of the Plan. With respect to each Option, the Committee shall specify whether such Option shall constitute an Incentive Option or an Option not intended to qualify as an Incentive Option (a "Nonqualified Option"). Subject only to any applicable limitations set forth elsewhere in the Plan, the number of shares of Stock to be covered by any Option shall be as determined by the Committee. 5. ELIGIBILITY. The individuals who shall be eligible to receive Incentive Options shall be such executive officers and other key employees (who may be members of the Board of Directors) of the Company, or of any parent or subsidiary corporation, as the Committee shall determine from time to time. With respect to Incentive Options, any reference to a parent or subsidiary corporation shall mean a parent corporation within the meaning of section 425(e) of the Code or a subsidiary corporation within the meaning of section 425(f) of the Code. The individuals who shall be eligible to receive Nonqualified Options shall be such executive officers and other key employees (who may be members of the Board of Directors) of the Company, or of any parent or subsidiary corporation, or any other person performing services for the Company or any parent or subsidiary corporation, as the Committee - 2 - 3 shall determine from time to time. With respect to Nonqualified Options, any reference to a parent corporation shall mean a corporation which has actual control of the Company through its direct or indirect ownership of not less than 51 percent of each class of voting stock of the Company; and any reference to a subsidiary corporation shall mean a corporation of which the Company owns, directly or indirectly, not less than 40 percent of each class of voting stock. 6. OPTION PRICE. The price at which shares may be purchased pursuant to an Option (the "Option Price") shall be determined by the Committee at the time each Option is granted but shall not be less than 100 percent of the Fair Market Value (as defined hereinafter) of the shares of Stock on the date the Option is granted. In the case of any employee of the Company or a parent or subsidiary corporation who owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the corporation employing the employee or of its parent or subsidiary corporation, the price at which shares may be so purchased under an Incentive Option shall be not less than 110 percent of the Fair Market Value of the Stock on the date the Incentive Option is granted. "Fair Market Value" for purposes of this Plan means the average of the high and low reported sales prices per share of Stock (as reported on the New York Stock Exchange) as of the relevant measuring date, or if there is no sale on the New York Stock Exchange on that date, then as of the next following day on which there is a sale. 7. DURATION OF OPTIONS. Each Option shall expire on the tenth (10th) anniversary date of its grant. In the case of any employee of the Company who owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the corporation employing the employee or of its parent or subsidiary corporation, no Incentive Option shall be exercisable after the expiration of five years after the date such Incentive Option is granted. The Committee in its discretion may provide that an Option shall be exercisable during such 10-year period or five-year period, as the case may be, or during any lesser period of time. 8. MAXIMUM VALUE OF STOCK SUBJECT TO INCENTIVE OPTIONS. Notwithstanding any other provisions of the Plan to the contrary, the aggregate Fair Market Value (determined as of the date the Incentive Option is granted) of the Stock with respect to which Incentive Options are exercisable for the first time by the Optionee in any calendar year (under this Plan and any other incentive stock option plan(s) of the Company and any parent and subsidiary corporation) shall not exceed $100,000. 9. AMOUNT EXERCISABLE. Each Option may be exercised, so long as it is valid and outstanding, from time to time, in whole or in part, in such manner and - 3 - 4 subject to such conditions, as the Committee in its discretion may provide in the option agreement (described in Paragraph 22 hereof). 10. EXERCISE OF OPTIONS. (a) NOTICE. Options shall be exercised by the delivery of written notice (the "Exercise Notice") to the Secretary of the Company setting forth the number of shares with respect to which the Option is to be exercised and the address to which the certificates representing shares of the Stock issuable upon the exercise of such Option shall be mailed (the "Exercise Date"). The date on which the Exercise Notice is delivered to the Company is the "Notice Date". (b) PAYMENT. Unless otherwise prescribed by the Committee, the Optionee shall tender to the Company on, or within three business days after, the Exercise Date full payment of the Option Price for the shares of Stock, together with any federal, state or local taxes required to be collected or withheld by the Company in connection with the exercise of the Option ("Taxes"), in cash (by personal check, cashier's check, certified check, bank draft or postal or express money order payable to the order of the Company or by payroll deduction). Alternatively, subject to the provisions of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), payment of the Option Price and any Taxes may be made by the Optionee's delivering to the Company the Exercise Notice together with irrevocable instructions to a broker to promptly deliver to the Company an amount equal to the Option Price of such shares of Stock and any Taxes, such amount being either from loan proceeds or from the sale of the shares of Stock to be issued to the Optionee. Alternatively, unless otherwise provided in the option agreement, payment of the Option Price and any Taxes may be made in whole or in part in shares of Stock previously issued to the Optionee, if at the time of delivery of the Exercise Notice (i) the Company has unrestricted earned surplus in an amount not less than the Option Price of such shares, (ii) all accrued cumulative preferential dividends and other current preferential dividends on all outstanding preferred stock of the Company have been fully paid, (iii) the reacquisition or exchange by the Company of its own shares for the purpose of enabling such Optionee to exercise such Option is otherwise permitted by applicable law and without any vote or consent of any shareholder of the Company and would not result in the Company's being in violation of any agreement by which it is bound, and (iv) there shall have been adopted, and there is in full force and effect, a resolution of the Board of Directors of the Company authorizing the reacquisition by the Company of its own shares for such purpose. If payment is made in whole or in part in shares of Stock, then the Optionee shall deliver to the Company, in payment of the Option Price of the shares with respect of which such Option is exercised, (i) certificates registered in the name of such Optionee representing a number of shares of Stock legally and beneficially owned by such - 4 - 5 Optionee, free of all liens, claims, and encumbrances of every kind, and having a Fair Market Value on the date of delivery of such notice that is not greater than the Option Price of the shares with respect to which such Option is to be exercised, such certificates to be accompanied by stock powers duly endorsed in blank by the record holder of the shares represented by such certificates, with the signature of such record holder guaranteed by a national banking association, and (ii) if the Option Price of the shares with respect to which such Option is to be exercised exceeds the Fair Market Value of such certificates, payment of the difference shall be made as provided above. Notwithstanding the foregoing provisions of this Paragraph 10, the Committee, in its sole discretion, may refuse to accept shares of Stock in payment of the Option Price of the shares with respect to which such Option is to be exercised and, in that event, any certificates representing shares of Stock which were delivered to the Company with such written notice shall be returned to such Optionee together with notice by the Company to such Optionee of the refusal of the Committee to accept such shares of Stock. (c) STOCK PURCHASE AGREEMENT. In its sole and absolute discretion, the Committee may require, as an additional condition to the issuance of Stock upon exercise of an Option, that the Optionee furnish the Committee with an executed copy of a stock purchase agreement, in such form as may be required by the Committee, at the time the Exercise Notice is delivered to the Company or within three business days after the proposed agreement is presented to the Optionee, if later. (d) SHARE CERTIFICATES. As promptly as practicable after the receipt by the Company of (i) the Exercise Notice from the Optionee setting forth the number of shares with respect to which such Option is to be exercised, (ii) payment of the Option Price of such shares in the form required by the foregoing provisions of this Paragraph 10, and (iii) a fully executed stock purchase agreement in the form required by the Committee, if any is so required, the Company shall cause to be delivered to such Optionee (or to a specified escrow agent, if so required under the terms of any applicable stock purchase agreement) certificates representing the number of shares of Stock with respect to which such Option has been so exercised, such certificates to be registered in the name of such Optionee, provided that such delivery shall be considered to have been made when such certificates shall have been mailed, postage prepaid, to such Optionee at the address specified for such purpose in the Exercise Notice from the Optionee to the Company. (e) VALUATION. Any calculation with respect to an Optionee's income, required tax withholding or otherwise shall be made using the Fair Market Value of such shares of Stock on the Notice Date, whether or not the Exercise Notice is delivered to the Company before or after the close of trading on that date, unless otherwise specified by the Committee. - 5 - 6 11. TRANSFERABILITY OF OPTIONS. Options shall not be transferable by the Optionee otherwise than by will or under the laws of descent and distribution, and shall be exercisable, during his lifetime, only by the Optionee. 12. TERMINATION OF EMPLOYMENT OR AFFILIATION OF OPTIONEE. Except as may be otherwise expressly provided in this Paragraph 12 or elsewhere in the Plan, if the Optionee's employment with the Company is terminated, the Optionee shall have the right to exercise the Option, to the extent to which he was entitled to exercise such Option immediately prior to such termination, at any time during the period ending the earlier of 30 days after such termination and the expiration of the Option. Whether authorized leave of absence, or absence on military or government service, shall constitute severance of the employment or affiliation relationship between the Company and the Optionee shall be determined by the Committee at the time thereof. In the event of the death of the Optionee while affiliated with or in the employ of the Company, or within three months after his retirement or termination due to age or disability as provided below, such Option shall terminate on the earlier of one year following the date of such death and the expiration of the Option. After the death of the Optionee, the time for exercise of the Option shall be accelerated and the Option shall be exercisable in full, and the Optionee's executors, administrators or any persons to whom his Option may be transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to such termination, to exercise the Option, in whole or in part, without regard to any limitations set forth in or imposed pursuant to Paragraph 9 hereof. If, before the date of expiration of the Option, the Optionee shall be retired in good standing from the employ of the Company, or the affiliation shall be severed for reasons of age or disability under the then established rules of the Company, the Option shall terminate on the earlier of three months after the date of such retirement or severance and the expiration of the Option. In the event of such retirement or severance, the Optionee shall have the right prior to the termination of such Option to exercise the Option to the extent to which he was entitled to exercise such Option immediately prior to such retirement or severance. For the purpose of determining the employment relationship or other affiliation between the Company and the Optionee, employment by or affiliation with any parent or subsidiary corporation shall be considered employment by or affiliation with the Company. 13. REQUIREMENTS OF LAW. The Company shall not be required to sell or issue any shares of Stock under any Option if the issuance of such shares shall constitute or result in a violation by the Optionee or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically in connection with the Securities Act of 1933, as now in effect or hereafter amended (the "Securities Act"), upon exercise of any Option, the Company shall not be required to issue such shares unless the Committee has received evidence satisfactory to it to the - 6 - 7 effect that the Optionee will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Committee shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register the shares of Stock covered hereby pursuant to the Securities Act. In the event the shares of Stock issuable on exercise of an Option are not registered under the Securities Act, the Company may imprint the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act: "The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any State and may not be sold or transferred except upon such registration or upon receipt by the Corporation of an opinion of counsel satisfactory to the Corporation, in form and substance satisfactory to the Corporation, that registration is not required for such sale or transfer." The Company shall not be obligated to take any other affirmative action in order to cause the exercise of an Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. 14. NO RIGHTS AS STOCKHOLDER. No Optionee shall have rights as a stockholder with respect to shares of Stock covered by his Option until the date of issuance of a stock certificate for such shares; and, except as otherwise provided in Paragraph 18 hereof, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such certificate. 15. EMPLOYMENT OR AFFILIATION OBLIGATION. The granting of an Option shall not impose upon the Company or any parent or subsidiary corporation any obligation to employ or become affiliated with, or continue to employ or be affiliated with, any Optionee; and the right of the Company or any parent or subsidiary corporation to terminate the employment or affiliation of any person shall not be diminished or affected by reason of the fact that an Option has been granted to him. 16. FORFEITURE FOR COMPETITION. Notwithstanding any other provision of the Plan, if at any time during the term of an Option granted hereunder the Committee finds by a majority vote, after full consideration of the facts presented on behalf of the Company and the Optionee, that such Optionee, without the written consent of the Company, directly or indirectly owns, operates, manages, controls or participates in the ownership, management, operation or control of, or is employed by or is paid as a consultant or as an independent contractor by a business which competes with the - 7 - 8 Company or any parent or subsidiary corporation in the trade area served by the Company or any parent or subsidiary corporation at any time during the term of the Option but prior to its exercise in full and in which area the Optionee had performed services for the Company or any parent or subsidiary corporation while employed by it, the Optionee shall forfeit all unexercised Options and all exercised Options under which the Company has not yet delivered the certificates and which had been granted to the Optionee by the Committee earlier. The preceding provisions of this Paragraph 16 shall not be deemed to have been violated solely by reason of the Optionee's ownership of a stock or securities of any publicly owned corporation, provided that such ownership does not result in effective control of such corporation, and provided further that written notice of such ownership, if in excess of one percent of the outstanding stock of said corporation, is given to the Committee within 60 days after the later of (i) the date on which the Optionee is notified of the award of an Option, or (ii) the date on which such ownership is acquired. 17. FORFEITURE FOR DISHONESTY. Notwithstanding anything to the contrary in the Plan, if the Committee finds by a majority vote, after full consideration of the facts presented on behalf of both the Company and the Optionee, that the Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his employment by or affiliation with the Company or any parent or subsidiary corporation which damaged the Company or any parent or subsidiary corporation, or for disclosing trade secrets of the Company or any parent or subsidiary corporation, the Optionee shall forfeit all unexercised Options and all exercised Options under which the Company has not yet delivered the certificates and which had been granted the Optionee by the Committee earlier. The decision of the Committee as to the cause of an Optionee's discharge and the damage done to the Company or any parent or subsidiary corporation shall be final. No decision of the Committee, however, shall affect the finality of the discharge of such Optionee by the Company or any parent or subsidiary corporation in any manner. 18. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of outstanding Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. If the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or - 8 - 9 reduction of the number of shares of Stock outstanding, without receiving compensation therefor in money, services or property, then (a) the number, class and per share price of shares of Stock subject to outstanding Options hereunder shall be appropriately adjusted in such a manner as to entitle an Optionee to receive upon exercise of an Option, for the same aggregate cash consideration, the same total number and class of shares as he would have received had he exercised his Option in full immediately prior to the event requiring the adjustment; and (b) the number and class of shares then reserved for issuance under the Plan shall be adjusted by substituting for the total number and class of shares of Stock then reserved that number and class of shares of stock that would have been received by the owner of an equal number of outstanding shares of each class of stock as the result of the event requiring the adjustment; provided in each case that with respect to Incentive Stock Options and Nonqualified Options intended to be qualified as performance-based compensation under Section 162(m)(4)(C) of the Code, no adjustment shall be authorized to the extent that the adjustment would cause the Plan to violate Section 422(b)(1) of the Code or would cause any part of such Option to fail to qualify under Section 162(m) of the Code, as the case may be, or any successor provisions thereto, and provided further, that the number of shares of Stock subject to any Option shall always be a whole number. After a merger of one or more corporations into the Company or after a consolidation of the Company and one or more corporations in which the Company shall be the surviving corporation, without regard to any limitations set forth or imposed pursuant to Paragraph 9 hereof, each holder of an outstanding Option shall, at no additional cost, be entitled upon exercise of such Option to receive (subject to any required action by stockholders) in lieu of the number and class of shares as to which such Option shall then be so exercisable, the number and class of shares of stock or other securities to which such Optionee would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately prior to such merger or consolidation, such Optionee had been the holder of record of the number and class of shares of Stock equal to the number and class of shares as to which such Option shall be so exercised. Notwithstanding any other provision of this Paragraph 18, if (i) the Company merges or consolidates with any other corporation (other than a wholly owned subsidiary) and is not the surviving corporation (or survives only as a subsidiary of another corporation), (ii) the Company sells all or substantially all of its assets to any other person or entity (other than a wholly owned subsidiary), (iii) the Company is dissolved or liquidated, or (iv) there is a Change of Control (as hereinafter defined) of the Company that is not approved, recommended or supported by the Board of Directors of the Company in actions taken prior to, and with respect to, such Change of Control, the Optionee shall have the right, within 30 days after the - 9 - 10 approval by the stockholders of the Company of such merger or consolidation, sale of assets or dissolution or the occurrence of such Change of Control, to elect to surrender all or part of such Options outstanding, irrespective of whether such Options are then exercisable, in exchange for a cash payment by the Company in an amount equal to the number of shares of Stock subject to the Option held by such Optionee multiplied by the difference between the Change of Control Price (as defined below) and the Option Price of a particular Option; provided, however, that if the occurrence of an event specified herein is within six months after the date of grant of a particular Option held by an Optionee who is subject to Section 16(b) of the Exchange Act, any cash payment to the Optionee shall be made on the day which is six months and one day after the date of grant of such Option. Notwithstanding the foregoing, if any right granted pursuant to the foregoing would make any of the occurrences specified above ineligible for pooling of interests accounting treatment under APB No. 16 that but for this provision would otherwise be eligible for such accounting treatment, the Optionee shall receive shares of Stock with a Fair Market Value equal to the cash that would otherwise be payable hereunder in substitution for the cash. If an Optionee does not elect to surrender all outstanding Options for a cash payment (or shares of Stock) as provided above, such Options, or replacement or substitution Options to be issued by the surviving or acquiring corporation, shall become fully exercisable, to the extent they are not, and shall remain exercisable for three months after the Optionee's termination of employment or until the stated expiration of the term of the Option, whichever is shorter. In the event that the consideration offered to stockholders of the Company in any transaction described in this paragraph consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash. For purpose of this Plan, "Change of Control" means: a) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") acquires of beneficial ownership of 20 percent or more of either (i) the then outstanding shares of Stock or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (a), a Person shall not include the Company or any subsidiary or any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary; or b) as a result of, or in connection with, a contested election for directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board of Directors of the Company. The Committee shall determine whether a Change of Control has occurred within the herein meaning and shall determine whether any such Change of Control has been approved, recommended or supported by the Board of Directors of the Company, and its determination shall be final and conclusive. - 10 - 11 For purposes of this Plan, "Change of Control Price" means the higher of (i) the highest reported sales price of a share of Stock in any transaction reported on the New York Stock Exchange during the 60-day period prior to and including the date of the approval by the stockholders of the Company of such merger, sale of assets or dissolution or the occurrence of the Change of Control and (ii) if the Change of Control is the result of a tender or exchange offer, the highest price per share of Stock paid in such tender or exchange offer; provided, however, that in the case of an Option which is held by an Optionee who is subject to Section 16(b) of the Exchange Act and was granted within six months of the occurrence of an event specified herein, then the Change of Control Price for such Option shall be the Fair Market Value of the Stock on the date such Option is cancelled. Except as hereinbefore expressly provided, the issue by the Company of shares of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, class or price of shares of Stock then subject to outstanding Options. 19. SUBSTITUTION OPTIONS. Options may be granted under this Plan from time to time in substitution for stock options held by employees of other corporations who are about to become employees of or affiliated with the Company or any parent or subsidiary corporation as the result of a merger or consolidation of the employing corporation with the Company or any parent or subsidiary corporation, or the acquisition by the Company or any parent or subsidiary corporation of the assets of the employing corporation, or the acquisition by the Company or any parent or subsidiary corporation of stock of the employing corporation as the result of which it becomes a subsidiary of the Company. The terms and conditions of the substitute Options so granted may vary from the terms and conditions set forth in this Plan to such extent as the Board of Directors of the Company at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted. 20. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may modify, revise or terminate this Plan at any time and from time to time; provided, however, that without the further approval of the holders of at least a majority of the outstanding shares of Stock, the Board of Directors may not (i) materially increase the benefits accruing to participants under the Plan; (ii) change the aggregate number of shares of Stock which may be issued under Options pursuant to the provisions of the Plan; (iii) reduce the Option Price at which Options may be granted to an amount less than the Fair Market Value per share at the time the Option is granted; or (iv) change - 11 - 12 the class of employees eligible to receive Options; provided, however, that the Board shall have the power to make such changes in the Plan and in the regulations and administrative provisions hereunder or in any outstanding Incentive Option as in the opinion of counsel for the Company may be necessary or appropriate from time to time to enable any Incentive Option granted pursuant to the Plan to qualify as an incentive stock option or such other stock option as may be defined under the Code so as to receive preferential federal income tax treatment. 21. INTENTIONALLY OMITTED. 22. WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied in a written option agreement, which shall be subject to the terms and conditions prescribed above and shall be signed by the Optionee and by an authorized officer of the Company for and in the name and on behalf of the Company. Such an option agreement shall contain such other provisions as the Committee in its discretion shall deem advisable. 23. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With respect to administration of the Plan, the Company shall indemnify each present and future member of the Committee and the Board of Directors against, and each member of the Committee and the Board of Directors shall be entitled without further act on his part to indemnity from the Company for, all expenses (including the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a member of the Committee and the Board of Directors, whether or not he continues to be such member of the Committee and the Board of Directors at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such member of the Committee and the Board of Directors (i) in respect of matters as to which he shall be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as such member of the Committee and the Board of Directors, or (ii) in respect of any matter in which any settlement is effected, to an amount in excess of the amount approved by the Company on the advice of its legal counsel; and provided further, that no right of indemnification under the provisions set forth herein shall be available to or enforceable by any such member of the Committee and the Board of Directors unless, within 60 days after institution of any such action, suit or proceeding, he shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Committee and the Board of Directors and shall be in - 12 - 13 addition to all other rights to which such member of the Committee and the Board of Directors may be entitled as a matter of law, contract or otherwise. 24. EFFECT OF AMENDMENTS. This 1991 Stock Option Plan, as amended through October 5, 1995, constitutes a complete amendment and restatement of such Plan. Any Option granted under the Plan shall be subject to the terms of the Plan as in effect at the time the Option is granted; provided, however, that by agreement between the Committee and the Optionee, any such Option may be amended to incorporate and become subject to the provisions of the Plan as amended through a date which is subsequent to the date on which the Option was granted. 25. EFFECTIVE DATE OF PLAN. The Plan became effective March 19, 1991. No Option shall be granted pursuant to this Plan after March 18, 2001. - 13 - EX-10.6 9 RESTRICTED STOCK INCENTIVE PLAN, AMENDED/RESTATED 1 EXHIBIT 10.6 WEATHERFORD ENTERRA, INC. RESTRICTED STOCK INCENTIVE PLAN AS AMENDED AND RESTATED THROUGH OCTOBER 5, 1995 1. INTRODUCTION AND STATEMENT OF PURPOSE. 1.1 This Restricted Stock Incentive Plan (the "Plan") of Weatherford Enterra, Inc. (the "Company"), for executive officers and other key employees of the Company and certain related corporations ("Key Employees"), is intended to advance the best interest of the Company (who may be members of the Board of Directors) and those related corporations by providing those persons who have significant ultimate responsibility for the management and planning of the Company's operations and who directly influence the growth and profits of the Company and those related corporations with additional opportunities for meaningful capital accumulation, and by increasing their proprietary interest in the success of the Company and those related corporations, encourage their continued employment with the Company or those related corporations. It is desired that the benefits available under this Plan, when added to other benefits payable to Key Employees, will furnish total compensation to those employees which is competitive in the Company's industry. 1.2 The Plan provides for two types of awards: Restricted Share grants and Performance Share grants (collectively called "Share Grants"). Restricted Share grants are designed to retain Key Employees in the employ of the Company. Performance Share grants are designed to reward long-term and short- term performance of Key Employees, such as reducing the debt-equity ratio of the Company, achieving certain operating and net income goals or stock appreciation goals (long-term), or selling or acquiring certain business assets, identifying and developing successor candidates for Key Employee positions or raising equity for the Company (short-term). 1.3 A Share Grant under the Plan could consist of a combination of Restricted Shares and Performance Shares, or could consist of only one type of shares, at the Committee's sole discretion. 2. ADMINISTRATION. 2.1 The Plan shall be administered by a committee to be appointed by the Board of Directors of the Company (hereinafter called the "Committee"). The Committee shall consist of not less than three members of the Board of Directors, all of whom shall be "disinterested persons". A "disinterested person" is a person who at the time he exercises discretion with respect to the award of a Share Grant is not, and for at least one year prior to that time has not been, eligible to receive Share Grants under the Plan or under other similar plans of the Company. A majority of the Committee's members will constitute a quorum and all determinations of the Committee will be made by a majority of its members. - 1 - 2 2.2 The Committee is empowered to: (a) Make all determinations regarding individuals eligible to participate in the Plan, including prospective employees of the Company who, upon commencing employment, would be Key Employees of the Company (the "Key Employees"); (b) Make all determinations and computations concerning the issuance of Restricted Shares and Performance Shares under the Plan and the number of shares to be granted to each Key Employee; (c) Cause the Company to enter into a written agreement with each Key Employee setting forth the terms and provisions of the Share Grant awarding the Restricted Shares and Performance Shares (the "Share Grant Agreement"); (d) Make rules and regulations for the administration of the Plan which are not inconsistent with the terms and provisions hereof; (e) Construe and administer all terms, provisions, conditions and limitations of the Plan in good faith; (f) Make equitable adjustments for any mistakes or errors in the administration of the Plan or deemed by the Committee to be necessary as the result of any unusual situation or any ambiguity in the Plan; and (g) Select, employ and compensate, from time to time, such consultants, accountants, attorneys and other agents and employees as the Committee may deem necessary or advisable for the proper and efficient administration of the Plan. 2.3 The foregoing list of express powers is not intended to be either complete or exclusive, and the Committee shall, in addition, have such powers, whether or not expressly authorized, which it may deem necessary, desirable, advisable or proper for the supervision and administration of the Plan. Except as otherwise specifically provided herein, the decision or judgment of the Committee on any question arising hereunder in connection with the exercise of any of its powers shall be final, binding and conclusive upon all parties concerned (including the Key Employee and any person claiming by, through or under a Key Employee) and shall not be subject to review. 3. SHARES SUBJECT TO GRANT. 3.1 The stock subject to the Share Grants and other provisions of the Plan shall be shares of the Company's Common Stock, $.10 par value (the "Stock"). The total amount of the Stock with respect to which Share Grants may be granted shall not exceed in the aggregate 160,437 shares, except as provided below. Distributions of shares hereunder may, at the Committee's sole discretion, be made from authorized but unissued shares or shares reacquired by the Company and held as treasury shares. Within such aggregate maximum number of shares - 2 - 3 there is no maximum number of such shares which may be issued as Restricted Shares or Performance Shares. 3.2 In the event that any Stock issued or granted under the Plan shall be forfeited, for any reason, the aggregate number of additional shares of Stock which may be issued or granted hereunder shall be increased by such number of shares, and said shares of Stock so forfeited may again be the subject of a Share Grant under the Plan. 3.3 In the event that the issued and outstanding shares of the Company's Stock should, as a result of any stock dividend, stock split or spin-off, recapitalization, combination or exchange of shares, merger, consolidation, acquisition of property or stock, separation, reclassification, reorganization, liquidation, or other similar event, be increased or decreased or changed into or exchanged for a different number or kind of share of stock or other securities of the Company or of another corporation, the number and class of additional shares or other securities which may be issued under the Plan will be appropriately adjusted to reflect such action. If any such adjustment results in a fractional share of Stock being issuable under the Plan, such fraction will be disregarded. 4. ELIGIBILITY. The individuals who shall be eligible to receive Stock under this Plan shall be such executive officers and other key employees (who may be members of the Board of Directors) of the Company, or of any parent or subsidiary corporation, as the Committee shall determine from time to time. Any reference to a parent corporation shall mean a corporation which has actual control of the Company through its direct or indirect ownership of not less than 51 percent of each class of voting stock of the Company; and any reference to a subsidiary corporation shall mean a corporation of which the Company owns, directly or indirectly, not less than 40 percent of each class of voting stock. 5. SHARE GRANTS. 5.1 The Committee may cause the Company to issue, from time to time, Restricted Shares or Performance Shares to, and enter into Share Grant Agreements with, such Key Employees as the Committee, in its sole discretion, may determine and designate. Subject to the final authority of the Committee, the selection of the Key Employees may be based on recommendations of the Company's Chief Executive Officer. 5.2 If the Committee decides to make a Share Grant, the Committee will designate the number of shares of Stock to be issued; whether the shares will be Restricted Shares or Performance Shares or a combination of the two types of shares; the nature of the restrictions on the Key Employee's ownership of the shares; the time or times at which the restrictions on ownership will be removed; the condition or conditions upon which the restrictions on ownership will be removed; and such other terms and provisions, not inconsistent with the Plan, as the Committee deems appropriate. The terms and provisions of the Share Grant will be set forth in a Share Grant Agreement. - 3 - 4 5.3 If the Committee decides to award Performance Shares to a Key Employee, in addition to the other terms and provisions of the Share Grant Agreement, the Committee will determine the Key Employee's performance objectives and specify the times within the Performance Period at which the Key Employee's performance will be evaluated. 5.4 The Committee will designate at the time of each Share Grant the commencement date and length of the Performance Period. Performance Periods with respect to Restricted Shares generally will be four years, although the Committee will have the discretion to designate a different length for a Performance Period, not less than three nor more than five years. Performance Periods with respect to Performance Shares will be determined by the nature of the applicable performance objectives and achievement thereof but in no event less than six months nor more than eight years. 5.5 The Committee shall have the authority to make a Share Grant to a Key Employee at any time; however, the Committee generally will commence a Share Grant for a Key Employee only one time per year. 6. OWNERSHIP AND RESTRICTIONS ON OWNERSHIP OF SHARES. 6.1 The Key Employee will own the shares of Stock from the date of the Share Grant, subject to the restrictions on ownership and other terms and provisions designated by the Committee and set forth in the Share Grant Agreement. 6.2. The Committee will determine whether a stock certificate representing part or all of the shares granted under the Plan will be issued to the Key Employee at the commencement of a Performance Period or at any time prior to the unrestricted ownership of the shares vesting in the Key Employee. In the event this occurs, the stock certificate will contain a legend restricting the sale, exchange, transfer, assignment, pledge or other disposition of the shares. In addition, the Committee will determine whether a Key Employee will have the right to vote any of the shares prior to the ownership restrictions being removed. The Committee will also determine whether the Key Employee will have the right to receive any dividends paid on any of such shares prior to the ownership restrictions being removed or whether such dividends will be accrued and paid to the Key Employee only when the restrictions on his ownership of the shares are removed. 6.3 All shares of Stock granted pursuant to the Plan will be subject to restrictions on ownership when granted, and a Key Employee will not be able to sell, exchange, transfer, assign, pledge or otherwise dispose of such shares until the restrictions on ownership are removed by the Committee in accordance with the terms and provisions of the Plan and the Share Grant Agreement. Further, the Key Employee may not assign, transfer or otherwise dispose of any right or interest under the Share Grant Agreement, except as provided therein. 7. REMOVAL OF RESTRICTIONS ON OWNERSHIP OF SHARES. 7.1 The Committee will determine, in its sole discretion, when the restrictions on ownership of the shares of stock granted under this Plan will be removed. - 4 - 5 7.2 The restrictions on the Key Employee's ownership of any Restricted Shares will be removed on all such shares at the end of a Performance Period or on a certain portion of such shares at times designated by the Committee (such as annually). The Key Employee generally must be employed by the Company at the designated time (or times) in order for the restrictions to be removed, although the Committee can provide otherwise. In the event the Key Employee's employment by the Company terminates prior to the ownership restrictions on the Restricted Shares being removed, the Key Employee will, upon the request of the Committee, for no consideration, forfeit all Restricted Shares which remain subject to such restrictions and surrender to the Company all stock certificates representing such shares, if any have been issued and delivered to him. 7.3 The restrictions on the Key Employee's ownership of any Performance Shares will be removed upon the achievement of the Key Employee's performance objectives or at the end of the Performance Period, unless the Committee has specified otherwise, provided that the Key Employee is still employed by the Company. In the event the Key Employee's employment with the Company terminates prior to his achieving his performance objectives or prior to the end of the Performance Period, the Key Employee will, upon the request of the Committee, for no consideration, forfeit all or part, as applicable, of the Performance Shares which remain subject to ownership restrictions and surrender to the Company all stock certificates representing such shares, if any have been issued and delivered to him. 8. HOLDING PERIOD. Notwithstanding any other provision hereof, any shares of stock granted hereunder must be held by the Key Employee for at least six months prior to sale, assignment, transfer or exchange, and any attempt to sell, assign, transfer or exchange such shares during the six months after grant shall be void. 9. DEATH OR DISABILITY. 9.1 Should a Key Employee's employment be terminated by death or total and permanent disability prior to the removal of the ownership restrictions on any shares of stock granted hereunder, the Committee has the right to remove the restrictions on part or all of such shares. The Committee will determine, in its sole discretion, whether and on which shares the restrictions should be removed, based on the length of service the Key Employee has in the Performance Period, the Key Employee's performance during the Performance Period and such other matters as the Committee deems relevant. 9.2 For purposes of the Plan, the Committee shall determine, in the exercise of its discretion, whether or not a Key Employee is totally and permanently disabled for purposes of the Plan and the date such disability (if any) commenced. Any such determinations by the Committee shall be conclusive and binding on the Key Employee and any person claiming by, through or under the Key Employee. Any determination of total and permanent disability and of the commencement date thereof will be made on the basis of medical reports and other evidence satisfactory to the Committee and in accordance with a uniform, non-discriminatory policy applied by the Committee. However, such determinations will not be binding on the Company or any Key Employee with respect to any other employee benefit or other plan or insurance policy - 5 - 6 wherein such determinations may be relevant, and need not be consistent with any determinations made under any such other plan or insurance policy. 10. EARLY RETIREMENT. Should a Key Employee take early retirement at the convenience of the Company prior to the removal of the ownership restrictions on any shares of stock granted hereunder, the Committee has the right to remove the restrictions on part or all of the shares. The Committee will determine, in its sole discretion, whether and on which shares the restrictions should be removed, based on the length of service the Key Employee has in the Performance Period, the Key Employee's performance during the Performance Period and such other matters as the Committee deems relevant. 11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control (as defined below) occurs, all restrictions to which the Key Employee's Restricted Shares or Performance Shares remained subject at such time shall automatically terminate and such shares shall become fully vested and transferable. The Company shall promptly deliver to the Key Employee stock certificates for such shares without the legend restricting the sale, exchange, transfer, assignment, pledge or other disposition, other than as may be required by applicable Securities laws. For purposes of this paragraph, a "Change of Control" shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30 percent of more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 11; or (b) Individuals, who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved - 6 - 7 by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction") in each case, unless, following such Corporate Transaction, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 60 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 30 percent or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or (d) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. 12. EMPLOYMENT OR AFFILIATION OBLIGATION. The making of a Share Grant shall not impose upon the Company or any parent or subsidiary corporation any obligation to employ or continue to employ a Key Employee, and the right of the Company or any parent or subsidiary corporation to terminate the employment of any person shall not be diminished or affected by reason of the fact that a Share Grant has been granted to him. - 7 - 8 13. AMENDMENT OR TERMINATION OF PLAN. 13.1 The Board of Directors, without approval of or notice to the Key Employees, may modify or amend this Plan at any time it deems advisable; provided, however, that without stockholder approval the Board of Directors may not (i) except as permitted in the case of stock splits and other recapitalizations, materially increase the aggregate number of shares which may be granted pursuant to the provisions of the Plan; (ii) materially increase the benefits accruing to the Key Employees under the Plan; or (iii) materially modify the requirements as to eligibility for participation in the Plan. 13.2 The Board of Directors, without approval of or notice to the Key Employees, may terminate the Plan at any time. 13.3 Any amendment or termination of the Plan shall not affect shares already issued or Share Grant Agreements already executed, without the consent of the Key Employee. In each case where the Board of Directors determines it to be appropriate or is advised by counsel that such approval is required, an amendment or termination of the Plan shall be submitted to the stockholders of the Company for approval. 14. MISCELLANEOUS PROVISIONS. 14.1 As a condition to the issuance of shares hereunder, the Company may require the Key Employee receiving such shares to represent and warrant at the time of issuance that the shares are being acquired only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such representation is required under the Securities Act of 1933, or any other applicable law, regulation or rule of any governmental authority. 14.2 During the term of the Plan, the Company will at times reserve and keep available, or have authorized but unissued, such number of shares of Stock as shall be sufficient to satisfy the requirements of the Plan. The inability of the Company to obtain from any regulatory body having jurisdictional authority deemed by the Company's counsel to be necessary to the lawful issuance of Stock hereunder shall relieve the Company of any liability in respect of the non-issuance of such Stock as to which such requisite authority shall not have been obtained. 14.3 Until the issuance of a stock certificate for Restricted Shares or Performance Shares, as appropriate, to a Key Employee (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive cash dividends or other distributions or any other rights as a stockholder of the Company shall exist with respect to such Restricted Shares or Performance Shares, notwithstanding the grant of such shares, the execution of a Share Grant Agreement, or the occurrence of any event or the passing of any period of time giving rise to a right in the Key Employee to receive unrestricted ownership of such shares under the Share Grant Agreement. No adjustment will be made for any cash dividend or other distribution or other rights for which the record date is prior to the date the stock certificates representing such Restricted Shares or Performance Shares are issued, except - 8 - 9 as otherwise expressly determined by the Committee. The Company shall endeavor in good faith to issue stock certificates for Restricted Shares or Performance Shares which are authorized to be issued under the Plan as promptly as practicable. However, neither the Company, the Committee or any member thereof, any transfer agent nor any other person shall have any liability to any Key Employee (or to any person claiming by, through or under any Key Employee) as the result of any delay in the issuance of any such certificates, including delays resulting from the negligence or willful misconduct of any such person or entity. 14.4 Notwithstanding anything to the contrary contained in this Plan or any Share Grant Agreement entered into hereunder, any Share Grant made under this Plan shall be granted subject to the approval of this Plan by the affirmative vote of the holders of a majority of the Stock of the Company present or represented and entitled to vote at a meeting duly called and held for such purpose in accordance with applicable Delaware law. No Share Grant Agreement entered into under this Plan nor any Share Grant made under this Plan shall create any obligation in the Company prior to such approval. In the event that the holders of a majority of the Stock of the Company do not so approve this Plan, any and all Share Grant Agreements theretofore entered into shall thereupon terminate and shall be void and of no force and effect and no Restricted Shares or Performance Shares shall be issued thereunder. 14.5 Any and all taxes payable with respect to income to a Key Employee resulting from the grant of Restricted Shares or Performance Shares hereunder shall be the sole responsibility of the Key Employee, not of the Company, whether or not the Company shall have withheld or collected from the Key Employee any sums required to be so withheld or calculated in respect of such income, and whether or not any sums so withheld or collected shall be sufficient to provide for any such taxes. The Company or any parent or subsidiary corporation shall be entitled to deduct from other compensation payable to each Key Employee any sums required by federal, state or local tax law to be withheld with respect to the grant of Restricted Shares or Performance Shares hereunder; but, in the alternative, the Company may require the Key Employee to pay such sums directly to the employer corporation. If the Key Employee elects to pay such sums directly, written notice of that election shall be delivered prior to the ownership restrictions on such Shares being removed and, whether pursuant to such election or pursuant to a requirement imposed by the Company, payment in cash or by check of such sums for taxes shall be delivered within ten days after the date on which ownership restrictions on such shares are removed. In addition, any such sums may be satisfied by the Key Employee in shares of Stock, at the discretion of the Committee, if the Key Employee instructs the Company in writing at or before the time the ownership restrictions on such shares are removed to withhold from the shares that number of shares having a value equal to the amount necessary to satisfy the sums required by federal, state or local tax law or if the Key Employee delivers to the Company that number of shares of Stock having a value equal to such amount. The number of shares required to satisfy such taxes will be calculated based on the fair market value of the Stock determined in accordance with the procedures established by the Committee. 14.6 The Company shall be entitled but shall have no obligation to cause the shares of Stock issuable hereunder to be registered under the Securities Act. - 9 - 10 15. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With respect to administration of the Plan, the Company shall indemnify each present and future member of the Committee and the Board of Directors against, and each member of the Committee and the Board of Directors shall be entitled without further act on his part to indemnity from the Company for, all expenses (including the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a member of the Committee and the Board of Directors, whether or not he continues to be such member of the Committee and the Board of Directors at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such member of the Committee and the Board of Directors (i) in respect of matters as to which he shall be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as such member of the Committee and the Board of Directors, or (ii) in respect of any matter in which any settlement is effected in an amount in excess of the amount approved by the Company on the advice of its legal counsel; and provided further, that no right of indemnification under the provisions set forth herein shall be available to or enforceable by any such member of the Committee and the Board of Directors unless, within 60 days after institution of any such action, suit or proceeding, he shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Committee and the Board of Directors and shall be in addition to all other rights to which such member of the Committee and the Board of Directors may be entitled as a matter of law, contract, or otherwise. 16. EFFECT OF AMENDMENTS. This Restricted Stock Incentive Plan, as amended through October 5, 1995, constitutes a complete amendment and restatement of such Plan. Any Share Grant granted under the Plan shall be subject to the terms of the Plan as in effect at the time the Share Grant is granted; provided, however, that by agreement between the Committee and the Key Employee, any such Share Grant may be amended to incorporate and become subject to the provisions of the Plan as amended through a date which is subsequent to the date on which the Share Grant was granted. 17. EFFECTIVE DATE OF PLAN. The Plan, effective March 18, 1987, is of perpetual duration. - 10 - EX-10.7 10 EXECUTIVE INCENTIVE STOCK BONUS PLAN, AS AMENDED 1 EXHIBIT 10.7 WEATHERFORD ENTERRA, INC. EXECUTIVE INCENTIVE STOCK BONUS PLAN AS AMENDED MARCH 20, 1996 1. PURPOSE OF PLAN. This Executive Incentive Stock Bonus Plan (the "Plan") of Weatherford International Incorporated (the "Company"), for officers and other key employees of the Company and certain related corporations ("Key Employees"), is intended to advance the best interest of the Company by providing those persons who have significant ultimate responsibility for the management and planning of the Company's operations and who directly influence the growth and profits of the Company and those related corporations with additional opportunities for meaningful capital accumulation, and by increasing their proprietary interest in the success of the Company and those related corporations, encourage their continued employment with the Company or those related corporations. It is desired that the benefits available under this Plan, when added to other benefits payable to Key Employees, will furnish total compensation to those employees which is competitive in the Company's industry. 2. CERTAIN DEFINITIONS. (a) "Board" shall mean the Board of Directors of the Company. (b) "Bonus Shares" shall mean shares of Common Stock granted to a Key Employee pursuant to Section 5 of the Plan. (c) "Bonus Share Agreement" shall mean the agreement described in Section 6 of the Plan. (d) "Bonus Share Grant" shall mean a grant of Bonus Shares pursuant hereto. (e) "Committee" shall mean the committee specified in Section 6 hereof. (f) "Common Stock" shall mean the Common Stock, $.10 par value per share, of the Company. - 1 - 2 (g) "Company" shall mean Weatherford Enterra, Inc., a Delaware corporation. (h) "Fair Market Value" shall mean the closing sale price of the Company's Common Stock on a Grant Date (or if Common Stock was not traded on such day, the first day following the Grant Date on which Common Stock was traded). (i) "Grant Date" shall mean the date on which Bonus Shares are awarded to a Key Employee pursuant to Section 5 of the Plan. (j) "Officer" shall mean a Key Employee who is an officer of the Company. 3. SHARES SUBJECT TO THE PLAN. (a) Subject to the provisions of Section 8 below, the maximum aggregate number of Bonus Shares which may be granted under the Plan shall be 25,179. (b) Bonus Shares may be, in whole or in part, authorized but unissued shares of Common Stock or shares of Common Stock previously issued and outstanding and reacquired by the Company. (c) The Company shall have no obligation to register Bonus Shares with the Securities and Exchange Commission, either prior to or after same are granted to a Key Employee. 4. ELIGIBILITY. The individuals who shall be eligible to receive Bonus Shares under this Plan shall be such officers and other key employees (including officers who may be members of the Board of Directors) of the Company, or of any subsidiary or affiliated corporation, as the committee appointed by the Board of Directors (the "Committee"), in its sole discretion, shall determine from time to time. Any reference to a subsidiary or affiliated corporation shall mean a corporation of which the Company owns, directly or indirectly, not less than 40 percent of each class of voting stock. 5. GRANTS. (a) The Committee may cause the Company to issue, from time to time, Bonus Shares to, and enter into Bonus Share Agreements with, such Key Employees as the Committee, in its sole discretion, may determine. The Committee will determine, in its sole discretion, if a Key Employee is - 2 - 3 eligible to receive a bonus for a given fiscal year, and if so, the amount of such bonus. The number of Bonus Shares to be issued to the Key Employee pursuant to the Plan will be calculated using the closing sale price of the Company's Common Stock (the "Fair Market Value") on the date on which the Bonus Shares are awarded (the "Grant Date"). (b) The Company shall not be required to issue fractional Bonus Shares. In lieu thereof, any fractional Bonus Shares shall be rounded to the next higher whole number. 6. ADMINISTRATION OF THE PLAN. (a) The Plan shall be administered by a committee to be appointed by the Board of Directors of the Company (hereinafter called the "Committee"). The Committee shall consist of not less than three members of the Board of Directors, all of whom shall be "disinterested persons". A "disinterested person" is a person who at the time he exercises discretion with respect to the award of Bonus Shares is not, and for at least one year prior to that time has not been, eligible to receive Bonus Shares under the Plan or under other similar plans of the Company. A majority of the Committee's members will constitute a quorum and all determinations of the Committee will be made by a majority of its members. (b) The Committee is empowered to: (i) Make all determinations regarding individuals who are considered Key Employees of the Company; (ii) Make all determinations and computations concerning the issuance of Bonus Shares under the Plan and the number of shares to be granted to a Key Employee; (iii) Cause the Company to enter into a Bonus Share Agreement with each Key Employee awarded Bonus Shares setting forth the terms and provisions of the such grant; (iv) Make rules and regulations for the administration of the Plan which are not inconsistent with the terms and provisions hereof; (v) Construe and administer all terms, provisions, conditions and limitations of the Plan in good faith; - 3 - 4 (vi) Make equitable adjustments for any mistakes or errors in the administration of the Plan or deemed by the Committee to be necessary as the result of any unusual situation or any ambiguity in the Plan; and (vii) Select, employ and compensate, from time to time, such consultants, accountants, attorneys and other agents and employees as the Committee may deem necessary or advisable for the proper and efficient administration of the Plan. (c) The foregoing list of express powers is not intended to be either complete or exclusive, and the Committee shall, in addition, have such powers, whether or not expressly authorized, which it may deem necessary, desirable, advisable or proper for the supervision and administration of the Plan. Except as otherwise specifically provided herein, the decision or judgment of the Committee on any question arising hereunder in connection with the exercise of any of its powers shall be final, binding and conclusive upon all parties concerned (including a Key Employee and any person claiming by, through or under a Key Employee) and shall not be subject to review. 7. CERTIFICATES REPRESENTING SHARES. Bonus Shares will be represented by a stock certificate or certificates registered in the name of the Key Employee to whom such Bonus Shares shall have been granted. 8. HOLDING PERIOD. Any Bonus Shares granted must be held by an Officer for at least six-months prior to sale, assignment, transfer or exchange, and any attempt to sell, assign, transfer or exchange such shares during the six months after grant shall be void. 9. ADJUSTMENT IN THE EVENT OF CHANGES OF COMMON STOCK. In the event of a recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation or liquidation or the like, the aggregate number and class of Bonus Shares available for grant under the Plan shall be ratably adjusted by the Committee, whose determination shall be conclusive. 10. NON-ALIENATION OF BENEFITS. No rights or benefits under the Plan or a Bonus Share Agreement shall be subject to anticipation, alienation, sale, assignment, hypothecation, pledge, exchange, transfer, - 4 - 5 encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void. No rights or benefits under the Plan or a Bonus Shares Agreement shall in any manner be liable for or subject to the debts, contracts, liabilities or torts of any person entitled to such right or benefit. If any Key Employee or beneficiary hereunder should attempt to anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge any right or benefit hereunder, then such right or benefit shall cease and terminate. 11. WITHHOLDING TAXES. Each Key Employee granted Bonus Shares shall pay to the Company, or the Company may deduct from other compensation payable to each Participant, the amount of any Federal, state or local taxes of any kind required by law to be withheld by the Company with respect thereto. If any such amounts must be withheld by the Company and the Key Employee elects to pay such sums directly, written notice of that election and such sums for taxes shall be delivered to the Company prior to delivery of such Bonus Shares. Any such taxes owed maybe satisfied by the Key Employee in shares of Common Stock, at the discretion of the Committee, if the Key Employee instructs the Company in writing prior to the issuance of a share certificate evidencing the Bonus Shares to withhold from such shares that number of shares having a value equal to the amount necessary to satisfy the taxes owed, or if the Key Employee delivers to the Company that number of shares of Common Stock having a value equal to that amount. The number of shares of Common Stock required to satisfy such taxes will be calculated based on the Fair Market Value of the Common Stock. 12. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate, modify or amend the Plan as it shall deem advisable; provided, however, that in no event may the Plan be amended more frequently than once every six months. Notwithstanding the foregoing, stockholder approval shall be obtained for any action with respect to the Plan to the extent required by applicable state or federal rules, regulations or laws. No termination or amendment of the Plan shall adversely affect the rights of any Key Employee under any grant previously made. 13. EXECUTION OF AGREEMENT. Each grant hereunder shall be contingent upon the execution by the Key Employee of a Bonus Share Agreement agreeing to the terms and condition set forth in this Plan, and any other terms and conditions required by counsel to the Company in order to comply with applicable Federal or state securities laws or other legal requirements. - 5 - 6 14. GOVERNMENT AND OTHER REGULATIONS. Notwithstanding any other provisions of the Plan, the obligations of the Company with respect to Bonus Shares shall be subject to all applicable laws, rules and regulations, and such approvals by any governmental agencies as may be required or deemed appropriate by the Company. The Company reserves the right to delay or restrict, in whole or in part, the issuance or delivery of Common Stock pursuant to any grants of Bonus Shares under the Plan until such time as: (a) any legal requirements or regulations shall have been met relating to the issuance of such Bonus Shares or to their registration, qualification or exemption from registration or qualification under the Securities Act of 1933 or any applicable state securities law; and (b) satisfactory assurances shall have been received that such Bonus Shares when delivered will be duly listed on the American Stock Exchange. 15. NON-EXCLUSIVITY OF PLAN. The adoption of the Plan by the Board shall not be construed as creating any limitation on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including without limitation, the awarding of stock of the Company otherwise than under the Plan, and such arrangements as may be either generally acceptable or applicable in specific cases. 16. GOVERNING LAW. The Plan shall be governed by, and construed in accordance with, the laws of the State of Texas. 17. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD. With respect to administration of the Plan, the Company shall indemnify each present and future member of the Committee and the Board against, and each member of the Committee and the Board shall be entitled without further act on his or her part to indemnity from the Company for, all expenses (including the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by him or her in connection with or arising out of any action, suit, or proceeding in which he or she may be involved by reason of his or her being or having been a member of the Committee and/or the Board, whether or not he or she continues to be such member of the Committee and/or the Board at the time of incurring such expenses; provided, however, that such - 6 - 7 indemnity shall not include any expenses incurred by any such member of the Committee and/or the Board (i) in respect of matters as to which he or she shall be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his or her duty as such member of the Committee and/or the Board, or (ii) in respect of any matter in which any settlement is effected to an amount in excess of the amount approved by the Company on the advice of its legal counsel; and provided further, that no right of indemnification under the provision set forth herein shall be available to or enforceable by any such member of the Committee and/or the Board unless, within 60 days after institution of any such action, suit or proceeding, he or she shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Committee and/or the Board and shall be in addition to all other rights to which such member of the Committee and/or the Board may be entitled as a matter of law, contract or otherwise. 18. MISCELLANEOUS PROVISIONS. (a) Except as to grants to a Key Employee, no employee or other person shall have any claim or right to be granted Bonus Shares under this Plan. (b) The expenses of the Plan shall be borne by the Company. (c) By accepting any grant under the Plan, each Key Employee and each personal representative or beneficiary and each other person claiming by, under or through him or her shall be conclusively deemed to have indicated his or her acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee. 19. EFFECT OF AMENDMENTS. This Executive Incentive Stock Bonus Plan, as amended through March 20, 1996, constitutes a complete amendment and restatement of such Plan. Any Bonus Share Grant granted under the Plan shall be subject to the terms of the Plan as in effect at the time the Bonus Share Grant is granted; provided, however, that by agreement between the Committee and the Key Employee, any such Bonus Share Grant may be amended to incorporate and become subject to the provisions of the Plan as amended through a date which is subsequent to the date on which the Bonus Share Grant was granted. 20. EFFECTIVE DATE OF PLAN. The Plan shall become effective and shall be deemed to have been adopted on May 15, 1992. The duration of the Plan is to be perpetual. - 7 - EX-10.8 11 SUPPLEMENTAL EXEC. RETIREMENT PLAN 1 EXHIBIT 10.8 FIRST AMENDMENT TO WEATHERFORD INTERNATIONAL INCORPORATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN THIS AGREEMENT by Weatherford International Incorporated (the "Sponsor"), W I T N E S S E T H: WHEREAS, the Sponsor maintains the Plan known as "Weatherford International Incorporated Supplemental Executive Retirement Plan" (the "Plan"); and WHEREAS, the Sponsor retained the right in Section 7.1 of the Plan to amend the Plan from time to time; and WHEREAS, the Sponsor desires to clarify the eligibility provisions of the Plan; and WHEREAS, the Board of Directors of the Sponsor approved resolutions to amend the Plan; NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 1992, as follows: Section 2.1 of the Plan is hereby completely amended and restated to provide as set forth in the substitute page attached hereto which shall be inserted into the Plan in place of the above-described original section. IN WITNESS WHEREOF, the Sponsor has executed this Agreement this _____ day of December, 1993. WEATHERFORD INTERNATIONAL INCORPORATED By ____________________________________ 2 ARTICLE II ELIGIBILITY 2.1 INITIAL ELIGIBILITY. Those employees of any Company who are designated by the Committee as members of a select group of management or highly compensated employees. Participants in the Weatherford Pension Plan who are designated by the Committee as members of a select group of management or highly compensated employees will automatically become a Participant in this Plan. 2.2 TERMINATION OR FREEZE OF WEATHERFORD PENSION PLAN. If the Weatherford Pension Plan is either frozen or terminated then each Participant in this Plan shall become fully vested in his Accrued Benefit to the date of the freeze or termination. The Deferred Compensation Benefit shall then be payable at the time, in the form and under the terms and conditions for the payment of benefits under the Weatherford Pension Plan. II-1 3 SECOND AMENDMENT TO WEATHERFORD INTERNATIONAL INCORPORATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN THIS AGREEMENT by Weatherford International Incorporated (the "Sponsor"), W I T N E S S E T H: WHEREAS, the Sponsor maintains the Plan known as "Weatherford International Incorporated Supplemental Executive Retirement Plan" (the "Plan"); and WHEREAS, the Sponsor retained the right in Section 7.1 of the Plan to amend the Plan from time to time; and WHEREAS, the Sponsor desires to clarify what compensation shall be taken into account under the Plan; and WHEREAS, the Board of Directors of the Sponsor approved resolutions to amend the Plan; NOW, THEREFORE, the Plan is hereby amended, effective as of ___________________, 1994, as follows: Section 3.2 of the Plan is hereby completely amended and restated to provide as set forth in the substitute pages attached hereto which shall be inserted into the Plan in place of the above-described original section. IN WITNESS WHEREOF, the Sponsor has executed this Agreement this _____ day of __________________, 1994. WEATHERFORD INTERNATIONAL INCORPORATED By ___________________________________ 4 ARTICLE III DEFERRED COMPENSATION BENEFIT 3.1 ENTITLEMENT TO DEFERRED COMPENSATION BENEFIT. A Participant shall be entitled to a Deferred Compensation Benefit under the terms of this Plan only upon fulfilling the requirements to become entitled to a benefit under the terms and provisions of the Weatherford Pension Plan as amended from time to time. 3.2 CALCULATION OF DEFERRED COMPENSATION BENEFIT. The Deferred Compensation Benefit payable to a Participant under the terms of this Plan shall be the same benefit which would be payable to the Participant under the applicable provisions of the Weatherford Pension Plan had the compensation considered under that plan for benefit accruals included all compensation paid the Participant in addition to the compensation permitted to be considered for plan purposes, including incentive cash and stock bonuses attributable to the Plan Year in which earned, regardless of when paid, and elective contributions under the Weatherford Supplemental Savings Plan, and had none of this benefit, so calculated, been subject to any mandatory limitations then applicable to it under the Code, ERISA or any other federal statute which now limits or will in the future limit benefits payable from that Plan (by way of illustration but not limitation, FOR EXAMPLE, the limitation on compensation set out in Section 401(a)(17) of the Code or the Section 415 limitation on benefits permitted to be paid by a qualified plan) reduced by the actual benefit paid under the Weatherford Pension Plan as subjected to those same limitations. In computing the Deferred Compensation Benefit and the benefit payable under the Weatherford Pension Plan, the same actuarial assumptions required by the definition of Accrued Benefit shall be used III-1 5 both in the calculation of the benefit and any additional assumptions necessary because of an election of form or time of consummation of benefits. 3.3 FORM AND TIME OF PAYMENT. The Deferred Compensation Benefit shall be payable to the Participant by the Company at the time, in the form and subject to the same conditions and limitations as are set out under the terms and provisions of the Weatherford Pension Plan, as amended from time to time. Should there be any dispute as to the form or the commencement date of payment of benefits, the resolution of that dispute for purposes of the Weatherford Pension Plan shall be conclusively deemed to be the resolution of that same dispute under the terms of this Plan. III-2 6 THIRD AMENDMENT TO WEATHERFORD INTERNATIONAL INCORPORATED SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN THIS AGREEMENT by Weatherford International Incorporated (the "Sponsor"), W I T N E S S E T H : WHEREAS, the Sponsor maintains the Plan known as "Weatherford International Incorporated Supplemental Executive Retirement Plan" (the "Plan"); and WHEREAS, the Sponsor retained the right in Section 7.1 of the Plan to amend the Plan from time to time; and WHEREAS, the Board of Directors of the Sponsor approved resolutions to amend the Plan; NOW, THEREFORE, the Plan is hereby amended, effective as of January, 1995, as follows: Section 3.1 of the Plan is hereby completely amended and restated to provide as set forth in the substitute page attached hereto which shall be inserted into the Plan in place of the above-described original section. IN WITNESS WHEREOF, the Sponsor has executed this Agreement this 23rd day of August, 1995. WEATHERFORD INTERNATIONAL INCORPORATED By /s/ P. BURGUIRES ---------------------------------- 7 ARTICLE III DEFERRED COMPENSATION BENEFIT 3.1 ENTITLEMENT TO DEFERRED COMPENSATION BENEFIT. A Participant shall be entitled to a Deferred Compensation Benefit under the terms of this Plan only upon fulfilling the requirements to become entitled to a benefit under the terms and provisions of the Weatherford Pension Plan as amended from time to time. Notwithstanding the preceding sentence, each Participant shall be entitled to a Deferred Compensation Benefit under the terms of this Plan upon the occurrence of a "change of control" that is not approved, recommended or supported by the Board of Directors in actions taken prior to, and with respect to, such "change of control." A "change of control" shall be deemed to have occurred if: (i) a third person, including a "group" as determined in accordance with section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of the Employer having 20% or more of the total number of votes that may be cast for the election of directors of the Employer; or (ii) as a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Employer before the Transaction shall cease to constitute a majority of the board of directors of the Employer or any successor to the Employer. The Committee shall determine whether a "change of control" has occurred within the meaning of this Section 3.1 and shall determine whether any such "change of control" has been approved, recommended or supported by the Board of Directors, and its determination shall be final and conclusive. III-1 EX-10.9 12 SUPPLEMENTAL SAVINGS PLAN 1 EXHIBIT 10.9 FIRST AMENDMENT TO WEATHERFORD SUPPLEMENTAL SAVINGS PLAN THIS AGREEMENT by Weatherford International Incorporated (the "Sponsor"), W I T N E S S E T H: WHEREAS, the Sponsor maintains the plan agreement known as "Weatherford Supplemental Savings Plan" (the "Plan"); and WHEREAS, the Sponsor retained the right in Section 7.1 of the Plan to amend the Plan from time to time; and WHEREAS, the Board of Directors of the Sponsor approved resolutions to amend the Plan; NOW, THEREFORE, the Plan is hereby amended, effective as of January 1, 1995, as follows: Section 6.1 of the Plan is hereby completely amended and restated to provide as set forth in the substitute pages attached hereto which shall be inserted into the Plan in place of the above-described original Section. IN WITNESS WHEREOF, the Sponsor has executed this Agreement this 28th day of August, 1995. WEATHERFORD INTERNATIONAL INCORPORATED By /s/ P. BURGUIERES --------------------------------------- 2 ARTICLE VI MEMBER'S RIGHTS AND BENEFITS 6.1 MEMBER'S VESTED INTEREST. Each Member shall have a 100% vested and nonforfeitable interest in the amounts allocated to his Basic Deferred Compensation Accrual Account under this Plan on the books of the Employer. Each Member shall have a 100% vested and nonforfeitable interest in the amounts allocated to his Supplemental Matching Accrual Account under the Plan on the books of the Employer in the event of his death, disability (as defined under the Basic Plan), or the attainment of age 65. If a Member severs employment for any other reason, he shall receive the vested portion of this Supplemental Matching Accrual Account in accordance with the following schedule:
Vested Percentage in Supplemental Completed Years of Active Service Matching Accrual Account --------------------------------- ------------------------ Less than two years . . . . . . . . . . . . . . . 0% Two years but less than 3 years . . . . . . . . . 25% Three years but less than 4 years . . . . . . . . 50% Four years but less than 5 years . . . . . . . . 75% Five years or more. . . . . . . . . . . . . . . .100%
Notwithstanding the vesting schedule above, each Member shall acquire a 100% vested interest in the amounts allocated to his Supplemental Matching Accrual Account under the Plan on the books of the Employer upon the occurrence of a "change of control" that is not approved, recommended or supported by the Board of Directors in actions taken prior to, and with respect to, such "change of control." A "change of control" shall be deemed to have occurred if: (i) a third person, including a "group" as determined in accordance with section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of the Employer having 20% or more of the total number of votes that may be cast for the election of directors of the Employer; or (ii) as a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Employer before the Transaction shall cease to constitute a majority of the board of directors of the Employer or any successor to the Employer. The Committee shall determine whether a "change of control" has occurred within the meaning of this Section 6.1 and shall determine whether any such "change of control" has been approved, recommended or supported by the Board of Directors, and its determination shall be final and conclusive. 6.2 TIME OF BENEFIT PAYMENTS. Vested benefits due under this Plan shall be paid 90 days after the end of the quarter in which the Member (a) terminates, (b) retires, (c) dies, or (d) becomes disabled (as defined under the Basic Plan). If a VI-1 3 SECOND AMENDMENT TO WEATHERFORD ENTERRA, INC. SUPPLEMENTAL SAVINGS PLAN THIS AGREEMENT by Weatherford Enterra, Inc. (the "Sponsor"), W I T N E S S E T H : WHEREAS, the Sponsor maintains the plan agreement known as "Weatherford Enterra, Inc. Supplemental Savings Plan" (the "Plan"); and WHEREAS, the Sponsor retained the right to amend the Plan from time to time; and WHEREAS, the Board of Directors of the Sponsor approved resolutions to amend the Plan; NOW, THEREFORE, the Plan is hereby amended, effective as of July 1, 1996, as follows: Articles II, III, IV and Sections 1.15 and 6.1 of the Plan are hereby completely amended and restated to provide as set forth in the substitute pages attached hereto which shall be inserted into the Plan in place of the above-described original Articles and Sections. IN WITNESS WHEREOF, the Sponsor has executed this Agreement this 12th day of December 1996. WEATHERFORD ENTERRA, INC. By /s/ H. SUSANNE THOMAS ---------------------------------- 4 INCLUDES FIRST AMENDMENT 8/4/95 SECOND AMENDMENT 12/12/96 WEATHERFORD SUPPLEMENTAL SAVINGS PLAN 5 1.13 "EXCESS AGGREGATE 401(m) CONTRIBUTIONS" means a Member's Excess Aggregate 401(m) Contributions as defined under the Basic Plan. 1.14 "MEMBER" means an Employee who is participating in this Plan. 1.15 "PLAN" means this Weatherford ENTERRA, INC. Supplemental Savings Plan, as amended from time to time. 1.16 "PLAN YEAR" means the Plan Year as defined under the Basic Plan. 1.17 "SPONSOR" means Weatherford International Incorporated. 1.18 "SUPPLEMENTAL MATCHING ACCRUALS" means the accrual made by the Employer on behalf of the Members pursuant to the provisions of Article IV. I-2 6 ARTICLE II ELIGIBILITY Those persons who are designated by the Committee to be members of a select group of management or highly compensated employees are eligible to participate in this Plan. II-1 7 ARTICLE III BASIC DEFERRED COMPENSATION ACCRUALS A Member shall be entitled to defer out of his regular Considered Compensation for the Plan Year A percentage of Considered Compensation provided he makes his election in writing prior to the beginning of each Plan Year under the rules and regulations established by the Committee. Any election of a deferral of compensation shall continue to be effective until the expiration date in the election form or if none is specified until it is later changed or resolved in writing by the Member. A Member shall also be entitled to make a separate election to defer any PORTION OR ALL OF A bonus he may be entitled to receive under rules and regulations established by the Committee. An election to defer a portion of any bonus shall continue to be effective until the expiration date in the election form or if none is specified until it is later changed or resolved in writing by the Member. III-1 8 ARTICLE IV SUPPLEMENTAL MATCHING ACCRUALS The Employer shall make a Supplemental Matching Accrual equal to (a) 50% of the first 6% of the Member's Deferred Compensation Accruals under this Plan, plus (b) an amount equal to any Employer Matching Contributions which are treated as Excess Aggregate 401(m) Contributions under the Basic Plan. However, the Supplemental Matching Accrual for any given Plan Year when added to the Employer Matching Contributions made by the Employer to the Basic Plan for that Plan Year shall not exceed 50% of 6% of the Member's TOTAL COMPENSATION for the same Plan Year. IV-1 9 ARTICLE VI MEMBER'S RIGHTS AND BENEFITS 6.1 MEMBER'S VESTED INTEREST. Each Member shall have a 100% vested and nonforfeitable interest in the amounts allocated to his Basic Deferred Compensation Accrual Account under this Plan on the books of the Employer. Each Member shall have a 100% vested and nonforfeitable interest in the amounts allocated to his Supplemental Matching Accrual Account under the Plan on the books of the Employer in the event of his death, disability (as defined under the Basic Plan), or the attainment of age 65. If a Member severs employment for any other reason, he shall receive the vested portion of this Supplemental Matching Accrual Account in accordance with the following schedule: Vested Percentage in Supplemental Completed Years of Active Service Matching Accrual Account --------------------------------- ------------------------ Less THAN ONE YEAR . . . . . . . . . . . . . . . . . . 0% ONE YEAR BUT LESS than Two years . . . . . . . . . . . 20% Two years but less than THREE years . . . . . . . . . . 40% Three years but less than FOUR years . . . . . . . . . 60% Four years but less than FIVE years . . . . . . . . . . 80% Five years or more. . . . . . . . . . . . . . . . . . .100% Notwithstanding the vesting schedule above, each Member shall acquire a 100% vested interest in the amounts allocated to his Supplemental Matching Accrual Account under the Plan on the books of the Employer upon the occurrence of a "change of control" that is not approved, recommended or supported by the Board of Directors in actions taken prior to, and with respect to, such "change of control." A "change of control" shall be deemed to have occurred if: (i) a third person, including a "group" as determined in accordance with section 13(d)(3) of the Securities Exchange Act of 1934, becomes the beneficial owner of shares of the Employer having 20% or more of the total number of votes that may be cast for the election of directors of the Employer; or (ii) as a result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sale of assets or contested election, or any combination of the foregoing transactions (a "Transaction"), the persons who were directors of the Employer before the Transaction shall cease to constitute a majority of the board of directors of the Employer or any successor to the Employer. The Committee shall determine whether a "change of control" has occurred within the meaning of this Section 6.1 and shall determine whether any such "change of control" has been approved, recommended or supported by the Board of Directors, and its determination shall be final and conclusive. 6.2 TIME OF BENEFIT PAYMENTS. Vested benefits due under this Plan shall be paid 90 days after the end of the quarter in which the Member (a) terminates, (b) retires, (c) dies, or (d) becomes disabled (as defined under the Basic Plan). If a VI-1 EX-10.14 13 EMPLOYMENT AGREEMENT - PHILIP BURGUIERES 1 EXHIBIT 10.14 EMPLOYMENT AGREEMENT This Employment Agreement (the "Agreement") is made and entered into as of October 17, 1996 by and between Weatherford Enterra, Inc., a Delaware corporation ("Weatherford" or the "Company"), and Philip Burguieres, an individual currently residing in Houston, Texas ("Burguieres"). RECITALS: WHEREAS, prior to the date of this Agreement, Burguieres has been employed by the Company since April 4, 1991 and prior to the date hereof served as Chairman, President and Chief Executive Officer of the Company; and WHEREAS, Burguieres has resigned as President and Chief Executive Officer of the Company as of the date hereof, but will continue as an employee of the Company, on terms and conditions and for the consideration hereinafter set forth, and serve as a director and as Chairman of the Board of Directors of the Company, subject to the terms and conditions hereinafter set forth; NOW, THEREFORE, for and in consideration of the premises and the respective covenants and agreements of the parties herein contained, the Company and Burguieres hereby agree as follows: ARTICLE 1 EMPLOYMENT The Company hereby agrees to employ Burguieres, and Burguieres hereby agrees to serve the Company, on the terms and conditions set forth herein. ARTICLE 2 TERM The term of this Agreement shall commence as of October 17, 1996 (the "Effective Date") and shall continue through October 16, 2001, unless sooner terminated as hereinafter provided. ARTICLE 3 POSITION AND DUTIES 3.1 Burguieres shall initially be employed as a director and as Chairman of the Board of Directors of the Company (the "Board") and shall have such responsibilities, duties and authority reasonably accorded to and expected of a Chairman and as may from time to time be prescribed by the Board or pursuant to the Company's bylaws. The parties expressly - 1 - 2 agree that the Board is under no obligation to reelect Burguieres as Chairman at any time in the future, nor is the Board required to nominate Burguieres for reelection as a director upon the expiration of his current term. Burguieres agrees to resign as Chairman, as a director, or both, at any time after the date hereof, if requested to do so by a majority of the members of the Board. Burguieres' resignation as Chairman, a director, or both, shall have no effect on Burguieres' employment by the Company. Should Burguieres resign either or both positions, the Board shall assign to him such other responsibilities, duties and authority as are deemed appropriate by the Board. 3.2 During the term of his employment, and excluding any periods of vacation and sick leave to which Burguieres is entitled, Burguieres shall devote such time and efforts to the business and affairs of the Company as shall be necessary to discharge his responsibilities and duties; provided, however, that Burguieres shall be permitted to engage from time to time in and to receive compensation for outside business activities, including the management of businesses and investments that are not related to the business and affairs of the Company to the extent such activities do not significantly interfere with the performance of Burguieres' responsibilities to the Company in accordance with this Agreement and do not cause Burguieres to be in violation of Article 6 of this Agreement. ARTICLE 4 COMPENSATION AND RELATED MATTERS 4.1 Salary. During the term of employment set forth in Article 2, the Company shall pay to Burguieres an annual base salary of $300,000, or such higher rate as may from time to time be determined in the sole discretion of the Board, the base salary to be paid in substantially equal semi-monthly installments. 4.2 Benefits. Burguieres shall not be eligible to participate in the Company's incentive compensation plans (including, without limitation, any cash or stock bonus plans (including any bonus that otherwise might have been paid or payable by the Company to Burguieres on account of performance during that portion of the fiscal year of the Company ending December 31, 1996 that preceded the Effective Date) or any incentive stock-based plans, such as stock option plans and restricted stock plans. During the term of this Agreement, Burguieres shall be eligible for the benefit plans and programs enumerated below: (a) Burguieres shall be entitled to continue his participation in the Company's 401(k) Savings Plan and the Company's Supplemental Savings Plan, as, and to the extent such plans are, in effect from time to time during the term of this Agreement. (b) Burguieres and Burguieres' eligible dependents shall be entitled to continue to participate and shall receive all benefits under the Company's welfare benefit plans, including, without limitation, medical, prescription, dental, disability, salary continuance, group life, accidental death and travel accident insurance plans and programs, as, and to the extent such plans and programs are, in effect from time to time during the term - 2 - 3 of this Agreement; provided, however, that Burguieres shall pay any premiums or other amounts required to be paid for such benefits. Upon termination of Burguieres' employment, he shall be entitled to health benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), provided that he shall pay any premiums owed in connection with such health benefits. After expiration of the COBRA benefits, Burguieres shall be entitled to convert the Company's health plan, as it relates to Burguieres and any eligible dependents, to an individual policy, upon payment of the applicable conversion fee. (c) During the first two years of the term of this Agreement, Burguieres shall be entitled to a Company telephone calling card, a Company corporate American Express card, but only to the extent this perquisite is afforded to other key employees of the Company and reimbursement for his expenses related to one mobile telephone. 4.3 Stock Options and Stock Appreciation Rights. (a) Immediately prior to the Effective Date, Burguieres held options granted under various of the Company's Stock Option Plans (the "Option Plans") to purchase (i) up to 50,000 shares of Common Stock, $.10 par value ("Common Stock"), of the Company at $10.50 per share, (ii) up to 12,500 shares of Common Stock at $8.75 per share, (iii) up to 27,500 shares of Common Stock at $15.75, (iv) up to 27,500 shares of Common Stock at $19.75 per share, (v) up to 27,500 shares of Common Stock at $18.50 per share, and (vi) up to 30,000 shares of Common Stock at $31.563 per share (such options being herein collectively called the "Unvested Options"). Notwithstanding any contrary provision of the Option Plans or of the several agreements pursuant to which the Unvested Options were granted to Burguieres, the rights of Burguieres with respect to said Unvested Options shall be fully vested at the Effective Date (such Unvested Options hereinafter included in the term the "Options") and exercisable by Burguieres at any time after the Effective Date in accordance with the terms of the Option Plan. (b) Immediately prior to the Effective Date, Burguieres held unvested stock appreciation units granted under the Company's Stock Appreciation Rights Plan (the "SAR Plan"), (i) 25,000 of which have a price of $10.75 per unit, and (ii) 6,250 which have a price of $9.00 per unit (such stock appreciation units being herein collectively called the "Unvested Units"). Notwithstanding any contrary provision of the SAR Plan or of the several agreements pursuant to which the Unvested Units were granted, the rights of Burguieres with respect to said Unvested Units shall be fully vested at the Effective Date (such Unvested Units hereinafter included in the term the "Units") and exercisable by Burguieres at any time after the Effective Date in accordance with the terms of the SAR Plan. (c) Except as otherwise specifically provided in this Section 4.3, Burguieres shall not be entitled to participate in any stock option plan or stock appreciation rights plan of the Company, including but not limited to any Option Plan or the SAR Plan, at any time on or after the Effective Date. - 3 - 4 (d) The Company shall be entitled to withhold from any payment to be made pursuant to Section 4.3 any portion of any taxable income that (i) is realized by Burguieres as a result of the exercise of any of the Options or the Units and (ii) the Company shall determine it is required by law or regulation to so withhold under applicable tax laws. 4.4 Restricted Stock. (a) Immediately prior to the Effective Date, Burguieres held 125,500 shares of Common Stock that were granted to Burguieres pursuant to the Company's Restricted Stock Incentive Plan (the "Restricted Stock Plan") and which remained subject to restrictions on ownership on the Effective Date (such shares of Common Stock being herein called the "Restricted Shares"). Notwithstanding any contrary provision of the Restricted Stock Plan or of any agreement pursuant to which the Restricted Shares were granted to Burguieres, all restrictions on ownership shall terminate with respect to the Restricted Shares as originally scheduled; provided, however, that all restrictions shall terminate upon the expiration or earlier termination of this Agreement. (b) Except as otherwise specifically provided in this Section 4.4, Burguieres shall not be entitled to participate in the Restricted Stock Plan at any time on or after the Effective Date. (c) The Company shall be entitled to withhold from any payments to be made pursuant to Section 4.4 any portion of any taxable income that (i) is realized by Burguieres as a result of the termination of any restriction on ownership on any of the Restricted Shares and (ii) the Company shall determine it is required by law or regulation to so withhold under applicable tax laws. 4.5 Vacation. Burguieres shall be entitled to paid vacation during each year of the Agreement, determined in accordance with the Company's then current vacation policy. Burguieres shall also be entitled to all paid holidays given by the Company to its employees. 4.6 Business Expenses. During the term of this Agreement, the Company will reimburse Burguieres for authorized business expenses incurred by Burguieres for Company-related business purposes, including expenses for entertainment and business development, travel and similar items, provided such expenses are made in accordance with the Company's policies and procedures and are approved by the Company. The Company will reimburse Burguieres on a monthly basis upon presentment by Burguieres of an itemized accounting of such expenditures, including receipts setting forth (in appropriate detail the date place, amount, names, etc.) the individual items for which reimbursement is sought. Major expense items, such as travel, must be authorized by the Company prior to Burguieres' incurring the expense. 4.7 Office and Support Staff. The Company contemplates that Burguieres in performing under this Agreement will require office space, secretarial assistance, telephone - 4 - 5 usage, facsimile, computer and other office equipment usage and other assistance. During the first two years of the term of this Agreement, the Company shall furnish Burguieres with office space, either in one of the Company's locations or elsewhere, and supply Burguieres' reasonable requirements at no expense to Burguieres. ARTICLE 5 TERMINATION 5.1 Termination by the Company. (a) Termination Due to Disability. Burguieres' employment hereunder shall terminate upon his "Disability". In the event of such termination, the Company shall pay to Burguieres the compensation pursuant to Section 4.1 to which he would otherwise be entitled had his employment continued through the date indicated in Article 2 hereof, in the same manner as paid while Burguieres was employed, and extend to Burguieres the benefits pursuant to Section 4.2(b), in accordance with the Company's policy with respect to Disability, 4.2(c), 4.3, 4.4 and 4.7; provided, however, that the Company shall be entitled to credit against any such benefits payable by it any amount paid to Burguieres under the Company's disability benefit programs provided for the benefit of Burguieres. For purposes of this Agreement, "Disability" is defined to mean that, as a result of Burguieres' incapacity due to physical or mental illness, Burguieres shall have been absent from his duties with the Company on a full-time basis for a period of one year and a physician acceptable to the Company is of the opinion that (i) Burguieres is suffering from "total disability" as defined in the Company's long-term disability plan, or any successor plan or program or (ii) Burguieres will qualify for a social security disability payment, and (iii) within thirty (30) days after written notice of termination is given, Burguieres shall not have returned to the full-time performance of Burguieres' duties. (b) Termination Due to Death. Burguieres' employment hereunder shall terminate upon his death. In the event of such termination, the Company shall pay to Burguieres' estate the compensation pursuant to Section 4.1 to which he would otherwise be entitled had his employment continued through the date indicated in Article 2 hereof, in the same manner as paid while Burguieres was employed, and extend to Burguieres' eligible dependents or estate, as appropriate, the benefits pursuant to Sections 4.2(b), in accordance with the Company's policy with respect to death, 4.2(c), 4.3, 4.4 and 4.7. (c) Termination Without Cause. The Company, without cause, may terminate this Agreement at any time by written notice to Burguieres. In the event of such termination, the Company shall pay Burguieres the compensation pursuant to Section 4.1 and extend to Burguieres the benefits pursuant to Sections 4.2(b), except for long- term disability, 4.2(c), 4.3, 4.4 and 4.7 to which he would otherwise be entitled had his employment continued through the date indicated in Article 2 hereof in the same manner as paid or extended while Burguieres was employed. - 5 - 6 (d) Termination for Cause. The Company may terminate Burguieres' employment for "Cause". In the event of such termination, the Company shall cease paying Burguieres compensation pursuant to Section 4.1 and shall terminate benefits pursuant to Sections 4.2, 4.3, 4.4, 4.5, 4.6 and 4.7, except as required by law. For purposes of this Agreement, the Company shall have "Cause" to terminate Burguieres' employment hereunder only (i) if termination shall have been the result of an act or acts of dishonesty on Burguieres' part constituting a felony and resulting, or intending to result, directly or indirectly, in gain or personal enrichment at the expense of the Company, or (ii) upon the willful and continued failure by Burguieres to substantially perform his duties with the Company (other than any such failure resulting from his incapacity due to mental or physical illness) after demand in writing for substantial performance is delivered to Burguieres by the Board, which demand specifically identifies the manner in which such Board believes that Burguieres has not substantially performed his duties, and such failure to perform his duties results in demonstrably material injury to the Company, or (iii) upon the breach by Burguieres of Article 6, which breach remains uncorrected for 30 days following written notice to Burguieres by the Company of such breach. Burguieres' employment shall in no event be considered to have been terminated by the Company for cause if such termination took place as a result of (i) bad judgment or negligence on his part, or (ii) any act or omission without intent of gaining therefrom, directly or indirectly, a profit to which Burguieres was not legally entitled, or (iii) any act or omission believed by Burguieres in good faith to have been in or not opposed to the interests of the Company, or (iv) any act or omission in respect of which a determination is made that Burguieres met the applicable standard of conduct prescribed for indemnification or reimbursement or payment of expenses under the bylaws of the Company or the laws of the State of Texas or the directors and officers liability insurance of the Company, in each case as in effect at the time of such act or omission. Burguieres shall not be deemed to have been terminated for cause unless and until there shall have been delivered to Burguieres a copy of a resolution duly adopted by the affirmative vote of not less than three-fourths (3/4) of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to Burguieres and an opportunity for Burguieres, together with his counsel, to be heard before the Board) finding that in the good faith of the Board he was guilty of conduct set forth above in clauses (i) through (iii) of the first sentence of this paragraph and specifying the particulars thereof in detail. 5.2 Termination by Burguieres. Burguieres may terminate his employment hereunder without any breach of this Agreement under any of the following circumstances: (a) the assignment to Burguieres by the Board of duties inconsistent with the position, duties, responsibilities and status of the Company's Chairman; or (b) the failure of the Company to re-elect or re-appoint Burguieres as Chairman, a director, or both, except in connection with the termination of employment pursuant to Section 5.1(c); or - 6 - 7 (c) for the Company's breach of any provision of this Agreement which, if correctable, remains uncorrected for 30 days following written notice to the Company by Burguieres of such breach; or (d) in the event a Change of Control (as defined hereinafter) occurs. A "Change of Control" shall mean: (i) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20 percent or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 5.2(d); or (ii) Individuals, who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction") in each case, unless, following such Corporate Transaction, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, - 7 - 8 of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 60 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 20 percent or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. In the event of such termination, the Company shall pay to Burguieres the compensation pursuant to Section 4.1 and extend to Burguieres the benefits pursuant to Sections 4.2(b), except for long-term disability coverage, 4.2(c), 4.3, 4.4 and 4.7 to which he would otherwise be entitled had his employment continued through the date indicated in Article 2, in the same manner as paid or extended while Burguieres was employed; provided, however, if termination occurs after a Change of Control, Burguieres can request, at his option, that the compensation owed pursuant to Section 4.1 be paid in a lump sum at his date of termination. 5.3 Date and Effect of Termination. "Date of Termination" shall mean (i) if Burguieres' employment is terminated by his death, the date of his death, (ii) if Burguieres' employment is involuntarily terminated pursuant to Section 5.1(b) (other than by reason of death) or Section 5.1(c) herein, the date specified in the notice of termination, (iii) if Burguieres' employment is terminated upon his Disability, the date 30 days after the Company's notice to Burguieres as contemplated in Section 5.1(a) hereof, and (iv) if Burguieres voluntarily terminates his employment, the date set forth in any notice to terminate under Section 5.2. This Agreement shall terminate on the Date of Termination relating to a termination pursuant to Section 5.1(a), 5.1(b) 5.1(c) or 5.2 and thereafter neither party will have any liability or obligation to the other under this Agreement, except for the covenants in Sections 5.1(a), 5.1(b) and 6. - 8 - 9 ARTICLE 6 NON-COMPETE In consideration of his employment hereunder and in view of the key position in which he will serve the Company, Burguieres agrees that during the period of his employment by the Company hereunder, he will not, without the prior written consent of the Board of Directors of the Company, directly or indirectly, own, manage, operate, control, be employed by, participate in or be connected in any manner with the ownership, management, operation or control of any business which competes, in the Company's reasonable judgment, with any business conducted by the Company or any of its subsidiaries or affiliates at the time of such termination in any area where such business is being conducted at the time of such termination. In addition, Burguieres agrees that during the period of his employment by the Company, he will not solicit for employment any individuals currently employed by the Company or any of its subsidiaries or affiliates. Breach by Burguieres of this covenant while he is employed by the Company shall be deemed to be "Cause", as defined in Section 5.1(c). ARTICLE 7 MISCELLANEOUS 7.1 No Mitigation Required; Other Employment. (a) If Burguieres' employment is terminated prior to the date indicated in Article 2 and he is receiving compensation and benefits hereunder, he shall not be required to mitigate the amount of any payment or benefit provided for in Section 4.1 or 4.2 by seeking other employment or otherwise. (b) If Burguieres' employment is terminated for any reason other than Cause and Burguieres obtains other employment that would not be a breach of the non-compete covenant included in Article 6 if he were still employed, the Company shall continue paying the compensation owed pursuant to Section 4.1 without reduction by any compensation earned by Burguieres as a result of employment by another employer after the date of termination, or otherwise. The benefits provided for in Section 4.2 shall terminate immediately, except as required by law. 7.2 Change of Control Agreement. Burguieres is party to a Change of Control Agreement dated December 9, 1993, as amended (the "COC Agreement"), with Weatherford, regarding compensation and severance arrangements in the event of a change in control (as defined therein) of Weatherford. The COC Agreement is rescinded in its entirety as of the date hereof, and Burguieres hereby waives all of his rights thereunder. This Agreement shall supersede and replace in its entirety the COC Agreement and the COC Agreement shall be of no further force and effect, and neither party shall have any obligation to the other thereunder. - 9 - 10 7.3 Successors; Binding Agreement. The Company will require any successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably satisfactory to Burguieres, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any succession shall be a breach of this Agreement and shall entitle Burguieres to compensation from the Company in the same amount and on the same terms as if he had terminated his employment pursuant to Section 5.2, except that for purposes of implementing the foregoing, the date on which each such succession become effective shall be the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 7.3 or which otherwise becomes bound by all of the terms and provisions of this Agreement by operation of law. This Agreement and all rights of Burguieres hereunder shall inure to the benefit of and be enforceable by Burguieres' personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Burguieres should die while any amounts would still be payable to him hereunder if he continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Burguieres' designated beneficiaries set forth in a written beneficiary designation filed with the Company or, if there be no such designated beneficiary, to Burguieres' estate. 7.4 Notices. For purpose of this Agreement, notices and all other communications provided for herein shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Company to: 1360 Post Oak Blvd., Suite 1000 Houston, Texas 77056-3098 Attn: Suzanne Thomas If to Burguieres to: 3229 Del Monte Houston, Texas 77019 or to such other address as either party may furnish to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt. 7.5 Applicable Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Texas without regard to the conflict of law principles thereof. 7.6 Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing, signed by - 10 - 11 Burguieres and such officer of the Company as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 7.7 Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not effect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect. 7.8 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 7.9 Entire Agreement. This Agreement, together with any exhibits hereto, constitutes, the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to the employment of Burguieres by the Company. Each party to this Agreement acknowledges that no representation, inducement, promise or agreement, oral or written, has been made by either party or by anyone acting on behalf of either party which is not embodied herein, and that no agreement, statement or promise relating to the employment of Burguieres by the Company, which is not contained in this Agreement, or any exhibits hereto, shall be valid or binding. Any modification or amendment of this Agreement will be effective only if it is in writing and signed by each of the parties hereto. IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written. WEATHERFORD ENTERRA, INC. By: /s/ H. SUZANNE THOMAS ----------------------------------- /s/ PHILIP BURGUIERES --------------------------------------- Philip Burguieres - 11 - EX-10.15 14 CONSULTING AGREEMENT - THOMAS N. AMONETT 1 EXHIBIT 10.15 CONSULTING AGREEMENT This Consulting Agreement dated as of July 26, 1996 between Weatherford Enterra, Inc. (the "Company") and Thomas N. Amonett (the "Consultant"). WHEREAS, the Company desires to engage Consultant to perform certain services, as hereinafter specified; and WHEREAS, Consultant is willing to enter into this Agreement with respect to such services upon the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and of the mutual agreements hereinafter set forth, the parties hereto agree as follows: 1. Duties. Consultant will serve as Acting President and Chief Executive Officer of the Company and otherwise consult with the Board of Directors for the term of this Agreement. 2. Term and Termination. This Agreement will commence on July 26, 1996 and will continue indefinitely until terminated by either party's giving written notice to the other of its intention to terminate same. 3. Compensation. The Company will pay to Consultant $22,750 per month, commencing July 26, 1996. The Consultant will continue to receive his quarterly retainer and meeting fees owed by the Company in connection with his serving as a director of the Company. 4. Relationship Between the Parties. Consultant is retained and engaged by the Company only for the purposes and to the extent set forth in this Agreement, and his relation to the Company and its affiliated or subsidiary companies shall be that of an independent contractor, and he shall be free to dispose of such portion of his entire time, energy and skill during regular business hours as he is not obligated to devote hereunder to the Company and its affiliated or subsidiary companies, to other pursuits, persons, firms or corporations which are not competitive to the businesses or products of the Company. Consultant shall not be considered under the provisions of this Agreement or otherwise as having an employee status and shall not be entitled to participate in any plans, arrangements or distributions by the Company or its affiliated or subsidiary companies pertaining to or in connection with any pension, stock, bonus, insurance, profit sharing or similar benefits for the Company's regular employees. - 1 - 2 5. Taxes. Consultant will be liable for all taxes imposed on him or his business by any government. Accordingly, the Company will not withhold from Consultant's fees any monies for payment of taxes, including income taxes, social security taxes, etc. Consultant agrees to hold harmless and indemnify the Company from and against the payment of any taxes on account of Consultant's performance hereunder. 6. Trade Secrets and Confidential Information. Consultant recognizes and acknowledges that he may have access to certain trade secrets and other confidential information of the Company and corporations affiliated with the Company and that such information constitutes valuable, special and unique property of the Company and such other corporations. Consultant will keep such information strictly confidential and will not, during the term of this Agreement, or for a period of five (5) years after the termination hereof, disclose any of such trade secrets or confidential information to any person, firm, corporation or other entity for any reason or purpose whatsoever except to authorized representatives of the Company and its affiliated corporations. In the event of a breach or threatened breach by Consultant of the provisions of this provision, the Company shall be entitled to an injunction restraining Consultant from disclosing, in whole or in part, such trade secrets and confidential information. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages from Consultant. 7. Other Contracts. Consultant warrants that his entering into this Agreement does not conflict with any obligations he has under any other agreement. 8. Conflict of Interest. Consultant agrees that he will not, without the prior written consent of the Company, serve any interest or do any act or thing which would, in the reasonable opinion of the Company, conflict with the interests of the Company or any of its affiliates during the term of this Agreement, and Consultant will not, without the prior written consent of the Company, enter into competition with the Company or any of its affiliated or subsidiary companies or perform services for any competitor of the Company or any of its affiliated or subsidiary companies during said period. 9. Notices. Any notice required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been given when deposited in the U.S. mail in a registered, postage prepaid envelope addressed, if to Consultant, 3609 W. Clay, Houston, Texas 77019, and if to the Company, Weatherford Enterra, Inc., 1360 Post Oak Boulevard, Houston, Texas 77056, Attn.: H. Suzanne - 2 - 3 Thomas, or to such other address as either party shall designate by written notice to the other. 10. Assignment. Consultant may not assign his rights or obligations hereunder without obtaining the prior written consent of the Company. The rights and obligations of the Company hereunder shall inure to the benefit of and shall be binding upon the successors and assigns of the Company. 11. Miscellaneous. (a) This Agreement shall be subject to and governed by the laws of the State of Texas. (b) Failure to insist upon strict compliance with any provision hereof shall not be deemed a waiver of such provision or any other provision hereof. (c) This Agreement may not be modified except by an agreement in writing executed by the parties hereto. (d) The invalidity or unenforceability of any provision hereof shall not affect the validity or enforceability of any other provision. 12. Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the engagement of Consultant by the Company. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written. WEATHERFORD ENTERRA, INC. By: /s/ H. SUZANNE THOMAS ------------------------------- Name: H. Suzanne Thomas Title: Senior Vice President and Secretary /s/ THOMAS N. AMONETT --------------------------------------- Thomas N. Amonett - 3 - 4 FIRST AMENDMENT TO CONSULTING AGREEMENT This First Amendment to Consulting Agreement dated as of January 1, 1997 between Weatherford Enterra, Inc. (the "Company") and Thomas N. Amonett (the "Consultant"). WHEREAS, the Company and Consultant have previously entered into that certain Consulting Agreement dated as of July 26, 1996 (the "Consulting Agreement"); and WHEREAS, the parties which to amend the Consulting Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual agreements hereinafter set forth, the parties agree as follows: 1. Section 3 of the Consulting Agreement is hereby deleted in its entirety and replaced with the following language: "COMPENSATION. (a) The Company will pay to Consultant $30,000 per month, commencing January 1, 1997. Consultant will continue to receive his quarterly retainer and meeting fees owed by the Company in connection with his serving as a director of the Company during the term of this agreement. (b) Upon Consultant's services as Acting President and Chief Executive Officer no longer being required, the Company will pay to Consultant an amount equal to one year's pay, such amount to be paid at such times and in such installments as directed by Consultant. In addition, the Company will provide Consultant with an office and secretarial assistance for one year thereafter; provided, however, that this shall be furnished at no additional cost to the Company." 2. The remainder of the Consulting Agreement shall remain in full force and effect as written. IN WITNESS WHEREOF, the parties have executed this First Amendment to Consulting Agreement as of the day and year first above written. WEATHERFORD ENTERRA, INC. By: /s/ H. SUZANNE THOMAS --------------------------------- Name: H. Suzanne Thomas --------------------------------- Title: Sr. Vice President and Secretary --------------------------------- /s/ Thomas N. Amonett ---------------------------------------- Thomas N. Amonett EX-21 15 SUBSIDIARIES OF THE COMPANY 1 EXHIBIT 21 WEATHERFORD ENTERRA, INC. SUBSIDIARIES AND AFFILIATES (December 31, 1996)
JURISDICTION % OF COMPANY OWNERSHIP NAME OF INCORPORATION (DIRECT OR INDIRECT) ---- ---------------- ---------------------- A-1 Bit & Tool Co., B.V. Netherlands 100% by W/Eurasia B.V. Aarbakke AS Norway 100% by W/Norge Arrow Completion Systems, Inc. (formerly Watson Packer, Inc.) Texas 100% by EPEG Bit & Tool A-1 S.r.l. Italy 100% by WEMESPA CanaRoss Limited Russia 50% by Enterra Cyprus CRC-Evans Automatic Welding, Inc. ("CRC-Evans Welding") Texas 100% by CRC-Evans CRC-Evans Automatic Welding Limited Delaware 100% by WUSI CRC-Evans Canada Ltd. ("CRC-Evans Canada") Canada 100% by WE/Canada CRC-Evans Holland B.V. Netherlands 100% by CRC-Evans CRC-Evans Limited Delaware 100% by CRC-Evans CRC-Evans Pipeline International (UK) Limited ("CRC-Evans Ltd.") United Kingdom 100% by W/Eurasia Ltd. CRC-Evans Pipeline International, Inc. ("CRC-Evans") Delaware 100% by WEI CRC-Evans Rehabilitation Systems, Inc. (CRC-Rehab.") Delaware 100% by CRC-Evans CRC-Evans Services Limited United Kingdom 100% by W/Eurasia Ltd. EMI-Elettro Magnetica Ispezioni Italia S.r.l. Italy 100% by WEMESPA Energy Industries Financial Services, Inc. Delaware 100% E/Compression Enterra (Thailand) Ltd. Thailand 100% by WEI Enterra (U.K.) Limited United Kingdom 100% by OFRH Enterra Compression Company ("E/Compression") Delaware 100% by EPEG Enterra Compression Investment Company ("E/Investment") Delaware 100% by E/Compression Enterra Corporation Nevada 100% by WEI Enterra Cyprus Limited Cyprus 100% by WE/Canada Enterra International Limited United Kingdom 100% by OFRH Enterra Norway AS Norway 100% by WEI Enterra Oil Field Services, Ltd. ("EOFS") Bermuda 100% by WUSI Enterra Oilfield Rentals (Malaysia) Sdn. Bhd. Malaysia 100% by WAPP Enterra Oilfield Rentals Limited Hong Kong 100% by WEI Enterra Oilfield Rentals Pty. Ltd. Australia 100% by WLI Enterra Patco Oilfield Products Incorporated Texas 100% by WEI Enterra Petroleum Equipment Group, Inc. ("EPEG") Delaware 100% by WEI Enterra Petroleum Equipment Group (UK) Ltd. United Kingdom 100% by W/Eurasia Ltd. Enterra Quality Drilling Tools Pte. Ltd. Singapore 100% by WAPP Enterra Rental and Fishing Company Delaware 100% by WUSI European Material Inspection (EMI) B.V. Netherlands 100% by W/Eurasia B.V. Homco Arabian Gulf, Inc. Delaware 100% by WUSI Homco Oilfield Services Limited United Kingdom 100% by W/Eurasia Ltd. Keltic Oil Tools Limited United Kingdom 100% by OFRH Nana Test, Inc. Alaska 100% by TEST Nodeco A/S Norway 100% by W/Norge Nodeco Ltd. United Kindgom 100% by W/Eurasia Ltd. Offshore Pipeline Services Limited United Kingdom 45% by CRC-Evans Ltd. Oil Field Rental Holdings Limited ("OFRH") United Kingdom 100% by W/Eurasia Ltd. Oiltools Weatherford Limited British Virgin Island 50% WLI PETCO Fishing & Rental Tools (U.K.) Ltd. United Kingdom 100% by W/Eurasia Ltd. Pipeline Induction Heat Limited ("PIH") United Kingdom 91.67% by W/Eurasia Ltd. Pipetex Limited United Kingdom 100% by PIH ServiciosTec LDC Cayman Islands 100% by EOFS Technical Oil Services Limited British Virgin Islands 100% by EOFS Test, Inc. Louisiana 100% by TEST
2
JURISDICTION % OF COMPANY OWNERSHIP NAME OF INCORPORATION (DIRECT OR INDIRECT) ---- ---------------- ---------------------- Test International E.C. Bahrain 100% by TEST Test International Ltd. Cayman Island 100% by TEST Test Saudi Arabia Ltd. Sauda Arabia 50% by TEST Total Energy Services International, Inc. - FSC Barbados 100% by EPEG Total Engineering Services Team, Inc. ("TEST") Louisiana 100% by EPEG Triumph-LOR International, Inc. ("T-LOR") Texas 100% by WUSI Weatherford Abu Dhabi, Limited ("W/Abu Dhabi") Cayman Islands 100% by WLI Weatherford/Al-Rushaid Ltd. Saudi Arabia 49% by W/Overseas Products, Ltd. Weatherford Asia Pacific Pte. Ltd ("WAPP") (formerly Enterra Oilfield Pte. Ltd.) Singapore 100% by WLI Weatherford Australia Pty. Limited Australia 100% by WLI Weatherford/Bin Hamoodah Abu Dhabi, UAE 49% by W/Abu Dhabi Weatherford East Europe Service GmbH Germany 100% by W/Holding Weatherford Enterra Canada Ltd. ("WE/Canada") Canada 85.68% by WLI, 4.45% by CRC-Evans and 9.87 by EPEG Weatherford Enterra de Mexico S.A. de C.V. (formerly Enterra de Mexico S.A. de C.V.) Mexico 99% WLI, 1% WUSI Weatherford Enterra S.A. (formerly Enterra Oilfield Rental S.A.) Argentina 100% by WLI Weatherford Enterra Colombia Limited (formerly Enterra Colombia Limited) British Virgin Islands 100% by EOFS Weatherford Enterra Compression Company, L.P. Delaware 99% by E/Investment & 1% by E/Compression Weatherford Enterra U.S., Limited Partnership Louisiana 99% by CRC-Evans Welding & 1% by WUSI Weatherford Espana, S.A. Spain 100% by W/Holding Weatherford Eurasia B.V. ("W/Eurasia B.V.") Netherlands 100% by WLI Weatherford Eurasia Ltd. ("W/Eurasia Ltd.") United Kingdom 99.9% by WLI & .1% by WEI Weatherford France, S.A. France 100% by WEI Weatherford Holding GmbH ("W/Holding") Germany 100% by WLI Weatherford, Inc. ("WINC") Panama 100% by WLI Weatherford International, Inc. (formerly Barber Industries, Inc.) Delaware 100% by CRC-Evans Canada Weatherford Ireland Limited Ireland 50% by W/U.K. & 50% by WLI Weatherford/Lamb, Inc. ("WLI") Delaware 100% by WEI Weatherford Latin America S.A. Panama 100% by WLI Weatherford (Malaysia) Sdn. Bhd. Malaysia 40% by WLI Weatherford Mediterranea S.p.A. ("WEMESPA") Italy 100% by W/Eurasia B.V. Weatherford Nigeria Ltd. Nigeria 60% by WLI Weatherford Norge A/S ("W/Norge") Norway 100% by W/Eurasia B.V. Weatherford Oil Tool Ges.m.b.H. Austria 95% by WLI & 5% by WEI Weatherford Oil Tool GmbH Germany 100% by W/Holding Weatherford Oil Tool Middle East Limited British Virgin Islands 100% by WLI Weatherford Oil Tool Nederland B.V. Netherlands 100% by W/Eurasia B.V. Weatherford Oil Tool (Private) Limited Singapore 100% by WLI Weatherford Overseas Products, Limited Cayman Islands 100% by WLI Weatherford Overseas Services, Limited Cayman Islands 100% by WLI Weatherford QAF (B) Sdn. Bhd. Brunei 50% by WLI Weatherford (Saudi Arabia), Ltd. Saudi Arabia 49% by W/Overseas Services, Ltd. Weatherford Services, S.A. Panama 100% by W/Holding Weatherford (U.K.) Limited United Kingdom 100% by W/Eurasia Ltd. Weatherford U.S., Inc. ("WUSI") Delaware 100% by CRC-Evans Weatherford Venezuela, S.A. Venezuela 100% by WLI WII Rental Company Delaware 100% by WLI WI Products and Equipment, Inc. Cayman Islands 100% by WLI World Wide Leasing LDC Cayman Islands 99% by EOFS & 1% by WUSI
2 EX-23 16 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 12, 1997, on the December 31, 1996 consolidated financial statements, included in this Form 10-K, into the Company's previously filed Registration Statement File Numbers 33-18187, 33-30522, 33-43131, 2-88509, 33-54842, 33-54844, 33-54846, 33-54848, 33-54850, 33-62253, 33-63215, 33-80068, 33-84076 and 33-84074. /s/ ARTHUR ANDERSEN LLP ARTHUR ANDERSEN LLP Houston, Texas March 25, 1997 EX-27 17 FINANCIAL DATA SCHEDULE
5 0000029302 WEATHERFORD ENTERRA, INC. 1,000 YEAR DEC-31-1996 JAN-01-1996 DEC-31-1996 33,029 0 289,057 16,241 163,302 505,434 1,254,686 693,496 1,397,723 211,359 0 0 0 5,217 836,391 1,397,723 994,468 994,468 714,346 714,346 13,752 0 22,914 104,847 34,593 70,073 0 0 0 70,073 1.35 1.35
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