Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
WEATHERFORD INTERNATIONAL INCORPORATED
AND
ENTERRA CORPORATION
JUNE 23, 1995
TABLE OF CONTENTS
ARTICLE I
THE MERGER.................................................................. 1
1.1 THE MERGER....................................................... 1
1.2 CLOSING DATE..................................................... 1
1.3 CONSUMMATION OF THE MERGER....................................... 2
1.4 EFFECTS OF THE MERGER............................................ 2
1.5 CERTIFICATE OF INCORPORATION; BYLAWS............................. 2
1.6 DIRECTORS AND OFFICERS........................................... 2
1.7 CONVERSION OF SECURITIES; EXCHANGE; FRACTIONAL SHARES............ 2
1.8 TAKING OF NECESSARY ACTION; FURTHER ACTION....................... 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES.............................................. 4
2.1 CERTAIN DEFINITIONS.............................................. 4
2.2 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD.................... 5
(a) ORGANIZATION AND COMPLIANCE WITH LAW....................... 5
(b) CAPITALIZATION............................................. 6
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT.................... 7
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS
TO WHICH WEATHERFORD IS A PARTY............................ 7
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS................... 8
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF CERTAIN
CHANGES AND EVENTS......................................... 9
(g) CERTAIN FEES............................................... 10
(h) LITIGATION................................................. 10
(i) EMPLOYEE BENEFIT PLANS..................................... 10
(j) TAXES...................................................... 12
(k) ENVIRONMENTAL.............................................. 13
(l) NO SEVERANCE PAYMENTS...................................... 14
(m) VOTING REQUIREMENTS........................................ 14
(n) INSURANCE.................................................. 14
(o) TITLE TO PROPERTY.......................................... 14
(p) WEATHERFORD ACTIONS........................................ 14
2.3 REPRESENTATIONS AND WARRANTIES OF ENTERRA........................ 14
(a) ORGANIZATION AND COMPLIANCE WITH LAW....................... 14
(b) CAPITALIZATION............................................. 15
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT.................... 15
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH INSTRUMENTS
TO WHICH ENTERRA IS A PARTY................................ 16
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS................... 16
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF CERTAIN
CHANGES AND EVENTS......................................... 18
(g) CERTAIN FEES............................................... 18
(h) LITIGATION................................................. 18
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(i) EMPLOYEE BENEFIT PLANS..................................... 19
(j) TAXES...................................................... 21
(k) ENVIRONMENTAL.............................................. 21
(l) NO SEVERANCE PAYMENTS...................................... 22
(m) VOTING REQUIREMENTS........................................ 22
(n) INSURANCE.................................................. 22
(o) TITLE TO PROPERTY.......................................... 22
(p) ENTERRA ACTIONS............................................ 22
ARTICLE III
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME........................ 23
3.1 CONDUCT OF BUSINESS BY WEATHERFORD PENDING THE MERGER............ 23
3.2 ACCESS TO INFORMATION............................................ 25
3.3 AFFILIATES' AGREEMENTS........................................... 25
3.4 RESERVATION OF WEATHERFORD COMMON STOCK.......................... 25
3.5 STOCK EXCHANGE LISTING........................................... 25
ARTICLE IV
COVENANTS OF ENTERRA PRIOR TO THE EFFECTIVE TIME............................ 25
4.1 CONDUCT OF BUSINESS BY ENTERRA PENDING THE MERGER................ 25
4.2 ACCESS TO INFORMATION............................................ 27
4.3 AFFILIATES' AGREEMENTS........................................... 27
ARTICLE V
ADDITIONAL AGREEMENTS....................................................... 28
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT......... 28
5.2 COMFORT LETTERS.................................................. 28
5.3 MEETINGS OF STOCKHOLDERS......................................... 28
5.4 REASONABLE EFFORTS; CONSENTS, APPROVALS AND WAIVERS.............. 29
5.5 ANTITRUST MATTERS................................................ 30
5.6 NOTIFICATION OF CERTAIN MATTERS.................................. 30
5.7 AGREEMENT TO DEFEND.............................................. 30
5.8 EXPENSES......................................................... 30
5.9 INDEMNIFICATION.................................................. 31
5.10 POST-EFFECTIVE TIME MAILING...................................... 32
5.11 STOCKHOLDERS' AGREEMENT.......................................... 32
5.12 ENTERRA STOCK OPTIONS............................................ 32
5.13 ENTERRA EMPLOYEE BENEFITS........................................ 33
5.14 UPDATE OF DISCLOSURE LETTERS..................................... 34
5.15 WEATHERFORD SPECIAL SEVERANCE PAY PLAN........................... 34
5.16 CHANGE OF CONTROL AGREEMENTS..................................... 34
5.17 INDEMNIFICATION AGREEMENTS....................................... 34
5.18 ENTERRA EMPLOYEE BONUSES......................................... 35
5.19 ENTERRA SEVERANCE AGREEMENTS..................................... 35
5.20 ENTERRA CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER.......... 36
5.21 WEATHERFORD CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER...... 36
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5.22 BOARD OF DIRECTORS............................................... 36
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ARTICLE VI
CONDITIONS.................................................................. 37
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER..... 37
6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD.............. 38
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ENTERRA.................. 40
ARTICLE VII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS.................................... 41
7.1 NO SOLICITATION BY WEATHERFORD................................... 41
7.2 NO SOLICITATION BY ENTERRA....................................... 43
7.3 FEE AND EXPENSE REIMBURSEMENTS................................... 45
ARTICLE VIII
MISCELLANEOUS............................................................... 46
8.1 TERMINATION...................................................... 46
8.2 EFFECT OF TERMINATION............................................ 47
8.3 WAIVER AND AMENDMENT............................................. 48
8.4 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS....................................................... 48
8.5 PUBLIC STATEMENTS................................................ 48
8.6 BINDING EFFECT; ASSIGNMENT....................................... 48
8.7 NOTICES.......................................................... 48
8.8 GOVERNING LAW; JURISDICTION...................................... 49
8.9 SEVERABILITY..................................................... 50
8.10 COUNTERPARTS..................................................... 50
8.11 HEADINGS......................................................... 50
8.12 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES...................... 50
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of the 23rd day of June,
1995 (the "Agreement"), is between Weatherford International Incorporated, a
Delaware corporation ("Weatherford"), and Enterra Corporation, a Delaware
corporation ("Enterra").
WHEREAS, subject to and in accordance with the terms and conditions of
this Agreement, the respective Boards of Directors of Weatherford and Enterra
have approved the merger of Enterra with and into Weatherford (the "Merger"),
whereby each issued and outstanding share of common stock, par value $1.00 per
share, of Enterra ("Enterra Common Stock") not owned directly or indirectly by
Enterra or Weatherford will be converted into the right to receive common stock,
par value $.10 per share, of Weatherford ("Weatherford Common Stock"), as
provided herein;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, the Merger is intended to be treated as a "pooling of
interests" for accounting purposes; and
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the Merger;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to and in accordance with the terms and
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), at the Effective Time (as defined in Section 1.3)
Enterra will be merged with and into Weatherford. As a result of the Merger, the
separate corporate existence of Enterra shall cease and Weatherford shall
continue as the surviving corporation (sometimes referred to herein as the
"Surviving Corporation") and shall succeed to and assume all of the rights and
obligations of Enterra in accordance with the DGCL. The corporate name of the
Surviving Corporation shall be "Weatherford/Enterra, Inc.".
1.2 CLOSING DATE. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Fulbright &
Jaworski L.L.P., 1301 McKinney, Suite 5100, Houston, Texas as soon as
practicable after the satisfaction or waiver of the conditions set forth in
Article VI or at such other time and place and on such other date as Weatherford
and Enterra shall agree; PROVIDED, that the closing conditions set forth in
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Article VI shall have been satisfied or waived at or prior to such time. The
date on which the Closing occurs is herein referred to as the "Closing Date".
1.3 CONSUMMATION OF THE MERGER. As soon as practicable on the Closing
Date, the parties hereto will cause the Merger to be consummated by filing with
the Secretary of State of the State of Delaware a certificate of merger in such
form as required by, and executed in accordance with, the relevant provisions of
the DGCL. The "Effective Time" of the Merger as that term is used in this
Agreement shall mean the effective time set forth in the certified copy of the
certificate of merger issued by the Secretary of State of the State of Delaware
with respect to the Merger.
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the applicable provisions of the DGCL.
1.5 CERTIFICATE OF INCORPORATION; BYLAWS. The Restated Certificate of
Incorporation and bylaws of Weatherford, as in effect immediately prior to the
Effective Time, shall be the Certificate of Incorporation and bylaws of the
Surviving Corporation and thereafter shall continue to be its Certificate of
Incorporation and bylaws until amended as provided therein and under the DGCL;
PROVIDED, HOWEVER, that the Certificate of Incorporation of the Surviving
Corporation shall be amended as set forth on Exhibit 1.5.
1.6 DIRECTORS AND OFFICERS.
(a) The Board of Directors of the Surviving Corporation shall
consist of ten persons. Exhibit 1.6(a) sets forth the initial directors
of the Surviving Corporation, along with the term of office for, and
the committee or committees of the Board of Directors, if any, on,
which each such director shall serve.
(b) Exhibit 1.6(b) sets forth the initial officers of the
Surviving Corporation, each of whom shall hold office until his or her
successor is duly elected or appointed and qualified.
1.7 CONVERSION OF SECURITIES; EXCHANGE; FRACTIONAL SHARES. Subject to
the terms and conditions of this Agreement, at the Effective Time, by virtue of
the Merger and without any action on the part of Weatherford, Enterra or their
stockholders:
(a) Each share of Enterra Common Stock issued and outstanding
immediately prior to the Effective Time (the "Shares"), other than any
Shares to be canceled pursuant to Section 1.7(b), shall be converted,
subject to the provisions of this Section 1.7, into the right to
receive 0.845 of a share (which number reflects a 1 for 2 reverse stock
split to be effected at the Closing) of Weatherford Common Stock (the
"Conversion Rate"); PROVIDED, HOWEVER, that no fractional shares of
Weatherford Common Stock shall be issued, and, in lieu thereof, a cash
payment shall be made pursuant to Section 1.7(f) hereof.
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(b) Each share of Enterra Common Stock held in the treasury of
Enterra and each Share owned by Weatherford or any direct or indirect
wholly-owned subsidiary of Enterra or of Weatherford immediately prior
to the Effective Time shall be canceled and extinguished at the
Effective Time without any conversion thereof and no payment shall be
made with respect thereto.
(c) As soon as practicable after the Effective Time, each
holder of an outstanding certificate that prior thereto represented
Shares shall be entitled, upon surrender thereof to the transfer agent
for the Weatherford Common Stock, to receive in exchange therefor a
certificate or certificates representing the number of whole shares of
Weatherford Common Stock into which the Shares so surrendered shall
have been converted as aforesaid, of such denominations and registered
in such names as such holder may request. Each holder of Shares who
would otherwise be entitled to a fraction of a share of Weatherford
Common Stock shall, upon surrender of the certificates representing
Shares held by such holder to Weatherford's transfer agent, be paid an
amount in cash in accordance with the provisions of Section 1.7(f).
Until so surrendered, each outstanding certificate that, prior to the
Effective Time, represented Shares shall be deemed from and after the
Effective Time, for all corporate purposes, other than the payment of
earlier dividends and distributions, to evidence the ownership of the
number of full shares of Weatherford Common Stock into which such
Shares shall have been converted pursuant to this Section 1.7. Unless
and until any such outstanding certificates shall be surrendered, no
dividends or other distributions payable to the holders of Weatherford
Common Stock, as of any time on or after the Effective Time, shall be
paid to the holders of such outstanding certificates that prior to the
Effective Time represented Shares; PROVIDED, HOWEVER, that, upon
surrender and exchange of such outstanding certificates, there shall
be paid to the record holders of the certificates issued and exchanged
therefor the amount, without interest thereon, of dividends and other
distributions, if any, that theretofore were declared and became
payable since the Effective Time with respect to the number of full
shares of Weatherford Common Stock issued to such holders.
(d) All shares of Weatherford Common Stock into which the
Shares shall have been converted pursuant to this Section 1.7 shall be
issued in full satisfaction of all rights pertaining to such converted
Shares.
(e) If any certificate for shares of Weatherford Common Stock
is to be issued in a name other than that in which the certificate
surrendered in exchange therefor is registered, it shall be a condition
of the issuance thereof that the certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall have paid to Weatherford or
its transfer agent any transfer or other taxes required by reason of
the issuance of a certificate for shares of Weatherford Common Stock in
any name other than that of the registered holder of the certificate
surrendered, or established to the satisfaction of Weatherford or its
transfer agent that such tax has been paid or is not payable.
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(f) No fraction of a share of Weatherford Common Stock
shall be issued, but in lieu thereof each holder of Shares who would
otherwise be entitled to a fraction of a share of Weatherford Common
Stock shall, upon surrender of the Shares held by such holder to
Weatherford's transfer agent, be paid an amount in cash equal to the
value of such fraction of a share based upon the closing price of
Weatherford Common Stock on the New York Stock Exchange on the last
trading day prior to the Effective Time. No interest shall be paid on
such amount. All Shares held by a record holder other than nominee
holders shall be aggregated for purposes of computing the number of
shares of Weatherford Common Stock to be issued pursuant to this
Section 1.7.
(g) None of Weatherford, Enterra, the Surviving Corporation or
Weatherford's transfer agent shall be liable to a holder of the Shares
for any amount properly paid to a public official pursuant to
applicable property, escheat or similar law.
1.8 TAKING OF NECESSARY ACTION; FURTHER ACTION. The parties hereto
shall take all such reasonable and lawful action as may be necessary or
appropriate to effectuate the Merger as promptly as possible. If, at any time
after the Effective Time, any such further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Surviving Corporation
with full right, title and possession to all assets, property, rights,
privileges, powers and franchises of Weatherford and Enterra, such corporations
shall direct their respective officers and directors to take all such lawful and
necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings ascribed to them below:
(a) "Environmental Laws" shall mean all United States or
foreign federal, state, local or municipal laws, rules, regulations,
statutes, ordinances or orders of any governmental entity relating to
(i) the control of any potential pollutant or protection of the air,
water or land, (ii) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation, and (iii)
exposure to hazardous, toxic or other substances alleged to be harmful.
The term "Environmental Laws" shall include, but not be limited to, the
Clean Air Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act, 33
U.S.C. Section 1251 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq., the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seq. and the Comprehensive Environmental Response,
Compensation an Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et
seq.
(b) "Environmental Permit" shall mean any permit, license,
approval, registration, identification number or other authorization
with respect to any business or other operations conducted by
Weatherford or any Weatherford Subsidiary (as defined in Section 2.2(a)
or Enterra or any Enterra Subsidiary (as defined in Section 2.3(a)),
as the case may be, required under any applicable Environmental Law.
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(c) "Hazardous Materials" shall mean any (i) petroleum or
petroleum products, (ii) hazardous substance as defined pursuant to
Section 101(14) of CERCLA or (iii) any other chemical, substance or
waste that is regulated under any Environmental Law.
(d) "Material Adverse Change" with respect to any party shall
mean a material adverse change in the business, financial condition or
results of operations of such party and its subsidiaries, taken as a
whole; PROVIDED, HOWEVER, that in no event shall the term "Material
Adverse Change" be deemed to include (i) changes in national or
international economic conditions or industry conditions generally,
(ii) changes, or possible changes, in foreign, federal, state or local
statutes and regulations applicable to Weatherford or Enterra, as the
case may be, or (iii) the loss of employees, customers or suppliers by
such party as a direct or indirect consequence of any announcement
relating to the Merger.
(e) "Material Adverse Effect" on any party shall mean any
material adverse effect on the business, financial condition or results
of operations of such party and its subsidiaries, taken as a whole;
PROVIDED, HOWEVER, that in no event shall the term "Material Adverse
Effect" be deemed to include (i) changes in national or international
economic conditions or industry conditions generally, (ii) changes, or
possible changes, in foreign, federal, state or local statutes and
regulations applicable to Weatherford or Enterra, as the case may be,
or (iii) the loss of employees, customers or suppliers by such party as
a direct or indirect consequence of any announcement relating to the
Merger.
(f) "Permitted Liens" shall mean: (i) liens for taxes not due
and payable or which are being contested in good faith, (ii)
mechanics', warehousemen's and other statutory liens incurred in the
ordinary course of business and (iii) defects and irregularities in
title and encumbrances that are not substantial in character or amount
and do not materially impair the use of the property or asset in
question.
2.2 REPRESENTATIONS AND WARRANTIES OF WEATHERFORD. Weatherford hereby
represents and warrants to Enterra that, except as expressly contemplated by
this Agreement or as set forth in the disclosure letter delivered by Weatherford
to Enterra on the date hereof (the "Weatherford Disclosure Letter"):
(a) ORGANIZATION AND COMPLIANCE WITH LAW. Weatherford and each
of its corporate subsidiaries (the "Weatherford Subsidiaries") is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has all
requisite corporate power and authority and all necessary governmental
authorizations to own, lease and operate all of its properties and
assets and to carry on its business as now being conducted, except
where the failure to do so would not, either individually or in the
aggregate, have a Material Adverse Effect. Weatherford and each of the
Weatherford Subsidiaries is duly qualified as a foreign corporation to
do business, and is in good standing, in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by
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it makes such qualification necessary, except in such jurisdictions
where the failure to do so does not and would not, either individually
or in the aggregate, have a Material Adverse Effect. Weatherford and
each of the Weatherford Subsidiaries is in compliance with all
applicable laws, judgments, orders, rules and regulations, domestic and
foreign, except where failure to be in such compliance would not,
either individually or in the aggregate, have a Material Adverse
Effect. Weatherford has heretofore delivered to Enterra true and
complete copies of Weatherford's Restated Certificate of Incorporation
and bylaws, as in existence on the date hereof.
(b) CAPITALIZATION.
(i) The authorized capital stock of Weatherford
consists of 80,000,000 shares of Weatherford Common Stock, par
value $.10 per share, and 1,000,000 shares of preferred stock,
par value $1.00 per share. As of June 21, 1995, there were
issued and outstanding 54,276,632 shares of Weatherford Common
Stock (including shares deemed to be outstanding pending the
exchange of shares of common stock of Petroleum Equipment
Tools Co. and H&H Oil Tool Co., Inc.) and no shares of
preferred stock, and 111,043 shares of Weatherford Common
Stock were held as treasury shares, of which 82,783 shares
were reserved for issuance pursuant to various stock option
agreements. As of June 21, 1995, there were reserved for
issuance 2,299,414 shares of Weatherford Common Stock pursuant
to stock option, employee stock purchase, 401(k) savings,
stock incentive and restricted stock plans (collectively, the
"Weatherford Options"). All issued shares of Weatherford
Common Stock are validly issued, fully paid and nonassessable
and no holder thereof is entitled to preemptive rights.
Weatherford is not a party to, and, excluding agreements among
various funds held or managed by institutional investors, has
no knowledge of, any voting agreement, voting trust or similar
agreement or arrangement relating to any class or series of
its capital stock, or any agreement or arrangement providing
for registration rights with respect to any capital stock or
other securities of Weatherford. All shares of Weatherford
Common Stock to be issued pursuant to the Merger, when issued
in accordance with this Agreement, will be validly issued,
fully paid and nonassessable and will not violate the
preemptive rights of any person. All outstanding shares of
capital stock of the Weatherford Subsidiaries are owned by
Weatherford, free and clear of all liens, charges,
encumbrances, adverse claims and options of any nature;
provided, however, that Weatherford's ownership of shares of
capital stock of certain foreign Weatherford Subsidiaries may
be subject to Permitted Liens.
(ii) Other than as set forth in this Section 2.2(b)
and as contemplated by Section 3.1(b)(iii), there are not now,
and at the Effective Time there will not be, any (A) shares of
capital stock or other equity securities of Weatherford
outstanding (other than Weatherford Common Stock issued
pursuant to Weatherford Options as described herein) or
(B) outstanding options, warrants, scrip, rights to subscribe
for, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable
for, shares of
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any class of capital stock of Weatherford, or contracts,
understandings or arrangements to which Weatherford is a
party, or by which it is or may be bound, to issue additional
shares of its capital stock or options, warrants, scrip or
rights to subscribe for, or securities or rights convertible
into or exchangeable for, any additional shares of its capital
stock.
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT. Weatherford has
all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and
delivery by Weatherford of this Agreement and the consummation by it of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action (subject only, with respect to the Merger,
to adoption and approval of this Agreement by the stockholders of
Weatherford as provided in Section 5.3(b). This Agreement has been duly
executed and delivered by Weatherford and is the valid and binding
obligation of Weatherford, enforceable against Weatherford in
accordance with its terms, except as such enforceability may be limited
or affected by (i) bankruptcy, insolvency, reorganization, moratorium,
liquidation, arrangement, fraudulent transfer, fraudulent conveyance
and other similar laws (including, without limitation, court decisions)
now or hereafter in effect and affecting the rights and remedies of
creditors generally or providing for the relief of debtors, (ii) the
refusal of a particular court to grant equitable remedies, including,
without limitation, specific performance and injunctive relief, and
(iii) general principles of equity (regardless of whether such remedies
are sought in a proceeding in equity or at law) and except as the
enforceability of any indemnification provision contained in this
Agreement may be limited by applicable federal or state securities
laws.
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH
INSTRUMENTS TO WHICH WEATHERFORD IS A PARTY. Neither the execution and
delivery of this Agreement nor the performance by Weatherford of its
obligations hereunder, nor the consummation of the transactions
contemplated hereby by Weatherford, will (i) conflict with
Weatherford's Restated Certificate of Incorporation or bylaws; (ii)
assuming satisfaction of the requirements set forth in clause (iii)
below, violate any provision of law applicable to Weatherford; (iii)
except for (A) requirements of Federal and state securities law, (B)
requirements arising out of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act"), (C) requirements of filings
in such foreign jurisdictions as may be applicable and (D) the filing
of a certificate of merger in accordance with the DGCL, require any
consent or approval of, or filing with or notice to, any public body or
authority, domestic or foreign, under any provision of law applicable
to Weatherford; or (iv) require any consent, approval or notice under,
or violate, breach, be in conflict with or constitute a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of any provision of, or
result in the creation or imposition of any lien upon any properties,
assets or business of Weatherford under, any note, bond, indenture,
mortgage, deed of trust, lease, franchise, permit, authorization,
license, contract, instrument or other agreement or commitment or any
order, judgment or decree to which Weatherford is a party or by which
Weatherford or its assets or properties is bound or encumbered, except
those that have already been given, obtained or filed and except in any
of the cases
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enumerated in clauses (ii) through (iv), those that, in the aggregate,
would not have a Material Adverse Effect.
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. Since January 1,
1992, Weatherford and each of the Weatherford Subsidiaries have filed
all reports, registration statements and other filings, together with
any amendments required to be made with respect thereto, that they have
been required to file with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). All reports, registration statements and other
filings (including, without limitation, all notes, exhibits and
schedules thereto and documents incorporated by reference therein)
filed by Weatherford with the Commission since January 1, 1992 through
the date of this Agreement, together with any amendments thereto, are
sometimes collectively referred to as the "Weatherford Commission
Filings". Weatherford has heretofore delivered to Enterra copies of the
Weatherford Commission Filings. As of the effectiveness dates declared
by the Commission, in the case of registration statements, as of the
mailing dates, in the case of proxy statements, or as of the filing
dates with the Commission, in the case of all other Weatherford
Commission Filings, the Weatherford Commission Filings complied, and
the Proxy Statement (as defined in Section 5.1) and the Registration
Statement (as defined in Section 5.1) (except with respect to
information concerning Enterra and the Enterra Subsidiaries furnished
by or on behalf of Enterra to Weatherford specifically for use therein)
will comply, in all material respects with the Securities Act, the
Exchange Act and the rules and regulations of the Commission
promulgated thereunder, as applicable, and did not or will not, as the
case may be, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under
which they were made, not misleading.
All material contracts of Weatherford and the Weatherford
Subsidiaries have been included in the Weatherford Commission Filings,
except for those contracts not required to be filed pursuant to the
rules and regulations of the Commission.
Each of the audited consolidated financial statements
(including, without limitation, any related notes or schedules)
included or incorporated by reference in the Weatherford Commission
Filings was, and each of the audited consolidated financial statements
to be included or incorporated by reference in the Proxy Statement and
the Registration Statement (except for those financial statements of
Enterra and the Enterra Subsidiaries furnished by or on behalf of
Enterra to Weatherford specifically for use therein) will be, prepared
in accordance with generally accepted accounting principles applied on
a consistent basis (except as may be noted therein or in the notes or
schedules thereto), and fairly presents, or will fairly present, as the
case may be, in all material respects, the consolidated financial
position of Weatherford and the Weatherford Subsidiaries as of the
dates thereof and the statements of income, cash flows and
stockholders' equity for the periods then ended in accordance with
generally accepted accounting principles. Each of the unaudited interim
financial statements
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included or incorporated by reference in the Weatherford Commission
Filings was, and each of the unaudited consolidated financial
statements to be included or incorporated by reference in the Proxy
Statement and the Registration Statement (except for those financial
statements of Enterra and the Enterra Subsidiaries furnished by or on
behalf of Enterra to Weatherford specifically for use therein) will be,
prepared in a manner consistent with the audited consolidated financial
statements and generally accepted accounting principles. As of the date
hereof, Weatherford has no material liabilities, absolute or
contingent, not reflected in the Weatherford Commission Filings, except
(i) liabilities not required under generally accepted accounting
principles to be reflected on such financial statements or the notes
thereto and (ii) liabilities incurred in the ordinary course of
business since the date of such financial statements consistent with
past operations and not relating to the borrowing of money.
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF
CERTAIN CHANGES AND EVENTS. Since April 1, 1995, except as disclosed in
the Weatherford Commission Filings filed with the Commission since that
date, Weatherford and the Weatherford Subsidiaries have conducted their
business only in the ordinary and usual course, and there has not been
(i) any Material Adverse Change in Weatherford or any condition, event
or development that reasonably may be expected to result in any
Material Adverse Change; (ii) any change by Weatherford in its
accounting methods, principles or practices; (iii) any revaluation by
Weatherford or any of the Weatherford Subsidiaries of any of its or
their assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (iv) any entry by Weatherford or any of
the Weatherford Subsidiaries into any commitment or transaction
material to Weatherford and the Weatherford Subsidiaries, taken as a
whole, other than in the ordinary course of business; (v) any
declaration, setting aside or payment of any dividends or distributions
in respect of the Weatherford Common Stock, or any redemption, purchase
or other acquisition of any of its securities or any securities of any
of the Weatherford Subsidiaries; (vi) any damage, destruction or loss
(whether or not covered by insurance) materially adversely affecting
the properties or business of Weatherford and the Weatherford
Subsidiaries, taken as a whole; (vii) any increase in indebtedness for
borrowed money; (viii) any granting of a security interest or lien on
any property or assets of Weatherford and the Weatherford Subsidiaries,
other than Permitted Liens; or (ix) any increase in or establishment of
any bonus, insurance, severance, deferred compensation, pension,
retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other
employee benefit plan or any other increase in the compensation payable
or to become payable to any officers or key employees of Weatherford or
any of the Weatherford Subsidiaries.
(g) CERTAIN FEES. Neither Weatherford nor any of its officers,
directors or employees, on behalf of Weatherford or any of the
Weatherford Subsidiaries or its or their respective Boards of Directors
(or any committee thereof), has employed any financial advisor, broker
or finder or incurred any liability for any financial advisory,
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brokerage or finders' fees or commissions in connection with the
transactions contemplated hereby.
(h) LITIGATION. Except as disclosed in the Weatherford
Commission Filings, there are no claims, actions, suits, investigations
or proceedings pending or, to the knowledge of Weatherford, threatened
against or affecting Weatherford or any of the Weatherford Subsidiaries
or any of their respective properties at law or in equity, or any of
their respective employee benefit plans or fiduciaries of such plans,
or before or by any federal, state, municipal or other governmental
agency or authority, or before any arbitration board or panel, wherever
located, that, individually or in the aggregate, if adversely
determined would have a Material Adverse Effect, or that involve the
risk of criminal liability.
(i) EMPLOYEE BENEFIT PLANS. The Weatherford Disclosure Letter
sets forth a complete and accurate list of:
(i) each "employee welfare benefit plan" (as such
term is defined in Section 3(1) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) (the
"Weatherford Welfare Plans");
(ii) each "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA) (the
"Weatherford Pension Plans"); and
(iii) all other employee benefit agreements or
arrangements, including, without limitation, deferred
compensation plans, incentive plans, bonus plans or
arrangements, stock option plans, stock purchase plans, golden
parachute agreements, severance pay plans, dependent care
plans, cafeteria plans, employee assistance programs,
scholarship programs, employment contracts and other similar
plans, agreements and arrangements (collectively, with the
Weatherford Welfare Plans and the Weatherford Pension Plans,
the "Weatherford Benefit Plans"),
that are currently in effect or were maintained within three years of
the Closing Date, or have been approved before this date but are not
yet effective, for the benefit of directors, officers, employees or
former employees (or their beneficiaries) of Weatherford, any of the
Weatherford Subsidiaries incorporated in the United States (the
"Weatherford U.S. Subsidiaries") or any member of a controlled group or
affiliated service group (as defined in Section 414(b), (c), (m) or (o)
of the Code) that is incorporated or domiciled in the United States of
which Weatherford or any of the Weatherford U.S. Subsidiaries is a
member (collectively, the "Weatherford Group"). Weatherford and the
Weatherford U.S. Subsidiaries will provide to Enterra, as to each
Weatherford Benefit Plan, as applicable, access to a complete and
accurate copy of (i) such plan, agreement or arrangement; (ii) the
trust, group annuity contract or other document that provides the
funding for such plan; (iii) the most recent annual Form 5500, 990 and
1041 reports; (iv) the most recent actuarial report or valuation
statement; (v) the most current summary plan description, handbook or
other booklet
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that describes any Weatherford Benefit Plan, and any summary of
material modifications prepared after each such summary plan
description; (vi) the most recent Internal Revenue Service ("IRS")
determination letter and all rulings or determinations requested from
the IRS subsequent to the date of such determination letter; and (vii)
all other pending correspondence from the IRS or the Department of
Labor received by any member of the Weatherford Group that relates to
such plan.
Each Weatherford Welfare Plan and Weatherford Pension Plan (i)
is in compliance with ERISA, including, without limitation, all
reporting and disclosure requirements of Part 1 of Subtitle B of Title
I of ERISA, except where the failure to be in compliance would not,
either individually or in the aggregate, have a Material Adverse
Effect; (ii) is in compliance with the Code, except where the failure
to be in compliance would not, either individually or in the aggregate,
have a Material Adverse Effect; (iii) has had the appropriate Form 5500
timely filed for any Weatherford Pension Plan, if applicable, for each
year of its existence and for any Weatherford Welfare Plan for each
year of its existence after 1987, except where the failure to cause
such timely filing would not, either individually or in the aggregate,
have a Material Adverse Effect; (iv) has not engaged in any transaction
described in Section 406 or 407 of ERISA or Section 4975 of the Code
unless it received or is entitled to an exemption under Section 408 of
ERISA or Section 4975 of the Code, as applicable, or unless such
transaction has been corrected and all applicable excise taxes paid or
waived; (v) has no issue pending (other than the payment of benefits in
the normal course or the qualification of the plan pursuant to an
application pending before the IRS) nor any issue resolved adversely to
the Weatherford Group that, in either case, may subject the Weatherford
Group to the payment of a penalty, interest, tax or other amount,
which, either individually or in the aggregate, would have a Material
Adverse Effect; and (vi) can be unilaterally terminated or amended on
no more than 90 days notice. No notice has been received by the
Weatherford Group of an increase or proposed increase in any premium
relative to any Weatherford Benefit Plan, and no amendment to any
Weatherford Benefit Plan within the last twelve months has increased
the rate of employer contributions thereunder that, either individually
or in the aggregate, would have a Material Adverse Effect.
Each Weatherford Benefit Plan that is intended to be a
voluntary employee benefit association has been submitted to and
approved by the IRS as exempt from federal income tax under Section
501(c)(9) of the Code or the applicable submission period relating to
any such plan will not have ended prior to the Closing. No Weatherford
Benefit Plan will cause the Weatherford Group to have liability for
severance pay as a result of this Agreement. The Weatherford Group does
not provide employee post-retirement medical or health coverage or
contribute to or maintain any employee welfare benefit plan that
provides for health benefit coverage following termination of
employment except as required by Section 4980B(f) of the Code or other
applicable statute, nor has the Weatherford Group made any
representations, agreements, covenants or commitments to provide that
coverage.
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Except for each Weatherford Pension Plan that is an ERISA
top-hat plan, each Weatherford Pension Plan has been submitted to and
approved as qualifying under Section 401(a) of the Code by the IRS or
the applicable remedial amendment period relating to such plan will not
have ended prior to the Closing. To the knowledge of Weatherford, no
facts have occurred that, if known by the IRS, could cause
disqualification of any Weatherford Pension Plan. Each Weatherford
Pension Plan to which Section 412 of the Code is applicable fully
complies with the funding requirements of that Section and there is no
accumulated funding deficiency as defined in Section 302(a)(2) of ERISA
(whether or not waived) in any such plan. The Weatherford Group has
paid all premiums (including, without limitation, interest, charges and
penalties for late payment) due the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to each Weatherford Pension Plan
for which premiums are required. No Weatherford Pension Plan has been
terminated under circumstances that would result in liability to the
PBGC or the Weatherford Group. There has been no "reportable event" (as
defined in Section 4043(b) of ERISA and the regulations under that
Section) with respect to any Weatherford Pension Plan subject to Title
IV of ERISA. With respect to each Weatherford Pension Plan subject to
Title IV of ERISA, the Weatherford Group has not (i) ceased operations
at a facility so as to become subject to the provisions of Section
4062(e) of ERISA, (ii) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA or (iii)
ceased making contributions on or before the Closing Date to any such
plan subject to Section 4064(a) of ERISA to which the Weatherford Group
made contributions at any time during the six years prior to the
Closing Date. Neither the Weatherford Group nor any member thereof has
made a complete or partial withdrawal from a multiemployer plan (as
defined in Section 3(37) of ERISA) so as to incur withdrawal liability
as defined in Section 4201 of ERISA.
Weatherford's subsidiaries incorporated outside of the United
States and any benefit plans maintained by any of them for the benefit
of their directors, officers, employees or former employees (or any of
their beneficiaries) are in compliance with applicable laws pertaining
to such plans in the jurisdictions of such subsidiaries, except where
such failure to be in compliance would not, either individually or in
the aggregate, have a Material Adverse Effect.
(j) TAXES. All returns and reports, including, without
limitation, information and withholding returns and reports ("Tax
Returns") of or relating to any foreign, federal, state or local tax,
assessment or other governmental charge ("Taxes" or a "Tax") that are
required to be filed on or before the Closing Date by or with respect
to Weatherford or any of the Weatherford Subsidiaries have been or will
be duly and timely filed, and all Taxes, including, without limitation,
interest and penalties, due and payable pursuant to such Tax Returns
have been paid or adequately provided for in reserves established by
Weatherford, except where the failure to file, pay or provide for would
not, either individually or in the aggregate, have a Material Adverse
Effect. All Tax Returns of or with respect to Weatherford or any of the
Weatherford Subsidiaries have been audited by the applicable
governmental authority, or the applicable statute of limitations has
expired, for all periods up to and including, without limitation, the
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tax year ended December 31, 1987. There is no material claim
against Weatherford or any of the Weatherford Subsidiaries with respect
to any Taxes, and no material assessment, deficiency or adjustment has
been asserted or proposed with respect to any Tax Return of or with
respect to Weatherford or any of the Weatherford Subsidiaries that has
not been adequately provided for in reserves established by
Weatherford. The total amounts set up as liabilities for current and
deferred Taxes in the consolidated financial statements included in the
Weatherford Commission Filings have been prepared in accordance with
generally accepted accounting principles and are sufficient to cover
the payment of all material Taxes, including, without limitation, any
penalties or interest thereon and whether or not assessed or disputed,
that are, or are hereafter finally determined to be, or to have been,
due with respect to the operations of Weatherford and the Weatherford
Subsidiaries through the periods covered thereby.
(k) ENVIRONMENTAL.
(i) There are no facts, conditions or circumstances
known to Weatherford that could cause Weatherford or any
Weatherford Subsidiary to incur any loss, liability, damage,
cost or expense, either individually or in the aggregate, in
excess of Weatherford's charges, accruals and reserves for
environmental matters reflected on Weatherford's consolidated
balance sheet contained in the most recent Weatherford
Commission Filing, for (A) violations of Environmental Laws,
(B) failure to obtain an Environmental Permit, (C) a
requirement to install environmental or pollution control
equipment, (D) removal, response or remedial costs related to
Hazardous Materials or (E) personal injury, property damage or
natural resources damage resulting from exposure to or
releases of Hazardous Materials, except in each case where
such loss, liability, damage, cost or expense would not have a
Material Adverse Effect.
(ii) The business and any other operations conducted
by Weatherford or any Weatherford Subsidiary are in compliance
with all applicable limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations
established under applicable Environmental Laws, except where
the failure to be in compliance would not, either individually
or in the aggregate, have a Material Adverse Effect.
(l) NO SEVERANCE PAYMENTS. None of Weatherford or the
Weatherford Subsidiaries will owe a severance payment or similar
obligation to any of their respective employees, officers or directors
as a result of the Merger or the transactions contemplated by this
Agreement, nor will any of such persons be entitled to an increase in
severance payments or other benefits as a result of the Merger or the
transactions contemplated by this Agreement in the event of the
subsequent termination of their employment.
(m) VOTING REQUIREMENTS. The affirmative vote of the holders
of a majority of the outstanding shares of Weatherford Common Stock is
the only vote of the
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holders of any class or series of the capital stock of Weatherford
necessary to approve this Agreement and the Merger.
(n) INSURANCE. The Weatherford Disclosure Letter sets forth
all policies of insurance currently in effect relating to the business
or operations of Weatherford and the Weatherford Subsidiaries.
(o) TITLE TO PROPERTY. Except as set forth in the Weatherford
Commission Filings, Weatherford and each of the Weatherford
Subsidiaries have good and indefeasible title to all of their real
properties purported to be owned in fee and good title to all their
other material assets, free and clear of all mortgages, liens, charges
and encumbrances other than Permitted Liens.
(p) WEATHERFORD ACTIONS. As of the date hereof, the Board of
Directors of Weatherford (at a meeting duly called and held) has
resolved to recommend approval and adoption of this Agreement and the
Merger by the stockholders of Weatherford. Merrill Lynch & Co. has
delivered to the Board of Directors of Weatherford its opinion that the
consideration to be paid by Weatherford pursuant to the Merger is fair
to Weatherford from a financial point of view.
2.3 REPRESENTATIONS AND WARRANTIES OF ENTERRA. Enterra hereby
represents and warrants to Weatherford that, except as expressly contemplated by
this Agreement or as set forth in the disclosure letter delivered by Enterra to
Weatherford on the date hereof (the "Enterra Disclosure Letter"):
(a) ORGANIZATION AND COMPLIANCE WITH LAW. Enterra and each of
its corporate subsidiaries (the "Enterra Subsidiaries") is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has all
requisite corporate power and authority and all necessary governmental
authorizations to own, lease and operate all of its properties and
assets and to carry on its business as now being conducted, except
where the failure to do so would not, either individually or in the
aggregate, have a Material Adverse Effect. Enterra and each of the
Enterra Subsidiaries is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary, except in such
jurisdictions where the failure to do so does not and would not, either
individually or in the aggregate, have a Material Adverse Effect.
Enterra and each of the Enterra Subsidiaries is in compliance with all
applicable laws, judgments, orders, rules and regulations, domestic and
foreign, except where failure to be in such compliance would not,
either individually or in the aggregate, have a Material Adverse
Effect. Enterra has heretofore delivered to Weatherford true and
complete copies of Enterra's Restated Certificate of Incorporation and
bylaws, as in existence on the date hereof.
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(b) CAPITALIZATION.
(i) The authorized capital stock of Enterra consists
of 40,000,000 shares of Enterra Common Stock, par value $1.00
per share, and 10,000,000 shares of series preferred stock,
par value $1.00 per share. As of June 21, 1995, there were
issued and outstanding 27,774,950 shares of Enterra Common
Stock and no shares of series preferred stock, and no shares
of Enterra Common Stock were held as treasury shares. As of
June 21, 1995, there were reserved for issuance 2,587,071
shares of Enterra Common Stock pursuant to stock option plans
(collectively, the "Enterra Options"). All issued shares of
Enterra Common Stock are validly issued, fully paid and
nonassessable and no holder thereof is entitled to preemptive
rights. Enterra is not a party to, and, excluding agreements
among various funds held or managed by institutional
investors, has no knowledge of, any voting agreement, voting
trust or similar agreement or arrangement relating to any
class or series of its capital stock, or any agreement or
arrangement providing for registration rights with respect to
any capital stock or other securities of Enterra. All
outstanding shares of capital stock of the Enterra
Subsidiaries are owned by Enterra, free and clear of all
liens, charges, encumbrances, adverse claims and options of
any nature; provided, however, that Enterra's ownership of
shares of capital stock of certain foreign Enterra
Subsidiaries may be subject to Permitted Liens.
(ii) Other than as set forth in this Section 2.3(b)
and as contemplated by Section 4.1(b)(iii), there are not
now, and at the Effective Time there will not be, any (A)
shares of capital stock or other equity securities of
Enterra outstanding (other than Enterra Common Stock issued
pursuant to Enterra Options as described herein) or (B)
outstanding options, warrants, scrip, rights to subscribe
for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or
exchangeable for, shares of any class of capital stock of
Enterra, or contracts, understandings or arrangements to
which Enterra is a party, or by which it is or may be bound,
to issue additional shares of its capital stock or options,
warrants, scrip or rights to subscribe for, or securities or
rights convertible into or exchangeable for, any additional
shares of its capital stock.
(c) AUTHORIZATION AND VALIDITY OF AGREEMENT. Enterra has
all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and
delivery by Enterra of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action (subject only, with respect to the Merger,
to adoption and approval of this Agreement by its stockholders as
provided for in Section 5.3(a)). This Agreement has been duly executed
and delivered by Enterra and is the valid and binding obligation of
Enterra, enforceable against Enterra in accordance with its terms,
except as such enforceability may be limited or affected by (i)
bankruptcy, insolvency, reorganization, moratorium, liquidation,
arrangement, fraudulent transfer, fraudulent conveyance and other
similar laws (including, without
-15-
limitation, court decisions) now or hereafter in effect and affecting
the rights and remedies of creditors generally or providing for the
relief of debtors, (ii) the refusal of a particular court to grant
equitable remedies, including, without limitation, specific performance
and injunctive relief, and (iii) general principles of equity
(regardless of whether such remedies are sought in a proceeding in
equity or at law).
(d) NO APPROVALS OR NOTICES REQUIRED; NO CONFLICT WITH
INSTRUMENTS TO WHICH ENTERRA IS A PARTY. Neither the execution and
delivery of this Agreement nor the performance by Enterra of its
obligations hereunder, nor the consummation of the transactions
contemplated hereby by Enterra, will (i) conflict with Enterra's
Restated Certificate of Incorporation or bylaws; (ii) assuming
satisfaction of the requirements set forth in clause (iii) below,
violate any provision of law applicable to Enterra; (iii) except for
(A) requirements of Federal and state securities law, (B) requirements
arising out of the HSR Act, (C) requirements of filings in such foreign
jurisdictions as may be applicable and (D) the filing of a certificate
of merger in accordance with the DGCL, require any consent or approval
of, or filing with or notice to, any public body or authority, domestic
or foreign, under any provision of law applicable to Enterra; or (iv)
require any consent, approval or notice under, or violate, breach, be
in conflict with or constitute a default (or an event that, with notice
or lapse of time or both, would constitute a default) under, or permit
the termination of any provision of, or result in the creation or
imposition of any lien upon any properties, assets or business of
Enterra under, any note, bond, indenture, mortgage, deed of trust,
lease, franchise, permit, authorization, license, contract, instrument
or other agreement or commitment or any order, judgment or decree to
which Enterra is a party or by which Enterra or any of its assets or
properties is bound or encumbered, except those that have already been
given, obtained or filed and except in any of the cases enumerated in
clauses (ii) through (iv), those that, in the aggregate, would not have
a Material Adverse Effect.
(e) COMMISSION FILINGS; FINANCIAL STATEMENTS. Since January 1,
1992, Enterra and each of the Enterra Subsidiaries have filed all
reports, registration statements and other filings, together with any
amendments required to be made with respect thereto, that they have
been required to file with the Commission under the Securities Act and
the Exchange Act. All reports, registration statements and other
filings (including, without limitation, all notes, exhibits and
schedules thereto and documents incorporated by reference therein)
filed by Enterra with the Commission since January 1, 1992 through the
date of this Agreement, together with any amendments thereto, are
sometimes collectively referred to as the "Enterra Commission Filings".
Enterra has heretofore delivered to Weatherford copies of the Enterra
Commission Filings. As of the effectiveness dates declared by the
Commission, in the case of registration statements, as of the mailing
dates, in the case of proxy statements, or as of the filing dates with
the Commission, in the case of all other Enterra Commission Filings,
the Enterra Commission Filings complied, and the Proxy Statement
(except with respect to information concerning Weatherford and the
Weatherford Subsidiaries furnished by or on behalf of Weatherford to
Enterra specifically for use therein) will comply, in all material
respects with the Securities Act, the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, as applicable,
and did not
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or will not, as the case may be, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
All material contracts of Enterra and the Enterra Subsidiaries
have been included in the Enterra Commission Filings, except for those
contracts not required to be filed pursuant to the rules and
regulations of the Commission.
Each of the audited consolidated financial statements
(including, without limitation, any related notes or schedules)
included or incorporated by reference in the Enterra Commission Filings
was, and each of the audited consolidated financial statements to be
included or incorporated by reference in the Proxy Statement (except
for those financial statements of Weatherford and the Weatherford
Subsidiaries furnished by or on behalf of Weatherford to Enterra
specifically for use therein) will be, prepared in accordance with
generally accepted accounting principles applied on a consistent basis
(except as may be noted therein or in the notes or schedules thereto),
and fairly presents or will fairly present, as the case may be, in all
material respects, the consolidated financial position of Enterra and
the Enterra Subsidiaries as of the dates thereof and the statements of
income, cash flows and stockholders' equity for the periods then ended
in accordance with generally accepted accounting principles. Each of
the unaudited interim financial statements included or incorporated by
reference in the Enterra Commission Filings was, and each of the
unaudited consolidated financial statements to be included or
incorporated by reference in the Proxy Statement (except for those
financial statements of Weatherford and the Weatherford Subsidiaries
furnished by or on behalf of Weatherford to Enterra specifically for
use therein) will be, prepared in a manner consistent with the audited
consolidated financial statements and generally accepted accounting
principles. As of the date hereof, Enterra has no material liabilities,
absolute or contingent, not reflected in the Enterra Commission
Filings, except (i) liabilities not required under generally accepted
accounting principles to be reflected on such financial statements or
the notes thereto and (ii) liabilities incurred in the ordinary course
of business since the date of such financial statements consistent with
past operations and not relating to the borrowing of money.
(f) CONDUCT OF BUSINESS IN THE ORDINARY COURSE; ABSENCE OF
CERTAIN CHANGES AND EVENTS. Since April 1, 1995, except as disclosed in
the Enterra Commission Filings filed with the Commission since that
date, Enterra and the Enterra Subsidiaries have conducted their
business only in the ordinary and usual course, and there has not been
(i) any Material Adverse Change in Enterra or any condition, event or
development that reasonably may be expected to result in any Material
Adverse Change; (ii) any change by Enterra in its accounting methods,
principles or practices; (iii) any revaluation by Enterra or any of the
Enterra Subsidiaries of any of its or their assets, including, without
limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business; (iv)
any entry by Enterra or any of the Enterra Subsidiaries into any
commitment or transaction material to Enterra and the Enterra
Subsidiaries, taken as a whole, other than in the ordinary
-17-
course of business; (v) any declaration, setting aside or payment of
any dividends or distributions in respect of the Enterra Common Stock,
or any redemption, purchase or other acquisition of any of its
securities or any securities of any of the Enterra Subsidiaries; (vi)
any damage, destruction or loss (whether or not covered by insurance)
materially adversely affecting the properties or business of Enterra
and the Enterra Subsidiaries, taken as a whole; (vii) any increase in
indebtedness for borrowed money; (viii) any granting of a security
interest or lien on any property or assets of Enterra and the Enterra
Subsidiaries, other than Permitted Liens; or (ix) any increase in or
establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards or restricted stock awards),
stock purchase or other employee benefit plan or any other increase in
the compensation payable or to become payable to any officers or key
employees of Enterra or any of the Enterra Subsidiaries.
(g) CERTAIN FEES. Neither Enterra nor any of its officers,
directors or employees, on behalf of Enterra or any of the Enterra
Subsidiaries or its or their respective Boards of Directors (or any
committee thereof), has employed any financial advisor, broker or
finder or incurred any liability for any financial advisory, brokerage
or finders' fees or commissions in connection with the transactions
contemplated hereby.
(h) LITIGATION. Except as disclosed in the Enterra Commission
Filings, there are no claims, actions, suits, investigations or
proceedings pending or, to the knowledge of Enterra, threatened against
or affecting Enterra or any of the Enterra Subsidiaries or any of their
respective properties at law or in equity, or any of their respective
employee benefit plans or fiduciaries of such plans, or before or by
any federal, state, municipal or other governmental agency or
authority, or before any arbitration board or panel, wherever located,
that, individually or in the aggregate, if adversely determined would
have a Material Adverse Effect, or that involve the risk of criminal
liability.
(i) EMPLOYEE BENEFIT PLANS. The Enterra Disclosure
Letter sets forth a complete and accurate list of:
(i) each "employee welfare benefit plan" (as
such term is defined in Section 3(1) of ERISA) (the "Enterra
Welfare Plans");
(ii) each "employee pension benefit plan" (as
such term is defined in Section 3(2) of ERISA) (the "Enterra
Pension Plans"); and
(iii) all other employee benefit agreements or
arrangements, including, without limitation, deferred
compensation plans, incentive plans, bonus plans or
arrangements, stock option plans, stock purchase plans, golden
parachute agreements, severance pay plans, dependent care
plans, cafeteria plans, employee assistance programs,
scholarship programs, employment contracts and other
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similar plans, agreements and arrangements (collectively, with
the Enterra Welfare Plans and the Enterra Pension Plans, the
"Enterra Benefit Plans"),
that are currently in effect or were maintained within three years of
the Closing Date, or have been approved before this date but are not
yet effective, for the benefit of directors, officers, employees or
former employees (or their beneficiaries) of Enterra, any of the
Enterra Subsidiaries incorporated in the United States (the "Enterra
U.S. Subsidiaries") or any member of a controlled group or affiliated
service group (as defined in Sections 414(b),(c),(m) and (o) of the
Code) that is incorporated or domiciled in the United States of which
Enterra or any of the Enterra U.S. Subsidiaries is a member
(collectively, the "Enterra Group"). Enterra and the Enterra U.S.
Subsidiaries will provide to Weatherford, as to each Enterra Benefit
Plan, as applicable, access to a complete and accurate copy of (i) such
plan, agreement or arrangement; (ii) the trust, group annuity contract
or other document that provides the funding for such plan; (iii) the
most recent annual Form 5500, 990 and 1041 reports; (iv) the most
recent actuarial report or valuation statement; (v) the most current
summary plan description, handbook or other booklet that describes any
Enterra Benefit Plan, and any summary of material modifications
prepared after each such summary plan description; (vi) the most recent
IRS determination letter and all rulings or determinations requested
from the IRS subsequent to the date of such determination letter; and
(vii) all other pending correspondence from the IRS or the Department
of Labor received by any member of the Enterra Group that relates to
such plan.
Each Enterra Welfare Plan and Enterra Pension Plan (i) is in
compliance with ERISA, including, without limitation, all reporting and
disclosure requirements of Part 1 of Subtitle B of Title I of ERISA,
except where the failure to be in compliance would not, either
individually or in the aggregate, have a Material Adverse Effect; (ii)
is in compliance with the Code, except where the failure to be in
compliance would not, either individually or in the aggregate, have a
Material Adverse Effect; (iii) has had the appropriate Form 5500 timely
filed for any Enterra Pension Plan, if applicable, for each year of its
existence and for any Enterra Welfare Plan for each year of its
existence after 1987, except where the failure to cause such timely
filing would not, either individually or in the aggregate, have a
Material Adverse Effect; (iv) has not engaged in any transaction
described in Section 406 or 407 of ERISA or Section 4975 of the Code
unless it received or is entitled to an exemption under Section 408 of
ERISA or Section 4975 of the Code, as applicable, or unless such
transaction has been corrected and all applicable excise taxes paid or
waived; (v) has no issue pending (other than the payment of benefits in
the normal course or the qualification of the plan pursuant to
an application pending before the IRS) nor any issue resolved adversely
to the Enterra Group that, in either case, may subject the Enterra
Group to the payment of a penalty, interest, tax or other amount,
which, either individually or in the aggregate, would have a Material
Adverse Effect; and (vi) can be unilaterally terminated or amended on
no more than 90 days notice. No notice has been received by the Enterra
Group of an increase or proposed increase in any premium relative to
any Enterra Benefit Plan, and no amendment to any Enterra Benefit Plan
within the last twelve months has
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increased the rate of employer contributions thereunder that, either
individually or in the aggregate, would have a Material Adverse Effect.
Each Enterra Benefit Plan that is intended to be a voluntary
employee benefit association has been submitted to and approved by the
IRS as exempt from federal income tax under Section 501(c)(9) of the
Code or the applicable submission period relating to any such plan will
not have ended prior to the Closing. No Enterra Benefit Plan will cause
the Enterra Group to have liability for severance pay as a result of
this Agreement. The Enterra Group does not provide employee
post-retirement medical or health coverage or contribute to or maintain
any employee welfare benefit plan that provides for health benefit
coverage following termination of employment except as required by
Section 4980B(f) of the Code or other applicable statute, nor has the
Enterra Group made any representations, agreements, covenants or
commitments to provide that coverage.
Except for each Enterra Pension Plan that is an ERISA top-hat
plan, each Enterra Pension Plan has been submitted to and approved as
qualifying under Section 401(a) of the Code by the IRS or the
applicable remedial amendment period relating to such plan will not
have ended prior to the Closing. To the knowledge of Enterra, no facts
have occurred that, if known by the IRS, could cause disqualification
of any Enterra Pension Plan. Each Enterra Pension Plan to which Section
412 of the Code is applicable fully complies with the funding
requirements of that Section and there is no accumulated funding
deficiency as defined in Section 302(a)(2) of ERISA (whether or not
waived) in any such plan. The Enterra Group has paid all premiums
(including, without limitation, interest, charges and penalties for
late payment) due the PBGC with respect to each Enterra Pension Plan
for which premiums are required. No Enterra Pension Plan has been
terminated under circumstances that would result in liability to the
PBGC or the Enterra Group. There has been no "reportable event" (as
defined in Section 4043(b) of ERISA and the regulations under that
Section) with respect to any Enterra Pension Plan subject to Title IV
of ERISA. With respect to each Enterra Pension Plan subject to Title IV
of ERISA, the Enterra Group has not (i) ceased operations at a facility
so as to become subject to the provisions of Section 4062(e) of ERISA,
(ii) withdrawn as a substantial employer so as to become subject to the
provisions of Section 4063 of ERISA or (iii) ceased making
contributions on or before the Closing Date to any such plan subject to
Section 4064(a) of ERISA to which the Enterra Group made contributions
at any time during the six years prior to the Closing Date. Neither the
Enterra Group nor any member thereof has made a complete or partial
withdrawal from a multiemployer plan (as defined in Section 3(37) of
ERISA) so as to incur withdrawal liability as defined in Section 4201
of ERISA.
Enterra's subsidiaries incorporated outside of the United
States and any benefit plans maintained by any of them for the benefit
of their directors, officers, employees or former employees (or any of
their beneficiaries) are in compliance with applicable laws pertaining
to such plans in the jurisdictions of such subsidiaries, except where
such failure to be in compliance would not, either individually or in
the aggregate, have a Material Adverse Effect.
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(j) TAXES. All Tax Returns of or relating to any Taxes that
are required to be filed on or before the Closing Date by or with
respect to Enterra or any of the Enterra Subsidiaries have been or will
be duly and timely filed, and all Taxes, including, without limitation,
interest and penalties, due and payable pursuant to such Tax Returns
have been paid or adequately provided for in reserves established by
Enterra, except where the failure to file, pay or provide for would
not, either individually or in the aggregate, have a Material Adverse
Effect. All Tax Returns of or with respect to Enterra or any of the
Enterra Subsidiaries have been audited by the applicable governmental
authority, or the applicable statute of limitations has expired, for
all periods up to and including, without limitation, the tax year ended
December 31, 1987. There is no material claim against Enterra or any of
the Enterra Subsidiaries with respect to any Taxes, and no material
assessment, deficiency or adjustment has been asserted or proposed with
respect to any Tax Return of or with respect to Enterra or any of the
Enterra Subsidiaries that has not been adequately provided for in
reserves established by Enterra. The total amounts set up as
liabilities for current and deferred Taxes in the consolidated
financial statements included in the Enterra Commission Filings have
been prepared in accordance with generally accepted accounting
principles and are sufficient to cover the payment of all material
Taxes, including, without limitation, any penalties or interest thereon
and whether or not assessed or disputed, that are, or are hereafter
finally determined to be, or to have been, due with respect to the
operations of Enterra and the Enterra Subsidiaries through the periods
covered thereby.
(k) ENVIRONMENTAL.
(i) There are no facts, conditions or circumstances
known to Enterra that could cause Enterra or any Enterra
Subsidiary to incur any loss, liability, damage, cost or
expense, either individually or in the aggregate, in excess of
Enterra's charges, accruals and reserves for environmental
matters reflected on Enterra's consolidated balance sheet
contained in the most recent Enterra Commission Filing, for
(A) violations of Environmental Laws, (B) failure to obtain an
Environmental Permit, (C) a requirement to install
environmental or pollution control equipment, (D) removal,
response or remedial costs related to Hazardous Materials or
(E) personal injury, property damage or natural resources
damage resulting from exposure to or releases of Hazardous
Materials, except in each case where such loss, liability,
damage, cost or expense would not have a Material Adverse
Effect.
(ii) The business and any other operations conducted
by Enterra or any Enterra Subsidiary are in compliance with
all applicable limitations, restrictions, conditions,
standards, prohibitions, requirements and obligations
established under applicable Environmental Laws, except where
the failure to be in compliance would not, either individually
or in the aggregate, have a Material Adverse Effect.
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(l) NO SEVERANCE PAYMENTS. None of Enterra or the Enterra
Subsidiaries will owe a severance payment or similar obligation to any
of their respective employees, officers or directors as a result of the
Merger or the transactions contemplated by this Agreement, nor will any
of such persons be entitled to an increase in severance payments or
other benefits as a result of the Merger or the transactions
contemplated by this Agreement in the event of the subsequent
termination of their employment.
(m) VOTING REQUIREMENTS. The affirmative vote of the
holders of a majority of the outstanding shares of Enterra Common Stock
is the only vote of the holders of any class or series of the capital
stock of Enterra necessary to approve this Agreement and the Merger.
(n) INSURANCE. The Enterra Disclosure Letter sets forth all
policies of insurance currently in effect relating to the business or
operations of Enterra and the Enterra Subsidiaries.
(o) TITLE TO PROPERTY. Except as set forth in the Enterra
Commission Filings, Enterra and each of the Enterra Subsidiaries have
good and indefeasible title to all of their real properties purported
to be owned in fee and good title to all their other material assets,
free and clear of all mortgages, liens, charges and encumbrances other
than Permitted Liens.
(p) ENTERRA ACTIONS. As of the date hereof, the Board of
Directors of Enterra (at a meeting duly called and held) has resolved
to recommend approval and adoption of this Agreement and the Merger by
the stockholders of Enterra. Simmons & Company International, Inc. has
delivered to the Board of Directors of Enterra its opinion that the
consideration to be received by the stockholders of Enterra pursuant to
the Merger is fair to the stockholders of Enterra from a financial
point of view.
ARTICLE III
COVENANTS OF WEATHERFORD PRIOR TO THE EFFECTIVE TIME
3.1 CONDUCT OF BUSINESS BY WEATHERFORD PENDING THE MERGER.
Weatherford covenants and agrees that, from the date of this Agreement until the
Effective Time, unless Enterra shall otherwise provide its prior consent in
writing (which consent shall not be unreasonably withheld) or as otherwise
expressly contemplated by this Agreement or as set forth in the Weatherford
Disclosure Letter:
(a) The business of Weatherford and the Weatherford
Subsidiaries shall be conducted only in, and Weatherford and the
Weatherford Subsidiaries shall not take any action except in, the
ordinary course of business;
(b) Weatherford shall not, and shall not permit any of the
Weatherford Subsidiaries to:
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(i) split, combine or reclassify any outstanding
capital stock of Weatherford, or authorize, declare, set aside
or pay any dividend payable in cash, stock, property or
otherwise in respect of the capital stock of Weatherford;
(ii) authorize or pay any extraordinary bonuses to
employees;
(iii) grant any stock options or rights to acquire
Weatherford Common Stock or common stock of any of the
Weatherford Subsidiaries to any person or entity, other than
options to purchase Weatherford Common Stock issued pursuant
to employee stock option plans in amounts consistent with past
practice;
(iv) authorize or issue, sell, pledge, dispose of
or encumber any shares of capital stock of Weatherford or,
except to Weatherford or a wholly-owned Weatherford
Subsidiary, any of the Weatherford Subsidiaries, other than
pursuant to Weatherford Options;
(v) sell, pledge, dispose of or encumber any
assets of Weatherford or any of the Weatherford Subsidiaries,
other than (A) in the ordinary course of business, (B) not
relating to the borrowing of money, (C) with respect to
purchase money security interests or (D) with respect to
encumbered assets acquired in connection with an acquisition
permitted under Section 3.1(b)(viii);
(vi) redeem, purchase, acquire or offer to acquire
any shares of Weatherford Common Stock;
(vii) enter into, or grant any material change in,
employment, compensation, benefit, severance, consulting or
stay-bonus arrangements;
(viii) acquire any corporation, partnership, other
business organization or division thereof for a purchase price
in excess of $5,000,000 or acquire corporations, partnerships,
other business organizations or divisions thereof for an
aggregate purchase price in excess of $15,000,000;
(ix) enter into any contract, agreement,
commitment or arrangement other than in the ordinary course of
business;
(x) authorize any capital expenditures other than
in the ordinary course of business, and in accordance with a
plan previously presented to, and not rejected by, the
Weatherford Board of Directors;
(xi) incur any obligation for borrowed money or
purchase money indebtedness, whether or not evidenced by a
note, bond, debenture or similar instrument, except in the
ordinary course of business, and in no event in excess of the
unused credit available from time to time under existing
credit facilities of Weatherford;
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(xii) amend or propose to amend the charter or
bylaws of Weatherford or any of the Weatherford Subsidiaries
in which Weatherford, either directly or indirectly, has less
than a 100% equity interest; or
(xiii) take, and Weatherford shall use its
reasonable efforts to prevent any affiliate of Weatherford
from taking, any action that would prevent, including with the
passage of time, the Merger's qualification for "pooling of
interests" accounting treatment or prevent the Merger from
being treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the
Code;
(c) Weatherford shall use all reasonable efforts (i) to
preserve intact the business organization of Weatherford and each of
the Weatherford Subsidiaries whose stock is pledged under existing
credit facilities, (ii) to maintain in effect any material franchises,
authorizations or similar rights of Weatherford and each of the
Weatherford Subsidiaries, (iii) to keep available the services of the
current officers and key employees of Weatherford and each of the
Weatherford Subsidiaries, (iv) to preserve its goodwill with those
having material business relationships with Weatherford and the
Weatherford Subsidiaries, (v) to maintain and keep the material
properties of Weatherford and each of the Weatherford Subsidiaries in
as good a repair and condition as presently exists, except for
deterioration due to ordinary wear and tear and damage due to casualty,
and (vi) to maintain in full force and effect insurance comparable in
amount and scope of coverage to that currently maintained by
Weatherford and the Weatherford Subsidiaries; and
(d) Weatherford shall not, and shall not permit any of
the Weatherford Subsidiaries to, take any action that would, or that
reasonably could be expected to, result in any of the representations
and warranties set forth in this Agreement becoming untrue or any of
the conditions to the Merger set forth in Article VI not being
satisfied. Weatherford promptly shall advise Enterra orally and in
writing of any change or event having, or which, insofar as reasonably
can be foreseen, would have, a Material Adverse Effect on Weatherford.
3.2 ACCESS TO INFORMATION. From the date hereof to the Effective
Time, Weatherford shall, and shall cause the Weatherford Subsidiaries and its
and their officers, directors, employees and representatives to, afford the
representatives of Enterra complete access during normal business hours to its
officers, employees, representatives, properties, books and records, and shall
furnish Enterra all financial, operating and other data and information as
Enterra, through its representatives, reasonably may request; PROVIDED, HOWEVER,
that notwithstanding the foregoing provisions of this Section 3.2 or any other
provision of this Agreement, Weatherford shall not be required to provide to
Enterra any information that is the subject of a confidentiality agreement and
that relates primarily to a party other than Weatherford, a Weatherford
Subsidiary or a former subsidiary of Weatherford.
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3.3 AFFILIATES' AGREEMENTS. Weatherford will use its reasonable
efforts to cause each stockholder who, in the opinion of counsel to Weatherford,
is an "affiliate" of Weatherford to enter into an agreement substantially in the
form of Exhibit 3.3.
3.4 RESERVATION OF WEATHERFORD COMMON STOCK. Weatherford shall
reserve for issuance, out of its authorized but unissued capital stock, such
number of shares of Weatherford Common Stock as may be issuable upon
consummation of the Merger.
3.5 STOCK EXCHANGE LISTING. Weatherford shall use all reasonable
efforts to cause the shares of Weatherford Common Stock to be issued upon
consummation of the Merger to be approved for listing on the New York Stock
Exchange, subject to official notice of issuance, prior to the Closing Date.
ARTICLE IV
COVENANTS OF ENTERRA PRIOR TO THE EFFECTIVE TIME
4.1 CONDUCT OF BUSINESS BY ENTERRA PENDING THE MERGER. Enterra
covenants and agrees that, from the date of this Agreement until the Effective
Time, unless Weatherford shall otherwise provide its prior consent in writing
(which consent shall not be unreasonably withheld) or as otherwise expressly
contemplated by this Agreement or as set forth in the Enterra Disclosure Letter:
(a) The business of Enterra and the Enterra Subsidiaries
shall be conducted only in, and Enterra and the Enterra Subsidiaries
shall not take any action except in, the ordinary course of business;
(b) Enterra shall not, and shall not permit any of the
Enterra Subsidiaries to:
(i) split, combine or reclassify any outstanding
capital stock of Enterra, or authorize, declare, set aside or
pay any dividend payable in cash, stock, property or otherwise
in respect of the capital stock of Enterra;
(ii) authorize or pay any extraordinary bonuses to
employees;
(iii) grant any stock options or rights to acquire
Enterra Common Stock or common stock of any of the Enterra
Subsidiaries to any person or entity, other than options to
purchase Enterra Common Stock issued pursuant to employee
stock option plans in amounts consistent with past practice;
(iv) authorize or issue, sell, pledge, dispose of
or encumber any shares of capital stock of Enterra or, except
to Enterra or a wholly-owned Enterra Subsidiary, any of the
Enterra Subsidiaries, other than pursuant to Enterra Options;
(v) sell, pledge, dispose of or encumber any
assets of Enterra or any of the Enterra Subsidiaries, other
than (A) in the ordinary course of business,
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(B) not relating to the borrowing of money, (C) with respect
to purchase money security interests or (D) with respect to
encumbered assets acquired in connection with an acquisition
permitted under Section 4.1(b)(viii);
(vi) redeem, purchase, acquire or offer to acquire
any shares of Enterra Common Stock;
(vii) enter into, or grant any material change in,
employment, compensation, benefit, severance, consulting or
stay-bonus arrangements;
(viii) acquire any corporation, partnership, other
business organization or division thereof for a purchase price
in excess of $5,000,000 or corporations, partnerships, other
business organizations or divisions thereof for an aggregate
purchase price in excess of $15,000,000;
(ix) enter into any contract, agreement,
commitment or arrangement other than in the ordinary course of
business;
(x) authorize any capital expenditures other than
in the ordinary course of business, and in accordance with a
plan previously presented to, and not rejected by, the Enterra
Board of Directors;
(xi) incur any obligation for borrowed money or
purchase money indebtedness, whether or not evidenced by a
note, bond, debenture or similar instrument, except in the
ordinary course of business, and in no event in excess of the
unused credit available from time to time under existing
credit facilities of Enterra;
(xii) amend or propose to amend the charter or
bylaws of Enterra or any of the Enterra Subsidiaries in which
Enterra, either directly or indirectly, has less than a 100%
equity interest; or
(xiii) take, and Enterra shall use its reasonable
efforts to prevent any affiliate of Enterra from taking, any
action that would prevent, including with the passage of time,
the Merger's qualification for "pooling of interests"
accounting treatment or prevent the Merger from being treated
for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code;
(c) Enterra shall use its reasonable efforts (i) to
preserve intact the business organization of Enterra and each of the
Enterra Subsidiaries whose stock is pledged under existing credit
facilities, (ii) to maintain in effect any material franchises,
authorizations or similar rights of Enterra and each of the Enterra
Subsidiaries, (iii) to keep available the services of the current
officers and key employees of Enterra and each of the Enterra
Subsidiaries, (iv) to preserve its goodwill with those having material
business relationships with Enterra and the Enterra Subsidiaries, (v)
to maintain and
-26-
keep the material properties of Enterra and each of the Enterra
Subsidiaries in as good a repair and condition as presently exists,
except for deterioration due to ordinary wear and tear and damage due
to casualty, and (vi) to maintain in full force and effect insurance
comparable in amount and scope of coverage to that currently maintained
by Enterra and each of the Enterra Subsidiaries; and
(d) Enterra shall not, and shall not permit any of the Enterra
Subsidiaries to, take any action that would, or that reasonably could
be expected to, result in any of the representations and warranties set
forth in this Agreement becoming untrue or any of the conditions to the
Merger set forth in Article VI not being satisfied. Enterra promptly
shall advise Weatherford orally and in writing of any change or event
having, or which, insofar as reasonably can be foreseen, would have, a
Material Adverse Effect on Enterra.
4.2 ACCESS TO INFORMATION. From the date hereof to the Effective
Time, Enterra shall, and shall cause the Enterra Subsidiaries and its and their
officers, directors, employees and representatives to, afford the
representatives of Weatherford complete access during normal business hours to
its officers, employees, representatives, properties, books and records, and
shall furnish Weatherford all financial, operating and other data and
information as Weatherford, through its representatives, reasonably may request;
PROVIDED, HOWEVER, that notwithstanding the foregoing provisions of this Section
4.2 or any other provision of this Agreement, Enterra shall not be required to
provide to Weatherford any information that is the subject of a confidentiality
agreement and that relates primarily to a party other than Enterra, an Enterra
Subsidiary or a former subsidiary of Enterra.
4.3 AFFILIATES' AGREEMENTS. Enterra will use its reasonable
efforts to cause each stockholder who, in the opinion of counsel to Enterra, is
an "affiliate" of Enterra to enter into an agreement substantially in the form
of Exhibit 4.3.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 JOINT PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As
promptly as practicable after the execution of this Agreement, Weatherford and
Enterra shall prepare and file with the Commission preliminary proxy materials
that shall constitute the joint proxy statement (the "Proxy Statement") of
Weatherford and Enterra and the registration statement with respect to the
Weatherford Common Stock to be issued in connection with the Merger (the
"Registration Statement"). As promptly as practicable after comments are
received from the Commission on the preliminary proxy materials, Weatherford and
Enterra shall file with the Commission a combined joint proxy statement and
registration statement on Form S-4 (or on such other form as shall be
appropriate) relating to the approval and adoption of the Merger and this
Agreement by the stockholders of Weatherford and the stockholders of Enterra and
the issuance by Weatherford of Weatherford Common Stock in connection with the
Merger and shall use their reasonable efforts to cause the Registration
Statement to become effective as soon as practicable. Subject to the terms and
conditions set forth in Section 7.2, the Proxy Statement shall contain a
statement that the Board of Directors of Enterra
-27-
recommended that the stockholders of Enterra approve and adopt the Merger and
this Agreement. Subject to the terms and conditions set forth in Section 7.1,
the Proxy Statement shall contain a statement that the Board of Directors of
Weatherford recommended that the stockholders of Weatherford approve and adopt
the Merger and this Agreement.
5.2 COMFORT LETTERS.
(a) Enterra shall use its reasonable efforts to cause to
be delivered to Weatherford a letter of KPMG Peat Marwick LLP dated as
of a date within five business days before the date on which the
Registration Statement shall become effective and addressed to
Weatherford, in form and substance reasonably satisfactory to
Weatherford and customary in scope and substance for "comfort" letters
delivered by independent public accountants in connection with
registration statements and proxy statements similar to the
Registration Statement and Proxy Statement.
(b) Weatherford shall use its reasonable efforts to cause
to be delivered to Enterra a letter of Arthur Andersen LLP dated as of
a date within five business days before the date on which the
Registration Statement shall become effective and addressed to Enterra,
in form and substance reasonably satisfactory to Enterra and customary
in scope and substance for "comfort" letters delivered by independent
public accountants in connection with registration statements and proxy
statements similar to the Registration Statement and Proxy Statement.
5.3 MEETINGS OF STOCKHOLDERS.
(a) Enterra shall promptly take all action reasonably
necessary in accordance with the DGCL and its Restated Certificate of
Incorporation and bylaws to convene a meeting of its stockholders to
consider and vote upon the adoption and approval of the Merger and this
Agreement. Subject to the terms and conditions set forth in Section
7.2, the Board of Directors of Enterra (i) shall recommend at such
meeting that the stockholders of Enterra vote to adopt and approve the
Merger and this Agreement, (ii) shall use its reasonable efforts to
solicit from stockholders of Enterra proxies in favor of such adoption
and approval and (iii) shall take all other action reasonably necessary
to secure a vote of its stockholders in favor of the adoption and
approval of the Merger and this Agreement.
(b) Weatherford shall promptly take all action reasonably
necessary in accordance with the DGCL and its Restated Certificate of
Incorporation and bylaws to convene a meeting of its stockholders to
consider and vote upon the adoption and approval of the Merger and this
Agreement. Subject to the terms and conditions set forth in Section
7.1, the Board of Directors of Weatherford (i) shall recommend at such
meeting that the stockholders of Weatherford vote to adopt and approve
the Merger and this Agreement, (ii) shall use its reasonable efforts to
solicit from stockholders of Weatherford proxies in favor of such
adoption and approval and (iii) shall take all other action reasonably
necessary to secure a vote of its stockholders in favor of the adoption
and approval of the Merger and this Agreement.
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(c) Weatherford and Enterra shall coordinate and
cooperate with respect to the timing of such meetings and shall
endeavor to hold such meetings on the same day and as soon as
practicable after the date hereof.
5.4 REASONABLE EFFORTS; CONSENTS, APPROVALS AND WAIVERS. Upon the
terms and subject to the conditions set forth in this Agreement, each of the
parties agrees to use reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and cooperate with the
other party in doing, all things necessary, proper or advisable (a) to
consummate and make effective, in the most expeditious manner practicable, the
Merger, and the other transactions contemplated by this Agreement, including,
without limitation, (i) the obtaining of all necessary consents, approvals or
waivers required in connection with the authorization, execution and delivery of
this Agreement and the consummation of the Merger (provided that no such
consent, approval or waiver shall require such party to take any action that
would impair the value that such party reasonably attributes to the Merger) and
(ii) the execution and delivery of any additional instruments (including,
without limitation, any required supplemental indentures) necessary to
consummate the transactions contemplated by this Agreement; and (b) to defend
any non-regulatory lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including, without limitation, seeking to have
any stay or temporary restraining order entered by any court or other
governmental entity vacated or reversed.
5.5 ANTITRUST MATTERS. The obligations of each of the parties to
this Agreement shall include the following:
(a) each of the parties hereto shall file a premerger
notification and report form pursuant to the HSR Act with respect to
the Merger as promptly as reasonably possible following execution and
delivery of this Agreement. Each of the parties agrees to use best
efforts to promptly respond to any request for additional information
pursuant to Section (e)(1) of the HSR Act; and
(b) each party hereto will furnish to the other copies of
all correspondence, filings or communications between that party, or
any of its representatives, on the one hand, and any governmental
agency or authority, on the other hand, with respect to
pre-notification obligations under any antitrust law with respect to
this Agreement or the Merger; PROVIDED, HOWEVER, that with respect to
any documents that the party reasonably believes should not be
disclosed to the other party, the party shall instead furnish those
documents to counsel for the other party pursuant to a mutually
satisfactory confidentiality agreement.
5.6 NOTIFICATION OF CERTAIN MATTERS. Enterra shall give prompt
notice to Weatherford, and Weatherford shall give prompt notice to Enterra,
orally and in writing, of (a) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate at any time from
the date hereof to the Effective Time, (b) any material failure of Enterra or
Weatherford, as the case may be, or any officer, director, employee or agent
thereof, to comply
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with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder, and (c) any fact or event that would make it
necessary to amend the Registration Statement or the Proxy Statement to render
the statements therein not misleading or to comply with applicable law.
5.7 AGREEMENT TO DEFEND. In the event any claim, action, suit,
investigation or other proceeding by any governmental body or other person or
other legal or administrative proceeding is commenced that questions the
validity or legality of the transactions contemplated hereby or seeks damages in
connection therewith, whether before or after the Effective Time, the parties
hereto agree to cooperate and use their reasonable efforts to defend against and
respond thereto; PROVIDED, HOWEVER, that this Section 5.7 shall not apply to
any governmental investigation contemplated under Section 5.5(a).
5.8 EXPENSES. Subject to the terms and conditions set forth in
Section 7.3, and except as otherwise agreed to in writing by the parties, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses.
5.9 INDEMNIFICATION.
(a) After the Effective Time Weatherford and the
Surviving Corporation shall, to the fullest extent permitted under
applicable law, defend, indemnify and hold harmless each person who is
now, or has been at any time prior to the date hereof or who becomes
prior to the Effective Time, an officer or director of Enterra or any
of the Enterra Subsidiaries (each, an "Indemnified Party" and,
collectively, the "Indemnified Parties") against (i) all costs or
expenses (including, without limitation, reasonable attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid
in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or
investigative, based in whole or in part on, or arising in whole or in
part out of, the fact that such person is or was an officer or
director, whether pertaining to any matter existing or occurring at or
prior to the Effective Time and whether asserted or claimed prior to,
or at or after, the Effective Time (collectively, the "Indemnified
Liabilities"); and (ii) all Indemnified Liabilities based in whole or
in part on, or arising in whole or in part out of, or pertaining to,
this Agreement, the Merger or the transactions contemplated hereby.
After the Effective Time, Weatherford and the Surviving Corporation
will be entitled to participate in and, to the extent that it may wish,
to assume the defense of any action, with counsel reasonably
satisfactory to the Indemnified Party; PROVIDED, HOWEVER, if any
Indemnified Party believes that, by reason of an actual or potential
conflict of interest, it is advisable for such Indemnified Party to be
represented by separate counsel, or if Weatherford or the Surviving
Corporation shall fail after the Effective Time to assume
responsibility for such defense, such Indemnified Party may retain
counsel reasonably satisfactory to Weatherford and the Surviving
Corporation who will represent such Indemnified Party, and Weatherford
and the Surviving Corporation shall pay all reasonable fees and
disbursements of such counsel promptly as statements therefor are
received to the fullest extent permitted by applicable law upon receipt
of
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any undertaking contemplated by Section 145(e) of the DGCL. The
Indemnified Party, Weatherford and the Surviving Corporation will
cooperate with each other and use their reasonable efforts to assist
each other in the vigorous defense of any such matter; PROVIDED,
HOWEVER, that neither Weatherford nor the Surviving Corporation shall
be liable for any settlement of any claim effected without its written
consent, which consent, however, shall not be unreasonably withheld.
Any Indemnified Party wishing to claim indemnification under this
Section 5.9, upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify Weatherford or the Surviving
Corporation, as applicable (but the failure to be so notified by an
Indemnified Party shall not relieve an indemnifying party from any
liability that it may have under this Section 5.9 except to the extent
such failure materially prejudices such indemnifying party). The
indemnifying parties shall be required to pay for only one law firm
(in addition to any required local counsel) selected by the
Indemnified Parties as a group in accordance with the foregoing
provisions with respect to each such matter unless there is, under
applicable standards of professional conduct, a conflict in any
significant issue between the positions of any two or more Indemnified
Parties. This Section 5.9 is intended to be for the benefit of, and
shall be enforceable by, each Indemnified Party, his or her heirs and
his or her representatives.
(b) For a period of six years after the Effective Time,
the Surviving Corporation shall use its best efforts to maintain in
effect director and officer liability insurance for the benefit of the
Indemnified Parties in comparable amounts, with comparable deductibles
or retained amounts and with comparable coverages and exclusions as
currently maintained by Enterra; PROVIDED, HOWEVER, that if the
Surviving Corporation is unable to obtain insurance for such period for
an aggregate premium of $1,000,000 or less or if such insurance
otherwise cannot be obtained or maintained by the Surviving
Corporation, then the Surviving Corporation's obligation pursuant
hereto shall only be to seek to be obtained the best possible coverage
under the circumstances subject to the foregoing limitation on
premiums.
(c) All rights and obligations under this Section 5.9
shall be in addition to any rights an Indemnified Party may have under
the Restated Certificate of Incorporation or bylaws of Enterra as in
effect on the date hereof, or pursuant to any other agreement,
arrangement or document in effect prior to the Effective Time. The
provisions of this Section 5.9 are intended to benefit, and may be
enforced by, all Indemnified Parties, and their respective heirs and
representatives. This Section 5.9 shall be binding upon all successors
and assigns of Enterra, Weatherford and the Surviving Corporation.
(d) If the Surviving Corporation is sold to a third
party, such third party shall expressly assume the Surviving
Corporation's indemnification obligation under this Section 5.9.
5.10 POST-EFFECTIVE TIME MAILING. As soon as practicable following
the Effective Time, the Surviving Corporation will cause to be mailed to each
holder of certificates that represented Enterra Common Stock prior to the
Effective Time, at such holder's address as it
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appears on Enterra's stock transfer records, a letter of transmittal and other
information advising such holder of the consummation of the Merger and to enable
such holder to effect the exchange of stock certificates as contemplated by
Article I of this Agreement.
5.11 STOCKHOLDERS' AGREEMENT. Weatherford will enter into a
Stockholders Agreement with First Reserve Corporation and the various First
Reserve Funds (as defined therein), in the form attached hereto as Exhibit 5.11.
5.12 ENTERRA STOCK OPTIONS. At the Effective Time, each Enterra
Option that remains as of such date unexercised in whole or in part shall be
replaced by a substitute option, granted under an existing Weatherford stock
option plan, to purchase that number of shares of Weatherford Common Stock
determined by multiplying the number of shares of Enterra Common Stock subject
to such Enterra Option by the Conversion Rate and multiplying the exercise price
per share of such Enterra Option by a fraction the numerator of which is one and
the denominator of which is the Conversion Rate. Each such substitute option
shall otherwise replicate the terms and conditions of the Enterra Option it
replaces. Weatherford shall take all corporate action necessary (a) to reserve
for issuance a sufficient number of shares of Weatherford Common Stock for
delivery upon exercise of such Enterra Options, (b) to ensure that all shares of
Weatherford Common Stock subject to such Enterra Options are issued pursuant to
a plan that complies with the exemption provided by Rule 16b-3 promulgated under
the Exchange Act and (c) to ensure that shares of Weatherford Common Stock
issued pursuant to the exercise of such Enterra Options are registered under the
Securities Act, listed on the New York Stock Exchange and may be freely
transferred by the holders thereof.
5.13 ENTERRA EMPLOYEE BENEFITS.
(a) For the period beginning at the Effective Time and
ending on June 30, 1996, Weatherford will either (i) cause to remain in
effect all Enterra Benefit Plans, as in effect on the Effective Date,
or (ii) provide benefits to employees of Enterra and the Enterra
Subsidiaries under the Weatherford Benefit Plans that are substantially
comparable to the benefits provided to such employees under the Enterra
Benefit Plans, as in effect on the Effective Date. From and after July
1, 1996, Weatherford agrees that participation in the Weatherford
Benefit Plans, as then in effect, shall be made available to all
Weatherford employees, including employees who were employees of
Enterra, and that such plans will provide the same or substantially
comparable benefits to all similarly situated employees.
(b) If participation in any Weatherford Benefit Plan is
made available to employees of Enterra or any Enterra Subsidiary, all
service with Enterra and the Enterra Subsidiaries prior to the
Effective Time and any other service recognized under the applicable
Enterra Benefit Plans for vesting and eligibility purposes shall be
credited to such employees and all waiting periods and pre-existing
condition limitations shall be waived under such Weatherford Benefit
Plan.
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(c) Prior to the Effective Time, Enterra shall have
established the Enterra Special Severance Pay Plan, in the form
attached hereto as Exhibit 5.13.
(d) Weatherford agrees that it shall make non-elective
employer contributions, including fixed or discretionary pension,
profit sharing and matching contributions, to each Enterra Benefit Plan
that is intended to be a qualified defined contribution plan under
Section 401(a) of the Code for the respective Enterra Benefit Plan's
first plan year ending on or after the Effective Date in accordance
with the terms of such plan. Weatherford agrees that the rate of each
such non-elective employer contribution in each case shall not be less
than the rate of such non-elective employer contribution that was made
to the respective Enterra Benefit Plan for the last plan year ending
prior to the Effective Date. An employee of Enterra or an Enterra
Subsidiary who is employed, and who is a participant in an Enterra
Benefit Plan that is subject to this Section 5.13(d), on the day before
the Effective Date (an "Eligible Enterra Employee") shall be entitled
to receive an allocation of such non-elective employer contributions
without regard to whether such employee continues to be an employee of
Enterra or an Enterra Subsidiary or any successor thereto on the last
day of the respective Enterra Benefit Plan's plan year (or other
period) for which such contributions are to be made. Weatherford agrees
to make any amendment to the applicable Enterra Benefit Plans as may be
necessary to effectuate the terms of this Section 5.13(d).
5.14 UPDATE OF DISCLOSURE LETTERS.
(a) Weatherford shall promptly disclose to Enterra in
writing (i) any information set forth in the Weatherford Disclosure
Letter with respect to subsections (b), (c), (e) and (g) of Section 2.2
that no longer is accurate and with respect to all other subsections of
Section 2.2 that no longer is accurate in any material respect and (ii)
any information of the nature of that set forth in the Weatherford
Disclosure Letter that arises between the date hereof and the Closing
and that would have been required to be included in the Weatherford
Disclosure Letter if such information had existed and been known or
available on the date hereof. Neither any such new disclosure, nor the
determination of Enterra to proceed with the Merger in spite of any
such new disclosure, shall relieve Weatherford from any liability for
any prior misrepresentation or breach of warranty.
(b) Enterra shall promptly disclose to Weatherford in
writing (i) any information set forth in the Enterra Disclosure Letter
with respect to subsections (b), (c), (e) and (g) of Section 2.3 that
no longer is accurate and with respect to all other subsections of
Section 2.3 that no longer is accurate in any material respect and (ii)
any information of the nature of that set forth in the Enterra
Disclosure Letter that arises between the date hereof and the Closing
and that would have been required to be included in the Enterra
Disclosure Letter if such information had existed and been known or
available on the date hereof. Neither any such new disclosure, nor the
determination of Weatherford to proceed with the Merger in spite of any
such new
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disclosure, shall relieve Enterra from any liability for any prior
misrepresentation or breach of warranty.
5.15 WEATHERFORD SPECIAL SEVERANCE PAY PLAN. Prior to the
Effective Time, Weatherford shall have established the Weatherford Special
Severance Pay Plan, in the form attached hereto as Exhibit 5.15.
5.16 CHANGE OF CONTROL AGREEMENTS. Weatherford shall, as of the
Effective Time, have entered into change of control agreements, substantially in
the form of Exhibit 5.16(a), with the persons and for the respective severance
benefits set forth on Exhibit 5.16(b).
5.17 INDEMNIFICATION AGREEMENTS. Weatherford shall, as of the
Effective Time, have entered into indemnification agreements, substantially in
the form of Weatherford's existing indemnification agreements with the persons
set forth on Exhibit 5.17.
5.18 ENTERRA EMPLOYEE BONUSES.
(a) The Enterra Board of Directors or the Executive
Compensation Committee of the Enterra Board of Directors (the "Enterra
Committee") shall determine, prior to the Closing Date, the final
amount of bonuses to be paid to the Enterra employees listed on Exhibit
5.18 for the fiscal year ended December 31, 1993, such amount not to
exceed the amount that previously has been accrued for such bonuses.
Such bonuses shall be paid only after collection of at least
$10,000,000 of the disputed outstanding receivables from Kuwait Oil
Company. If such bonuses are not paid prior to the Closing Date, (i)
the determination of the Enterra Board of Directors or the Enterra
Committee, as the case may be, will be binding upon Weatherford, (ii)
any Enterra employee terminated after such date shall receive the
entire amount of the bonus determined by the Enterra Board of Directors
or the Enterra Committee, as the case may be, and (iii) payment of such
bonuses shall be administered by Messrs. William E. Macaulay and Robert
L. Parker, Sr., who will be directors of the Surviving Corporation.
(b) The Enterra Board of Directors or the Enterra
Committee shall declare, prior to the Closing Date, the amount of
bonuses to Enterra employees, based upon Enterra's achievement of
certain financial and other targets for Enterra for the fiscal year
ending December 31, 1995, determined by the Enterra Board of Directors
or the Enterra Committee, as the case may be, in a manner consistent
with the Enterra and Total Energy Services Company bonus plans under
which bonuses were paid for the fiscal year ended December 31, 1994.
The final amount of bonuses shall be determined by the Enterra Board of
Directors or the Enterra Committee, as the case may be, if audited
financial results for the year ending December 31, 1995 are known prior
to the Closing Date, or by Messrs. Macaulay and Parker, if such results
are not known until after the Closing Date. Bonuses will be paid not
earlier than February 1, 1996 and not later than February 28, 1996. Any
Enterra employee terminated after the Closing Date shall receive the
entire amount of the bonus.
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(c) In addition to the 1995 bonuses referenced in Section
5.18(b), Enterra may pay bonuses to Enterra employees in an amount not
to exceed $1,000,000 in the aggregate. The recipients and amounts of
such bonuses shall be determined in the sole discretion of the Enterra
Committee; PROVIDED, HOWEVER, that the total amount paid to any one
employee shall not exceed the aggregate of the current annualized
salary and most recent annual bonus of such employee.
5.19 ENTERRA SEVERANCE AGREEMENTS.
(a) Each of the Enterra severance agreements with the
individuals set forth on Exhibit 5.19 shall be amended to provide for
gross-up payments if the party subject to such an agreement is subject
to an excise tax under Section 4999 of the Code to ensure that such
party receives the benefit intended under the applicable agreement.
(b) The parties agree that, as a result of the Merger,
any resignation by any of M. Timothy Carey, Steven C. Grant, Edward C.
Grimes, Steven W. Krablin, J. Joseph Percle and Michael L. Stansberry
at any time from the Effective Date through August 12, 1996 shall
constitute a "Termination upon Change of Control" (as such term is
defined in the severance agreement between such person and Enterra).
Further, it is agreed that, for purposes of Section 3(a)(ii) of the
severance agreement between Enterra and each such individual, if the
bonus for the 1993 fiscal year is required to be taken into account,
the final amount of the 1993 bonus determined by the Enterra Board of
Directors or the Enterra Committee pursuant to Section 5.18(a) shall be
counted, notwithstanding whether the disputed receivables from Kuwait
Oil Company have been collected. It is further agreed that the manner
in which the obligation to provide extended medical and dental benefits
under Section 4(b) of each such individual's severance agreement with
Enterra shall be to pay to such individual during the full period for
which such benefits are required to be extended a monthly amount equal
to the difference between the applicable COBRA continuation premium for
such benefits and the premium, if any, charged to the individual for
such benefits immediately prior to the Change in Control (as defined in
such severance agreement) and such individual shall pay the full
premium to the plan.
5.20 ENTERRA CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER.
(a) Weatherford shall, as of the Effective Time, have
entered into definitive arrangements with D. Dale Wood reflecting the
principal terms set forth in Exhibit 5.20.
(b) If the implementation of the principal terms set
forth in Exhibit 5.20 shall make the Merger ineligible for
pooling-of-interests accounting treatment under Accounting Principles
Bulletin No. 16, Enterra agrees to use its best efforts to negotiate a
package that would provide Mr. Wood in the aggregate with a
substantially similar economic benefit.
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5.21 WEATHERFORD CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER.
Weatherford shall, as of the Effective Time, pay Philip Burguieres a fee in the
amount set forth in Exhibit 5.21. If Mr. Burguieres' fee set forth in Exhibit
5.21 shall make the Merger ineligible for pooling-of-interests accounting
treatment under Accounting Principles Bulletin No. 16, Weatherford agrees to use
its best efforts to negotiate an alternative package with Mr. Burguieres.
5.22 BOARD OF DIRECTORS.
(a) The Board of Directors of Weatherford will take
action prior to the Effective Time to cause the number of directors
comprising the full Board of Directors of the Surviving Corporation at
the Effective Time to be increased to ten persons, and the five persons
listed on Exhibit 5.22 as the Enterra designees to the Board of
Directors of the Surviving Corporation shall be elected to the Board of
Directors of the Surviving Corporation by the Weatherford Board of
Directors effective at the Effective Time, such increase in number and
such election to be subject to the Closing. The Weatherford Board of
Directors will also take action prior to the Effective Time to cause
the committees of the Board of Directors of the Surviving Corporation
at the Effective Time to be the committees listed on Exhibit 1.6(a)
hereto, having the membership noted on such Exhibit, such action to
be subject to the Closing. If prior to the Effective Time, any
Enterra designee for director set forth on Exhibit 5.22, or if during
the two years after the Effective Time, any Enterra designated
director shall decline or be unable to serve as a director of the
Surviving Corporation, the other Enterra designees or the remaining
Enterra designated directors, as the case may be, shall designate
another person to serve in such person's stead, subject to the
approval of a majority of the Weatherford designated directors at that
time, which approval shall not be unreasonably withheld. Weatherford
agrees that, during the two year period after the Effective Time, it
shall cause at least one Enterra designee listed on Exhibit 5.22 (or
his successor chosen pursuant to this Section 5.22(a)) to be a member
of each of the Executive and Nominating Committee, Audit Committee and
Compensation and Stock Plans Committee of the Board of Directors of
the Surviving Corporation. Weatherford shall take all appropriate
action for two years after the Effective Time to assist in the
nomination for election as directors of the Enterra designees listed
on Exhibit 5.22 (or any successor chosen pursuant to this Section
5.22(a)).
(b) Each person designated by Enterra to serve on the
Board of Directors of the Surviving Corporation, and any person
subsequently appointed to the Board of Directors of the Surviving
Corporation by such designees pursuant to Section 5.22(a), shall be
covered by the Weatherford International Incorporated Non-Employee
Director Retirement Plan and the prior service of any such person on
the Enterra Board of Directors shall count as service on the Board of
Directors of the Surviving Corporation for all purposes under such
plan.
(c) If prior to the Effective Time, any Weatherford
designee for director set forth on Exhibit 5.22, or if during the two
years after the Effective Time, any Weatherford designated director
shall decline or be unable to serve as a director of the
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Surviving Corporation, the other Weatherford designees or the remaining
Weatherford designated directors, as the case may be, shall designate
another person to serve in such person's stead, subject to the approval
of a majority of the Enterra designated directors at that time, which
approval shall not be unreasonably withheld.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment or waiver at or prior to the Closing Date of the following
conditions:
(a) This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of
Weatherford and the stockholders of Enterra as may be required by law
and by any applicable provisions of their respective certificates of
incorporation or bylaws;
(b) The waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated;
(c) No order shall have been entered and remain in effect
in any action or proceeding before any foreign, federal or state court
or governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal
the consummation of the Merger;
(d) The Registration Statement shall be effective on the
Closing Date, and all post-effective amendments filed shall have been
declared effective or shall have been withdrawn; and no stop order
suspending the effectiveness thereof shall have been issued and no
proceedings for that purpose shall have been initiated or, to the
knowledge of the parties, threatened by the Commission;
(e) There shall have been obtained any and all material
permits, approvals and consents of securities or blue sky commissions
of any jurisdiction, and of any other governmental body or agency, that
reasonably may be deemed necessary so that the consummation of the
Merger and the transactions contemplated thereby will be in compliance
with applicable laws, the failure to comply with which would have a
Material Adverse Effect on Enterra or Weatherford; and
(f) All approvals of private persons, financial
institutions or corporations, (i) the granting of which is necessary
for the consummation of the Merger or the transactions contemplated in
connection therewith and (ii) the non-receipt of which would have a
Material Adverse Effect on Enterra or Weatherford, shall have been
obtained.
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6.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF WEATHERFORD. The
obligation of Weatherford to effect the Merger is, at the option of Weatherford,
also subject to the fulfillment or waiver at or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of Enterra
contained in subsections (b), (c), (e) and (g) of Section 2.3 shall be
accurate, and the representations and warranties of Enterra contained
in all other subsections of Section 2.3 shall be accurate in all
material respects (except to the extent qualified by materiality, in
which case such representations and warranties shall be accurate), as
of the Closing Date as though such representations and warranties had
been made at and as of that time (except where any such representation
or warranty is made as of a date specifically set forth therein); all
of the terms, covenants and conditions of this Agreement to be complied
with and performed by Enterra on or before the Closing Date shall have
been duly complied with and performed in all material respects; and a
certificate of Enterra to the foregoing effect dated the Closing Date
and signed by the chief executive officer of Enterra shall have been
delivered to Weatherford;
(b) Since the date of this Agreement, no Material Adverse
Change of Enterra shall have occurred, and Weatherford shall have
received a certificate of Enterra signed by the chief executive officer
of Enterra dated the Closing Date to such effect;
(c) Weatherford shall have been advised in writing as of
the date of this Agreement and as of the Closing Date (i) by Arthur
Andersen LLP that, in accordance with generally accepted accounting
principles and applicable rules and regulations of the Commission, the
Merger should be treated as a "pooling of interests" for accounting
purposes and (ii) by KPMG Peat Marwick LLP that, in accordance with
generally accepted accounting principles and applicable rules and
regulations of the Commission, Enterra is a poolable entity;
(d) Enterra shall have received, and furnished written
copies to Weatherford of, the Enterra affiliates' agreements pursuant
to Section 4.3;
(e) Weatherford shall have received from Morgan, Lewis &
Bockius, counsel to Enterra, an opinion dated the Effective Time
covering the matters set forth in Exhibit 6.2(e);
(f) Weatherford shall have received a copy of the
"comfort letter" of KPMG Peat Marwick LLP pursuant to Section 5.2(a)
and on or prior to the Closing Date an additional letter from KPMG Peat
Marwick LLP dated as of the Closing Date, in form and substance
reasonably satisfactory to Weatherford, stating that nothing has come
to their attention, as of a date no earlier than five days prior to the
Closing Date, which would require any change in their letter delivered
pursuant to Section 5.2(a) if it were required to be dated and
delivered on the Closing Date;
(g) The Board of Directors of Weatherford shall have
received from Merrill Lynch & Co. a written opinion, dated as of the
date of this Agreement, in form and
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substance reasonably satisfactory to the Board of Directors of
Weatherford, to the effect that the consideration to be paid by
Weatherford pursuant to the Merger is fair to Weatherford from a
financial point of view, which opinion shall have been confirmed in
writing to such Board as of the date the Proxy Statement is first
mailed to the stockholders of Weatherford and not subsequently
withdrawn;
(h) Weatherford shall have received from Fulbright &
Jaworski L.L.P., counsel to Weatherford, a written opinion dated as of
the date that the Proxy Statement is first mailed to stockholders of
Weatherford to the effect that (i) the Merger will be treated for
federal income tax purposes as a reorganization within the meaning of
Section 368(a) of the Code, (ii) Weatherford and Enterra will each be a
party to that reorganization within the meaning of Section 368(b) of
the Code and (iii) Weatherford and Enterra shall not recognize any gain
or loss as a result of the Merger, and such opinion shall not have been
withdrawn or modified in any material respect;
(i) The Stockholders' Agreement among Enterra, First
Reserve Corporation and the various First Reserve Funds shall have been
in full force and effect, and the stockholders of Enterra named therein
shall not be in breach of any of the material terms thereof,
immediately prior to the Closing; and
(j) D. Dale Wood shall have entered into definitive
arrangements reflecting the principal terms set forth in Exhibit 5.20.
6.3 ADDITIONAL CONDITIONS TO OBLIGATIONS OF ENTERRA. The
obligation of Enterra to effect the Merger is, at the option of Enterra, also
subject to the fulfillment or waiver at or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of Weatherford
contained in subsections (b), (c), (e) and (g) of Section 2.2 shall be
accurate, and the representations and warranties of Weatherford
contained in all other subsections of Section 2.2 shall be accurate in
all material respects (except to the extent qualified by materiality,
in which case such representations and warranties shall be accurate, as
of the Closing Date as though such representations and warranties had
been made at and as of that time (except where any such representation
or warranty is made as of a date specifically set forth therein); all
of the terms, covenants and conditions of this Agreement to be complied
with and performed by Weatherford on or before the Closing Date shall
have been duly complied with and performed in all material respects;
and a certificate of Weatherford to the foregoing effect dated the
Closing Date and signed by the chief executive officer of Weatherford
shall have been delivered to Enterra;
(b) Since the date of this Agreement, no Material Adverse
Change of Weatherford shall have occurred, and Enterra shall have
received a certificate of Weatherford signed by the chief executive
officer of Weatherford dated the Closing Date to such effect;
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(c) Enterra shall have been advised in writing as of the
date of this Agreement and as of the Closing Date (i) by KPMG Peat
Marwick LLP that, in accordance with generally accepted accounting
principles and applicable rules and regulations of the Commission, the
Merger should be treated as a "pooling of interests" for accounting
purposes and (ii) by Arthur Andersen LLP that, in accordance with
generally accepted accounting principles and applicable rules and
regulations of the Commission, Weatherford is a poolable entity;
(d) Weatherford shall have received, and furnished
written copies to Enterra of, the Weatherford affiliates' agreements
pursuant to Section 3.3;
(e) Enterra shall have received from Fulbright & Jaworski
L.L.P., counsel to Weatherford, an opinion dated the Effective Time
covering the matters set forth in Exhibit 6.3(e);
(f) Enterra shall have received a copy of the "comfort
letter" of Arthur Andersen LLP pursuant to Section 5.2(b) and on or
prior to the Closing Date an additional letter from Arthur Andersen LLP
dated as of the Closing Date, in form and substance reasonably
satisfactory to Enterra, stating that nothing has come to their
attention, as of a date no earlier than five days prior to the Closing
Date, which would require any change in their letter delivered pursuant
to Section 5.2(b) if it were required to be dated and delivered on the
Closing Date;
(g) The Board of Directors of Enterra shall have received
from Simmons & Company International, Inc. a written opinion, dated as
of the date of this Agreement, in form and substance reasonably
satisfactory to the Board of Directors of Enterra, to the effect that
the consideration to be received by the stockholders of Enterra
pursuant to the Merger is fair to the stockholders of Enterra from a
financial point of view, which opinion shall have been confirmed in
writing to such Board as of the date the Proxy Statement is first
mailed to the stockholders of Enterra and not subsequently withdrawn;
(h) Enterra shall have received from Morgan, Lewis &
Bockius,counsel to Enterra, a written opinion dated as of the date that
the Proxy Statement is first mailed to stockholders of Enterra to the
effect that (i) the Merger will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of
the Code, (ii) Weatherford and Enterra will each be a party to that
reorganization within the meaning of Section 368(b) of the Code and
(iii) the stockholders of Enterra shall not recognize any gain or loss
as a result of the Merger, other than to the extent such stockholders
receive cash in lieu of fractional shares, and such opinion shall not
have been withdrawn or modified in any material respect;
(i) The shares of Weatherford Common Stock to be issued
upon consummation of the Merger shall have been approved for listing on
the New York Stock Exchange, subject to official notice of issuance;
and
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(j) Each of the Weatherford Change of Control Agreements
set forth on Exhibit 6.3(j)(i) shall be amended, pursuant to the form
attached hereto as Exhibit 6.3(j)(ii).
ARTICLE VII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS
7.1 NO SOLICITATION BY WEATHERFORD.
(a) Weatherford shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer,
director, employee, investment banker, attorney or other advisor, agent
or representative of Weatherford or any of its subsidiaries to,
directly or indirectly, (i) solicit, initiate or encourage the
submission of any Weatherford Takeover Proposal (as hereinafter
defined), (ii) enter into any agreement with respect to any
Weatherford Takeover Proposal, or (iii) participate in any discussions
or negotiations regarding, or furnish to any person any information
with respect to, the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Weatherford Takeover Proposal;
PROVIDED, HOWEVER, that prior to the vote of stockholders of
Weatherford for approval and adoption of this Agreement and the Merger,
Weatherford may take any actions described in the foregoing clause
(iii) to the extent that the Board of Directors of Weatherford
determines, in good faith after consultation with outside counsel, that
failure to take such actions could reasonably be expected to result in
a breach of the Board's fiduciary obligations. Without limiting the
foregoing, it is understood that any violation of the restrictions set
forth in the preceding sentence by any officer, director or employee of
Weatherford or any of the Weatherford Subsidiaries or any investment
banker, attorney or other advisor, agent or representative of
Weatherford, whether or not such person is purporting to act on behalf
of Weatherford or otherwise, shall be deemed to be a material breach of
this Agreement by Weatherford. For purposes of this Agreement, a
"Weatherford Takeover Proposal" means (i) any proposal or offer, other
than a proposal or offer by Enterra or any of its affiliates, for a
merger or other business combination involving Weatherford, (ii) any
proposal or offer, other than a proposal or offer by Enterra or any of
its affiliates, to acquire from Weatherford or any of its affiliates in
any manner, directly or indirectly, more than 30% of the voting stock
of Weatherford or any Weatherford Subsidiary or a material amount of
the assets of Weatherford and the Weatherford Subsidiaries, taken as a
whole, or (iii) any proposal or offer, other than a proposal or offer
by Enterra or any of its affiliates, to acquire from the stockholders
of Weatherford by tender offer, exchange offer or otherwise more than
30% of the outstanding voting stock of Weatherford.
(b) Neither the Board of Directors of Weatherford nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Enterra the approval or
recommendation by the Board of Directors of Weatherford or any such
committee of this Agreement or the Merger or take any action having
such effect or (ii) approve or recommend, or propose to approve or
recommend, any Weatherford Takeover Proposal. Notwithstanding the
foregoing, if
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the Board of Directors of Weatherford receives a Weatherford Takeover
Proposal that, in the exercise of its fiduciary obligations (as
determined in good faith after consultation with outside counsel), it
determines to be a Weatherford Superior Proposal (as hereinafter
defined), the Board of Directors of Weatherford may withdraw or modify
its approval or recommendation of this Agreement or the Merger and may
(subject to the following sentence) terminate this Agreement, in each
case at any time after the fifth business day following Enterra's
receipt of written notice (a "Weatherford Notice of Superior Proposal")
advising Enterra that the Board of Directors of Weatherford has
received a Weatherford Takeover Proposal that it has determined to be a
Weatherford Superior Proposal, specifying the principal terms and
conditions of such Weatherford Superior Proposal and identifying
the person making such Weatherford Superior Proposal. Weatherford may
terminate this Agreement pursuant to the preceding sentence only if the
stockholders of Weatherford shall not yet have voted upon the Merger
and Weatherford shall have paid to Enterra the Termination Fee (as
defined in Section 7.3(a)). Nothing contained herein shall prohibit
Weatherford from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) of the Exchange Act provided that
Weatherford does not withdraw or modify its position with respect to
the Merger or take any action having such effect or approve or
recommend a Weatherford Takeover Proposal. For purposes of this
Agreement, a "Weatherford Superior Proposal" means any bona fide
Weatherford Takeover Proposal to merge with or acquire, directly or
indirectly, all of the voting stock then outstanding or all or
substantially all of the assets of Weatherford, and otherwise on terms
that the Board of Directors of Weatherford determines in its good faith
reasonable judgment (based on the written advice of a financial advisor
of nationally recognized reputation) to be more favorable to
Weatherford's stockholders than the Merger.
(c) If the Board of Directors of Weatherford or any
committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Enterra the approval or
recommendation by the Board of Directors of Weatherford or any such
committee of this Agreement or the Merger or take any action having
such effect or (ii) approve or recommend, or propose to approve or
recommend, any Weatherford Takeover Proposal, Enterra may terminate
this Agreement.
(d) In addition to the obligations of Weatherford set
forth in Section 7.1(b), Weatherford shall promptly advise Enterra
orally and in writing of any negotiations or discussions, entered into
in reliance on the proviso to the first sentence of Section 7.1(a).
7.2 NO SOLICITATION BY ENTERRA.
(a) Enterra shall not, nor shall it permit any of its
subsidiaries to, nor shall it authorize or permit any officer,
director, employee, investment banker, attorney or other advisor, agent
or representative of Enterra or any of its subsidiaries to, directly or
indirectly, (i) solicit, initiate or encourage the submission of any
Enterra Takeover Proposal (as hereinafter defined), (ii) enter into any
agreement with respect to any Enterra Takeover Proposal, or (iii)
participate in any discussions or negotiations
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regarding, or furnish to any person any information with respect to,
the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Enterra Takeover Proposal; PROVIDED, HOWEVER,
that prior to the vote of stockholders of Enterra for approval and
adoption of this Agreement and the Merger, Enterra may take any actions
described in the foregoing clause (iii) to the extent that the Board of
Directors of Enterra determines, in good faith after consultation with
outside counsel, that failure to take such actions could reasonably be
expected to result in a breach of the Board's fiduciary obligations.
Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in the preceding sentence by any officer,
director or employee of Enterra or any of the Enterra Subsidiaries or
any investment banker, attorney or other advisor, agent or
representative of Enterra, whether or not such person is purporting to
act on behalf of Enterra or otherwise, shall be deemed to be a material
breach of this Agreement by Enterra. For purposes of this Agreement, an
"Enterra Takeover Proposal" means (i) any proposal or offer, other than
a proposal or offer by Weatherford or any of its affiliates, for a
merger or other business combination involving Enterra, (ii) any
proposal or offer, other than a proposal or offer by Weatherford or any
of its affiliates, to acquire from Enterra or any of its affiliates in
any manner, directly or indirectly, more than 30% of the voting stock
of Enterra or any Enterra Subsidiary or a material amount of the assets
of Enterra and the Enterra Subsidiaries, taken as a whole, or (iii) any
proposal or offer, other than a proposal or offer by Weatherford or any
of its affiliates, to acquire from the stockholders of Enterra by
tender offer, exchange offer or otherwise more than 30% of the
outstanding voting stock of Enterra.
(b) Neither the Board of Directors of Enterra nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Weatherford the approval or
recommendation by the Board of Directors of Enterra or any such
committee of this Agreement or the Merger or take any action having
such effect or (ii) approve or recommend, or propose to approve or
recommend, any Enterra Takeover Proposal. Notwithstanding the
foregoing, if the Board of Directors of Enterra receives an Enterra
Takeover Proposal that, in the exercise of its fiduciary obligations
(as determined in good faith after consultation with outside counsel),
it determines to be an Enterra Superior Proposal (as hereinafter
defined), the Board of Directors of Enterra may withdraw or modify its
approval or recommendation of this Agreement or the Merger and may
(subject to the following sentence) terminate this Agreement, in each
case at any time after the fifth business day following Weatherford's
receipt of written notice (an "Enterra Notice of Superior Proposal")
advising Weatherford that the Board of Directors of Enterra has
received an Enterra Takeover Proposal that it has determined to be an
Enterra Superior Proposal, specifying the principal terms and
conditions of such Enterra Superior Proposal and identifying the person
making such Enterra Superior Proposal. Enterra may terminate this
Agreement pursuant to the preceding sentence only if the stockholders
of Enterra shall not yet have voted upon the Merger and Enterra shall
have paid to Weatherford the Termination Fee. Nothing contained herein
shall prohibit Enterra from taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) of the Exchange Act provided
that Enterra does not withdraw or modify its position with respect to
the
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Merger or take any action having such effect or approve or recommend an
Enterra Takeover Proposal. For purposes of this Agreement, an "Enterra
Superior Proposal" means any bona fide Enterra Takeover Proposal to
merge with or acquire, directly or indirectly, all of the voting stock
then outstanding or all or substantially all of the assets of Enterra,
and otherwise on terms that the Board of Directors of Enterra
determines in its good faith reasonable judgment (based on the written
advice of a financial advisor of nationally recognized reputation) to
be more favorable to Enterra's stockholders than the Merger.
(c) If the Board of Directors of Enterra or any committee
thereof shall (i) withdraw or modify, or propose to withdraw or modify,
in a manner adverse to Weatherford the approval or recommendation by
the Board of Directors of Enterra or any such committee of this
Agreement or the Merger or take any action having such effect or (ii)
approve or recommend, or propose to approve or recommend, any Enterra
Takeover Proposal, Weatherford may terminate this Agreement.
(d) In addition to the obligations of Enterra set forth
in Section 7.2(b), Enterra shall promptly advise Weatherford orally and
in writing of any negotiations or discussions, entered into in reliance
on the proviso to the first sentence of Section 7.2(a).
7.3 FEE AND EXPENSE REIMBURSEMENTS.
(a) Weatherford agrees to pay Enterra a fee in
immediately available funds of $20,000,000 (the "Termination Fee")
promptly upon the termination of this Agreement if this Agreement is
terminated by Enterra or Weatherford pursuant to Section 8.1(j).
Further, Weatherford agrees to pay Enterra the Termination Fee if:
(i) this Agreement is terminated for any reason
other than a material breach by Enterra and, after the date
hereof and before such termination, a Weatherford Takeover
Proposal shall have been made and the stockholders of
Weatherford shall not have approved the Merger; or
(ii) Weatherford shall have terminated this
Agreement pursuant to Section 8.1(c) or Section 8.1(h) and,
within six months after such termination, Weatherford shall
have entered into a definitive agreement with any person
(other than Enterra or any of its affiliates) with respect to
a Weatherford Takeover Proposal than is more favorable to
Weatherford's stockholders that the Merger.
The Termination Fee shall be payable promptly upon termination of this
Agreement if any of the events described in Section 7.3(a) (i) shall
have occurred prior to termination. The Termination Fee payable
pursuant to Section 7.3(a) (ii) shall be payable promptly upon the
first occurrence of the event following termination of this Agreement.
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(b) Enterra agrees to pay Weatherford the Termination Fee
promptly upon the termination of this Agreement if this Agreement is
terminated by Enterra or Weatherford pursuant to Section 8.1(k).
Further, Enterra agrees to pay Weatherford the Termination Fee if:
(i) this Agreement is terminated for any reason
other than a material breach by Weatherford and, after the
date hereof and before such termination, an Enterra Takeover
Proposal shall have been made and the stockholders of Enterra
shall not have approved the Merger; or
(ii) Enterra shall have terminated this Agreement
pursuant to Section 8.1(d) or Section 8.1(i) and, within six
months after such termination, Enterra shall have entered into
a definitive agreement with any person (other than Weatherford
or any of its affiliates) with respect to an Enterra Takeover
Proposal that is more favorable to Enterra's stockholders than
the Merger.
The Termination Fee shall be payable promptly upon termination of this
Agreement if any of the events described in Section 7.3(b) (i) shall
have occurred prior to termination. The Termination Fee payable
pursuant to Section 7.3(b) (ii) shall be payable promptly upon the
first occurrence of the event following termination of this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1 TERMINATION. This Agreement may be terminated and the Merger
and the other transactions contemplated herein may be abandoned at any time
prior to the Effective Time, whether prior to or after approval by the
stockholders of Weatherford or the stockholders of Enterra:
(a) by mutual consent of Weatherford and Enterra;
(b) by either Weatherford or Enterra if the Merger has
not been effected on or before December 31, 1995;
(c) by Weatherford if the condition set forth in Section
6.2(g) is not satisfied;
(d) by Enterra if the condition set forth in Section
6.3(g) is not satisfied;
(e) by Weatherford if a final, unappealable order shall
have been entered to restrain, enjoin or otherwise prevent, or awarding
substantial damages in connection with, a consummation of this
Agreement or the transactions contemplated in connection herewith, or
there is pending by any governmental body any suit challenging or
seeking to restrain or prohibit the consummation of the Merger or any
of the other transactions contemplated by this Agreement or seeking to
obtain from
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Enterra or any of the Enterra Subsidiaries any damages that are
material in relation to Enterra and the Enterra Subsidiaries, taken as
a whole;
(f) by Enterra if a final, unappealable order shall have
been entered to restrain, enjoin or otherwise prevent, or awarding
substantial damages in connection with, a consummation of this
Agreement or the transactions contemplated in connection herewith, or
there is pending by any governmental body any suit challenging or
seeking to restrain or prohibit the consummation of the Merger or any
of the other transactions contemplated by this Agreement or seeking to
obtain from Weatherford or any of the Weatherford Subsidiaries any
damages that are material in relation to Weatherford and the
Weatherford Subsidiaries, taken as a whole;
(g) by either Weatherford or Enterra if the required
approval of the stockholders of Enterra or the stockholders of
Weatherford for the adoption and approval of the Merger and this
Agreement is not received at their respective stockholders' meetings;
(h) by Weatherford if (i) since the date of this
Agreement there has been a Material Adverse Change in Enterra or (ii)
there has been a breach of any representation or warranty set forth in
subsection (b), (c), (e) or (g) of Section 2.2, or there has been a
breach of any other subsection of Section 2.2 in any material respect
(except to the extent qualified by materiality, in which case such
representations and warranties shall not have been breached in any
respect), by Enterra or Enterra fails to perform in any material
respect any of its covenants, agreements or obligations under this
Agreement;
(i) by Enterra if (i) since the date of this Agreement
there has been a Material Adverse Change in Weatherford or (ii) there
has been a breach of any representation or warranty set forth in
subsection (b), (c), (e) or (g) of Section 2.3, or there has been a
breach of any other subsection of Section 2.3 in any material respect
(except to the extent qualified by materiality, in which case such
representations and warranties shall not have been breached in any
respect), by Weatherford or Weatherford fails to perform in any
material respect any of its covenants, agreements or obligations under
this Agreement;
(j) by Weatherford or Enterra to the extent permitted
under Section 7.1; or
(k) by Weatherford or Enterra to the extent permitted
under Section 7.2.
8.2 EFFECT OF TERMINATION. In the event of any termination of this
Agreement pursuant to Section 8.1, Weatherford and Enterra shall have no
obligation or liability to each other except that (i) the provisions of Sections
5.8 and 7.3, this Article VIII and the obligations set forth in the
Confidentiality Agreement dated May 12, 1995, between Weatherford and Enterra
(the "Confidentiality Agreement") shall survive any such termination, and (ii)
in the case of termination pursuant to Section 8.1(h) or 8.1(i) only, nothing
herein and no
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termination pursuant to such sections will relieve any party from liability for
any breach of this Agreement.
8.3 WAIVER AND AMENDMENT. Any provision of this Agreement may be
waived at any time by the party that is, or whose stockholders are, entitled to
the benefits thereof. This Agreement may not be amended or supplemented at any
time, except by an instrument in writing signed on behalf of each party hereto;
PROVIDED that after this Agreement has been approved and adopted by the
stockholders of Weatherford and the stockholders of Enterra, this Agreement may
be amended only as may be permitted by applicable provisions of the DGCL. The
waiver by any party hereto of any condition or of a breach of another provision
of this Agreement shall not operate or be construed as a waiver of any other
condition or subsequent breach. The waiver by any party hereto of any of the
conditions precedent to its obligations under this Agreement shall not preclude
it from seeking redress for breach of this Agreement other than with respect to
the condition so waived.
8.4 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. None of the representations, warranties, covenants or agreements in
this Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time, except for the terms of Article I, Sections 5.4,
5.7, 5.8, 5.9, 5.10, 5.12, 5.13, 5.18, 5.19(b) and 5.22, this Article VIII and
the agreements of the "affiliates" of Enterra and Weatherford delivered pursuant
to Section 6.2(d) and Section 6.3(d), respectively.
8.5 PUBLIC STATEMENTS. Enterra and Weatherford agree to consult
with each other prior to issuing any press release or otherwise making any
public statement with respect to the transactions contemplated hereby, and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or applicable stock exchange
policy.
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the
benefit of and will be binding upon the parties hereto and their respective
legal representatives, successors and permitted assigns. This Agreement shall
not be assignable by the parties hereto.
8.7 NOTICES. All notices, requests, demands, claims and other
communications that are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
in person or by courier, (b) sent by facsimile transmission, answer back
requested, or (c) mailed, certified first class mail, postage prepaid, return
receipt requested, to the parties hereto at the following addresses:
if to Enterra: Enterra Corporation
13100 Northwest Freeway, Sixth Floor
Houston, Texas 77040
Attention: D. Dale Wood, Chairman of
the Board, President and Chief
Executive Officer
Fax: (713) 462-7816
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with a required copy to: Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, Pennsylvania 19103-6993
Attention: David R. King
Fax: (215) 963-5299
if to Weatherford: Weatherford International Incorporated
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
Attention: Philip Burguieres, Chairman
of the Board, President and Chief
Executive Officer
Fax: (713) 439-1152
with a required copy to: Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Attention: Charles L. Strauss
Fax: (713) 651-5246
or to such other address or facsimile number as any party shall have furnished
to the other by notice given in accordance with this Section 8.7. Such notices
shall be effective, (i) if delivered in person or by courier, upon actual
receipt by the intended recipient, (ii) if sent by facsimile transmission, when
the answer back is received, or (iii) if mailed, upon the earlier of five days
after deposit in the mail and the date of delivery as shown by the return
receipt therefor.
8.8 GOVERNING LAW; JURISDICTION. THIS AGREEMENT, THE SUBJECT
MATTER HEREOF AND ALL OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED
IN ALL RESPECTS, INCLUDING, WITHOUT LIMITATION, VALIDITY, INTERPRETATION AND
EFFECT, BY THE LAWS OF THE STATE OF DELAWARE. EACH PARTY HERETO IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY COURT OF COMPETENT JURISDICTION IN
THE STATE OF DELAWARE AND THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
DELAWARE, AND ANY OTHER COURT OF THE STATE OF DELAWARE AND THE UNITED STATES
WITH JURISDICTION TO HEAR APPEALS FROM ANY SUCH COURT, FOR THE PURPOSES OF ANY
SUIT, ACTION OR OTHER PROCEEDING OF ANY TYPE WHATSOEVER ARISING OUT OF THIS
AGREEMENT OR THE SUBJECT MATTER HEREOF OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY BROUGHT BY ANY PARTY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY SUCH SUIT, ACTION OR PROCEEDING ANY CLAIM THAT SUCH PARTY IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED COURTS, THAT THE
SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE
OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT, OR THE
SUBJECT
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MATTER HEREOF MAY NOT BE ENFORCED IN OR BY SUCH COURT. EACH PARTY HERETO FURTHER
AGREES NOT TO BRING OR PURSUE ANY SUCH SUIT, ACTION OF OTHER PROCEEDING IN ANY
OTHER COURTS OR JURISDICTION.
8.9 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated.
8.10 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same agreement.
8.11 HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
8.12 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement,
the exhibits attached hereto, the Weatherford Disclosure Letter (and Schedule
2.2(n) thereto), the Enterra Disclosure Letter (and the exhibits attached
thereto) and the Confidentiality Agreement constitute the entire agreement and
supersedes all other prior agreements and understandings, both oral and written,
among the parties or any of them, with respect to the subject matter hereof and
neither this nor any documents delivered in connection with this Agreement
confers upon any person not a party hereto any rights or remedies hereunder
except as provided in Sections 5.9, 5.12, 5.13, 5.18 and 5.19(b).
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
WEATHERFORD INTERNATIONAL INCORPORATED
By: /s/ Phillip Burguieres
-------------------------------------------
Philip Burguieres
Chairman of the Board, President and
Chief Executive Officer
ENTERRA CORPORATION
By: /s/ D. Dale Wood
-------------------------------------------
D. Dale Wood
Chairman of the Board, President and
Chief Executive Officer
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