1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 7, 1998
REGISTRATION NUMBER 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
EVI, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 3498 04-2515019
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
5 POST OAK PARK, SUITE 1760
HOUSTON, TEXAS 77027-3415
(713) 297-8400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
BERNARD J. DUROC-DANNER
EVI, INC.
5 POST OAK PARK, SUITE 1760
HOUSTON, TEXAS 77027-3415
(713) 297-8400
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
CURTIS W. HUFF
FULBRIGHT & JAWORSKI L.L.P.
1301 MCKINNEY, SUITE 5100
HOUSTON, TEXAS 77010-3095
(713) 651-5151
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: Upon consummation of the Merger described herein.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
CALCULATION OF REGISTRATION FEE
===========================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE(3)
- ---------------------------------------------------------------------------------------------------------------------------
Common Stock, $1.00 par
value................. 50,200,112 N/A $2,241,038,678 $213,978
===========================================================================================================================
(1) Represents the maximum number of shares of Common Stock issuable or reserved
for issuance upon consummation of the Merger described herein.
(2) Pursuant to Rule 457(f) under the Securities Act of 1933, the proposed
maximum offering price is calculated as $2,241,038,678 (representing
52,842,223 shares of Weatherford Enterra, Inc. common stock, $.10 par value,
multiplied by $42.41, which is the average of the high and low sales price
for such stock on April 6, 1998, as reported by The New York Stock
Exchange).
(3) Pursuant to Rule 457(b) under the Securities Act of 1933, the registration
fee included with this Registration Statement has been offset by $447,129,
which is the fee previously paid by the Registrant with the filing of
preliminary proxy materials on Schedule 14A (which contained the Joint Proxy
Statement/Prospectus included herein) filed on April 2, 1998.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
2
EVI, INC.
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(b) OF REGULATION S-K
ITEM OF FORM S-4 LOCATION IN THE PROSPECTUS
---------------- --------------------------
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Cover of Registration Statement; Cross
Reference Sheet; Outside Front Cover Page
of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front Cover Page of Prospectus;
Table of Contents; Available Information;
Incorporation of Certain Documents by
Reference
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Forward-Looking Statements; Summary;
General Information about the Special
Meetings; Terms of the Merger; Comparative
Rights of Stockholders of EVI and
Weatherford; Market Prices and Dividend
Information; EVI Selected Condensed
Consolidated Financial Data; Weatherford
Selected Condensed Consolidated Financial
Data; Unaudited Pro Forma Condensed
Consolidated Financial Statements; EVI;
Weatherford; Management
4. Terms of the Transaction................... Summary; The Merger; Terms of the Merger;
Comparative Rights of Stockholders of EVI
and Weatherford
5. Pro Forma Financial Information............ Summary; Unaudited Pro Forma Condensed
Consolidated Financial Statements
6. Material Contracts with the Company Being
Acquired................................... Summary; The Merger; Management
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................ Not Applicable
8. Interests of Named Experts and Counsel..... Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities ............................... Not Applicable
10. Information with Respect to S-3
Registrants................................ Available Information; Incorporation of
Certain Documents by Reference; Summary;
EVI
11. Incorporation of Certain Information by
Reference.................................. Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants................................ Not Applicable
13. Incorporation of Certain Information by
Reference.................................. Not Applicable
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants.......... Not Applicable
15. Information with Respect to S-3
Companies.................................. Available Information; Incorporation of
Certain Documents by Reference; Summary;
Weatherford
3
ITEM OF FORM S-4 LOCATION IN THE PROSPECTUS
---------------- --------------------------
16. Information with Respect to S-2 or S-3
Companies.................................. Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies.................. Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited......... Incorporation of Certain Documents by
Reference; General Information About the
Special Meetings; Terms of the
Merger -- Interests of Certain Persons in
the Merger; Management; Stock Ownership;
Stockholders' Proposals
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer....................... Not Applicable
4
[EVI LOGO]
EVI, INC.
5 POST OAK PARK, SUITE 1760
HOUSTON, TEXAS 77027
April , 1998
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders (the
"Special Meeting") of EVI, Inc. ("EVI") to be held at a.m., C.D.T., on
, , 1998, at , Houston, Texas.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger dated as of March
4, 1998 (the "Merger Agreement"), by and between EVI and Weatherford Enterra,
Inc. ("Weatherford"), pursuant to which Weatherford will be merged with and into
EVI (the "Merger"). The Merger Agreement provides that, upon completion of the
Merger, each outstanding share of Weatherford common stock, $0.10 par value,
will be converted into the right to receive .95 of a share of EVI common stock,
$1.00 par value ("EVI Common Stock"). As a result, an aggregate of approximately
shares of EVI Common Stock will be issued or reserved for issuance pursuant
to outstanding employee benefit awards (representing approximately % of the
outstanding shares of EVI Common Stock on a fully diluted basis) pursuant to the
Merger Agreement.
A summary of the basic terms and conditions of the Merger, certain
financial and other information relating to EVI and Weatherford and a copy of
the Merger Agreement are set forth in the enclosed Joint Proxy
Statement/Prospectus. Please review and consider the enclosed materials
carefully. In connection with its approval of the Merger on March 4, 1998, the
Board of Directors received and took into account the opinion of Morgan Stanley
& Co. Incorporated ("Morgan Stanley"), EVI's financial advisor, to the effect
that, as of such date and based upon and subject to certain matters stated in
such opinion, the exchange ratio pursuant to the Merger Agreement was fair to
EVI from a financial point of view. A copy of the opinion of Morgan Stanley
dated March 4, 1998, is included in the accompanying Joint Proxy
Statement/Prospectus as Appendix B and should be read carefully in its entirety.
The Board of Directors has unanimously approved the Merger Agreement and
the related transactions. THE BOARD OF DIRECTORS AND MANAGEMENT BELIEVE THAT THE
PROPOSED MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, EVI AND THE
STOCKHOLDERS OF EVI AND UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR ITS APPROVAL.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED AND VOTED. ACCORDINGLY, WE ASK THAT YOU MARK, DATE,
SIGN AND RETURN YOUR PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. If you have
multiple stockholder accounts and receive more than one set of these materials,
please be sure to vote each proxy and return it in the respective postage-paid
envelope provided.
Thank you for your continued interest and cooperation.
Very truly yours,
/s/ BERNARD J. DUROC-DANNER
BERNARD J. DUROC-DANNER
President and Chief Executive
Officer
5
EVI, INC.
5 POST OAK PARK, SUITE 1760
HOUSTON, TEXAS 77027
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 1998
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of EVI, Inc.,
a Delaware corporation ("EVI"), will be held at a.m., C.D.T., on ,
, 1998, at , Houston, Texas, for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of March 4, 1998 (the "Merger
Agreement"), by and between EVI and Weatherford Enterra, Inc.
("Weatherford"), providing for the merger of Weatherford with and into EVI
(the "Merger") pursuant to which each outstanding share of Weatherford
common stock, $0.10 par value, will be converted into the right to receive
.95 of a share of EVI common stock, $1.00 par value ("EVI Common Stock").
As a result, an aggregate of approximately shares of EVI Common
Stock would be issued or reserved for issuance pursuant to outstanding
employee benefit awards (representing approximately % of the
outstanding shares of EVI Common Stock on a fully diluted basis) pursuant
to the Merger Agreement.
2. To consider and take action upon any other business that may
properly come before the Special Meeting, or any adjournment or
postponement thereof.
THE BOARD OF DIRECTORS HAS CAREFULLY CONSIDERED THE TERMS OF THE MERGER
AGREEMENT AND THE MERGER AND BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE
BEST INTERESTS OF, EVI AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER.
The Board of Directors has fixed the close of business on ,
1998, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Special Meeting or any adjournment or
postponement thereof. Only stockholders of record at the close of business on
the record date are entitled to notice of and to vote at such meeting. A
complete list of such stockholders will be available for examination at the
Special Meeting and at EVI's offices at 5 Post Oak Park, Suite 1760, Houston,
Texas, during ordinary business hours, after , for the examination
by any such stockholder for any purpose germane to the Special Meeting.
By order of the Board of Directors,
/s/ JAMES G. KILEY
James G. Kiley
Corporate Secretary
, 1998
------------------------
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. EVEN IF
YOU PLAN TO BE PRESENT, YOU ARE URGED TO MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE SPECIAL
MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY.
6
[WEATHERFORD LOGO]
WEATHERFORD ENTERRA, INC.
1360 POST OAK BLVD., SUITE 1000
HOUSTON, TEXAS 77056-3021
March , 1998
Dear Stockholder:
You are cordially invited to attend a special meeting of stockholders (the
"Special Meeting") of Weatherford Enterra, Inc. ("Weatherford") to be held at
a.m., C.D.T., on , , 1998, at , Houston,
Texas.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger dated as of March
4, 1998 (the "Merger Agreement"), by and between EVI, Inc. ("EVI") and
Weatherford, pursuant to which Weatherford will be merged with and into EVI (the
"Merger"). The Merger Agreement provides that, upon completion of the Merger,
each outstanding share of Weatherford common stock, $0.10 par value, will be
converted into the right to receive .95 of a share of EVI common stock, $1.00
par value.
A summary of the basic terms and conditions of the Merger, certain
financial and other information relating to EVI and Weatherford and a copy of
the Merger Agreement are set forth in the enclosed Joint Proxy
Statement/Prospectus. Please review and consider the enclosed materials
carefully. In connection with its approval of the Merger on March 4, 1998, the
Board of Directors of Weatherford received and took into account the opinions of
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Simmons
& Company International ("Simmons"), financial advisors retained by Weatherford,
to the effect that, as of that date and based upon and subject to certain
matters stated in each opinion, the common stock exchange ratio of .95 pursuant
to the Merger Agreement was fair to the stockholders of Weatherford from a
financial point of view. Copies of each of the Merrill Lynch opinion and the
Simmons opinion dated March 4, 1998, are included in the accompanying Joint
Proxy Statement/Prospectus as Appendices C and D, respectively, and each should
be read carefully in its entirety.
The Board of Directors of Weatherford has unanimously approved the Merger
Agreement and the related transactions. THE BOARD OF DIRECTORS AND MANAGEMENT OF
WEATHERFORD BELIEVE THAT THE PROPOSED MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, WEATHERFORD AND THE STOCKHOLDERS OF WEATHERFORD AND UNANIMOUSLY
RECOMMEND THAT YOU VOTE FOR ITS APPROVAL.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, IT IS IMPORTANT THAT
YOUR SHARES BE REPRESENTED AND VOTED. ACCORDINGLY, WE ASK THAT YOU MARK, DATE,
SIGN AND RETURN YOUR PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. If you have
multiple stockholder accounts and receive more than one set of these materials,
please be sure to vote each proxy and return it in the respective postage-paid
envelope provided.
Thank you for your continued interest and cooperation.
Very truly yours,
LOGO
Thomas R. Bates, Jr.
President and Chief Executive
Officer
7
WEATHERFORD ENTERRA, INC.
1360 POST OAK BLVD., SUITE 1000
HOUSTON, TEXAS 77056-3021
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 1998
Dear Stockholder:
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
Weatherford Enterra, Inc., a Delaware corporation ("Weatherford"), will be held
at , Houston, Texas, at a.m., C.D.T., on , ,
1998. As described in the accompanying Joint Proxy Statement/Prospectus, the
Special Meeting will be held for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of March 4, 1998 (the "Merger
Agreement"), by and between EVI, Inc. ("EVI") and Weatherford, pursuant to
which, among other things, (a) Weatherford will be merged with and into EVI
(the "Merger"), and (b) each issued and outstanding share of Weatherford
common stock, $0.10 par value, (other than shares held directly or
indirectly by EVI or Weatherford) will be converted into the right to
receive .95 of a share of EVI common stock, $1.00 par value, all as more
fully described in the accompanying Joint Proxy Statement/Prospectus and
the Merger Agreement included as Appendix A thereto.
2. To consider and take action upon such other business that may
properly come before the Special Meeting or any adjournment or postponement
thereof.
THE BOARD OF DIRECTORS OF WEATHERFORD HAS CAREFULLY CONSIDERED THE TERMS OF
THE MERGER AGREEMENT AND THE MERGER AND BELIEVES THAT THE MERGER IS FAIR TO, AND
IN THE BEST INTERESTS OF, WEATHERFORD AND ITS STOCKHOLDERS. THE BOARD OF
DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE MERGER.
The Board of Directors has fixed the close of business on ,
1998, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Special Meeting or any adjournment or
postponement thereof. Only stockholders of record at the close of business on
such record date are entitled to notice of and to vote at such meeting. A
complete list of such stockholders will be available for examination at the
Special Meeting and at Weatherford's offices at 1360 Post Oak Blvd., Suite 1000,
Houston, Texas, during ordinary business hours, after , 1998, for
the examination by any such stockholder for any purpose germane to the Special
Meeting.
By order of the Board of Directors,
H. SUZANNE THOMAS
Secretary
, 1998
IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD. PLEASE PROMPTLY MARK, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU INTEND TO BE
PRESENT AT THE SPECIAL MEETING. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE AT THE SPECIAL MEETING.
YOU SHOULD NOT RETURN CERTIFICATES FOR WEATHERFORD COMMON STOCK WITH THE
ENCLOSED PROXY. YOU SHOULD NOT FORWARD YOUR STOCK CERTIFICATES UNTIL YOU HAVE
RECEIVED A LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT.
8
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 7, 1998
EVI, INC. WEATHERFORD ENTERRA, INC.
JOINT PROXY STATEMENT
SPECIAL MEETINGS OF STOCKHOLDERS TO BE HELD , 1998
---------------------
EVI, INC.
(COMMON STOCK, $1.00 PAR VALUE)
PROSPECTUS
---------------------
This Joint Proxy Statement/Prospectus is being furnished to stockholders of
EVI, Inc., a Delaware corporation ("EVI"), in connection with the solicitation
of proxies by its Board of Directors (the "EVI Board") for use at the Special
Meeting of Stockholders of EVI (the "EVI Special Meeting") scheduled to be held
on , 1998, at a.m., C.D.T., at , Houston, Texas,
and any adjournment or postponement thereof, and to stockholders of Weatherford
Enterra, Inc., a Delaware corporation ("Weatherford"), in connection with the
solicitation of proxies by its Board of Directors (the "Weatherford Board") for
use at the Special Meeting of Stockholders of Weatherford (the "Weatherford
Special Meeting") scheduled to be held on , 1998, at a.m.,
C.D.T., at , Houston, Texas and any adjournment or postponement
thereof.
At the EVI Special Meeting and the Weatherford Special Meeting, the holders
of EVI's common stock, $1.00 par value ("EVI Common Stock"), and the holders of
Weatherford's common stock, $0.10 par value ("Weatherford Common Stock"),
respectively, will be asked to consider and vote upon a proposal to approve and
adopt the Agreement and Plan of Merger dated as of March 4, 1998 (the "Merger
Agreement"), by and between EVI and Weatherford, pursuant to which Weatherford
will merge with and into EVI (the "Merger") and the holders of the issued and
outstanding shares of Weatherford Common Stock will be entitled to receive .95
of a share (the "Exchange Ratio") of EVI Common Stock for each share of
Weatherford Common Stock held by them as of the effective time of the Merger.
See "The Merger" and "Comparative Rights of Stockholders of EVI and
Weatherford". A copy of the Merger Agreement is attached as Appendix A. It is
anticipated that the Merger will be effected as soon as practicable following
the EVI and Weatherford Special Meetings.
This Joint Proxy Statement/Prospectus also constitutes the prospectus of
EVI pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the issuance of up to shares of EVI Common Stock in
connection with the Merger.
Based on the shares of Weatherford Common Stock outstanding as of
, 1998, and the shares of Weatherford Common Stock reserved
for issuance pursuant to outstanding Weatherford employee benefit awards, an
aggregate of shares of EVI Common Stock will be issued to the current
Weatherford stockholders in the Merger and an additional shares of EVI
Common Stock will be reserved for issuance to the holders of outstanding
Weatherford employee benefit awards. As a result, an aggregate of shares
of EVI Common Stock would be issued or reserved for issuance (representing
approximately % of the outstanding shares of EVI Common Stock on a fully
diluted basis) pursuant to the Merger Agreement. Based on the market price of
EVI Common Stock as of , 1998, the market value of the consideration
to be paid to the holders of Weatherford Common Stock in the Merger would be
$ per share of Weatherford Common Stock, for an aggregate total
consideration for all outstanding shares and employee benefit awards of $
million.
This Joint Proxy Statement/Prospectus is first being mailed to stockholders
of each of EVI and Weatherford on or about , 1998.
On , 1998, the closing prices of EVI Common Stock and Weatherford
Common Stock, as reported on the New York Stock Exchange, were $ and
$ , respectively.
---------------------
THE SHARES OF EVI COMMON STOCK TO BE ISSUED IN CONNECTION WITH THE MERGER HAVE
NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS , 1998.
9
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION........................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE..................................... 4
FORWARD-LOOKING STATEMENTS...................... 5
SUMMARY......................................... 6
The Companies................................. 6
The Combined Companies........................ 7
The Special Meetings.......................... 7
The Merger.................................... 8
Opinions of Financial Advisors................ 8
Terms of the Merger........................... 9
Comparative Rights of Stockholders of EVI and
Weatherford................................. 14
Market Prices and Dividend Information........ 15
EVI Summary Historical Financial Data......... 16
Weatherford Summary Historical Financial
Data........................................ 17
Unaudited Summary Combined Pro Forma Financial
Information of EVI and Weatherford.......... 18
Comparative Unaudited Per Share Information... 19
EVI............................................. 20
General....................................... 20
Christiana Acquisition........................ 20
WEATHERFORD..................................... 20
GENERAL INFORMATION ABOUT THE SPECIAL
MEETINGS...................................... 21
Date, Time and Place of Special Meetings...... 21
Record Date and Outstanding Shares............ 21
Purposes of the Special Meetings.............. 21
Vote Required................................. 21
Voting and Revocation of Proxies.............. 22
Solicitation of Proxies....................... 22
Other Matters................................. 22
THE MERGER...................................... 23
General Description of the Merger............. 23
Background.................................... 23
EVI's Reasons for the Merger.................. 26
Recommendation of the EVI Board............... 27
Weatherford's Reasons for the Merger.......... 27
Recommendation of the Weatherford Board....... 29
OPINIONS OF FINANCIAL ADVISORS.................. 29
Morgan Stanley Opinion........................ 29
Merrill Lynch and Simmons Opinions............ 32
TERMS OF THE MERGER............................. 40
Effective Time of the Merger.................. 40
Manner and Basis of Converting Shares......... 40
Conditions to the Merger...................... 41
Representations and Warranties of EVI and
Weatherford................................. 43
Conduct of Business of EVI and Weatherford
Prior to the Merger......................... 43
Board of Directors and Management Following
the Merger.................................. 45
Amendment and Restatement of the Certificate
of Incorporation and By-laws of EVI......... 45
No Solicitation; Payments in the Event of
Certain Takeover Proposals.................. 45
Termination or Amendment of Merger
Agreement................................... 48
Indemnification............................... 48
PAGE
----
Weatherford Options and Stock Plans........... 48
Voting Agreements............................. 49
Certain U.S. Federal Income Tax
Consequences................................ 50
Accounting Treatment.......................... 51
Governmental and Regulatory Approvals......... 52
NYSE Listing.................................. 52
Interests of Certain Persons in the Merger.... 52
Restrictions on Resales by Affiliates......... 56
No Dissenters' Rights......................... 57
COMPARATIVE RIGHTS OF STOCKHOLDERS OF EVI AND
WEATHERFORD................................... 58
Special Vote Required for Certain Business
Combinations................................ 58
Vote Required for Corporate Transactions and
Other Matters............................... 59
Disposition of Assets......................... 59
Action by Written Consent..................... 59
Calling of Special Meetings of Stockholders... 59
Notice of Meetings of Stockholders............ 60
Advance Notice Provisions..................... 60
Removal of Directors.......................... 60
Power to Amend By-laws........................ 60
Director Elections, Qualifications and
Number...................................... 61
DESCRIPTION OF EVI CAPITAL STOCK................ 61
MARKET PRICES AND DIVIDEND INFORMATION.......... 63
EVI SELECTED CONDENSED CONSOLIDATED FINANCIAL
DATA.......................................... 64
WEATHERFORD SELECTED CONDENSED CONSOLIDATED
FINANCIAL DATA................................ 65
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.......................... 66
EVI and Weatherford Combined Unaudited
Adjusted Pro Forma Condensed Consolidated
Balance Sheet............................... 67
EVI and Weatherford Combined Unaudited Pro
Forma Condensed Consolidated Statements of
Income...................................... 68
EVI and Weatherford Combined Unaudited
Adjusted Pro Forma Condensed Consolidated
Statement of Income......................... 69
Notes to Pro Forma Condensed Consolidated
Financial Statements........................ 70
MANAGEMENT...................................... 73
Directors of EVI Following the Merger......... 73
Executive Officers of EVI Following the
Merger...................................... 75
STOCK OWNERSHIP................................. 77
Principal Stockholders and Management of
EVI......................................... 77
Principal Stockholders and Management of
Weatherford................................. 79
INDEPENDENT PUBLIC ACCOUNTANTS.................. 82
LEGAL MATTERS................................... 82
EXPERTS......................................... 82
STOCKHOLDERS' PROPOSALS......................... 83
APPENDIX A -- Agreement and Plan of Merger
APPENDIX B -- Morgan Stanley Opinion
APPENDIX C -- Merrill Lynch Opinion
APPENDIX D -- Simmons Opinion
2
10
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION WITH RESPECT TO THE MATTERS DESCRIBED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS OTHER THAN THOSE CONTAINED HEREIN OR IN THE DOCUMENTS
INCORPORATED BY REFERENCE HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY EVI OR
WEATHERFORD. THIS JOINT PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED BY THIS
JOINT PROXY STATEMENT/PROSPECTUS OR A SOLICITATION OF A PROXY IN ANY
JURISDICTION WHERE, OR TO ANY PERSON WHOM, IT IS UNLAWFUL TO MAKE SUCH AN OFFER
OR SOLICITATION. NEITHER THE DELIVERY HEREOF NOR ANY DISTRIBUTION OF SECURITIES
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF EVI OR WEATHERFORD SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
EVI and Weatherford are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by EVI and Weatherford with the
Commission can be inspected at the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
the Regional Offices of the Commission at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material of EVI and Weatherford
may be obtained from the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains an Internet Website at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Reports, proxy statements and other information filed by EVI or
Weatherford may also be inspected at the offices of the New York Stock Exchange
(the "NYSE"), 20 Broad Street, New York, New York 10005, on which the EVI Common
Stock and Weatherford Common Stock are listed. Upon the consummation of the
Merger, the listing of the Weatherford Common Stock on the NYSE will be
terminated.
EVI has filed with the Commission a registration statement on Form S-4
under the Securities Act with respect to the EVI Common Stock offered hereby
(the "Registration Statement"). This Joint Proxy Statement/Prospectus, which
constitutes a part of the Registration Statement, does not contain all of the
information contained in the Registration Statement, certain portions of which
are omitted as permitted by the rules and regulations of the Commission. For
further information with respect to EVI and the EVI Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto,
which may be inspected at the Commission's offices, without charge, or copies of
which may be obtained from the Commission upon payment of prescribed fees.
Statements contained in this Joint Proxy Statement/Prospectus as to the contents
of any document filed as an exhibit to the Registration Statement are not
necessarily complete, and in each instance, reference is hereby made to the copy
of such document filed as an exhibit to the Registration Statement for a more
complete description of the matter involved, and each such statement being
qualified in its entirety by such reference. All information herein with respect
to EVI and its affiliates has been furnished by EVI, and all information herein
with respect to Weatherford and its affiliates has been furnished by
Weatherford.
3
11
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by EVI with the Commission (File No. 1-13086)
are incorporated by reference herein:
(a) EVI's Annual Report on Form 10-K for the year ended December 31,
1997;
(b) EVI's Current Report on Form 8-K dated May 1, 1997, as amended by
Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A dated
January 14, 1998;
(c) EVI's Current Report on Form 8-K dated November 5, 1997, as
amended by Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A
dated March 26, 1998;
(d) EVI's Current Report on Form 8-K dated December 2, 1997, as
amended by Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A
dated February 13, 1998;
(e) EVI's Current Report on Form 8-K dated January 28, 1998;
(f) EVI's Current Report on Form 8-K dated February 3, 1998;
(g) EVI's Current Report on Form 8-K dated March 2, 1998;
(h) EVI's Current Report on Form 8-K dated March 5, 1998, as amended
by Amendment No. 1 to the Current Report on Form 8-K on Form 8-K/A dated
March 9, 1998; and
(i) The description of EVI Common Stock contained in EVI's
Registration Statement on Form 8-A (filed May 19, 1994) and as amended by
EVI's Registration Statement on Form S-3 (Registration No. 333-12367),
including any amendment or report filed for the purpose of updating such
description.
The following documents filed by Weatherford with the Commission (File No.
1-7867) are incorporated by reference herein:
(a) Weatherford's Annual Report on Form 10-K for the year ended
December 31, 1997; and
(b) Weatherford's Current Report on Form 8-K dated March 4, 1998.
All documents filed by EVI and Weatherford pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Joint Proxy
Statement/Prospectus and prior to the date of the Special Meetings shall be
deemed to be incorporated by reference in this Joint Proxy Statement/Prospectus
and to be a part hereof from the date of filing of such documents. Any statement
contained in this Joint Proxy Statement/Prospectus or in a document incorporated
or deemed to be incorporated by reference in this Joint Proxy
Statement/Prospectus shall be deemed to be modified or superseded for purposes
of this Joint Proxy Statement/Prospectus to the extent that a statement
contained in this Joint Proxy Statement/Prospectus or in any other subsequently
filed document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Joint Proxy Statement/Prospectus.
EVI undertakes to provide without charge to each person to whom a copy of
this Joint Proxy Statement/ Prospectus has been delivered, upon request, a copy
of any or all of the documents incorporated by reference herein, other than the
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into the information that this Joint Proxy Statement/Prospectus
incorporates, and other than those relating to Weatherford, which may be
obtained from Weatherford as described below. Requests for such copies should be
directed to EVI, 5 Post Oak Park, Suite 1760, Houston, Texas 77027, Attention:
Corporate Secretary (Telephone number (713) 297-8400).
Weatherford undertakes to provide without charge to each person to whom a
copy of this Joint Proxy Statement/Prospectus has been delivered, upon request,
a copy of any or all of the documents relating to Weatherford incorporated by
reference herein, other than the exhibits to such documents, unless such
exhibits are specifically incorporated by reference into the information that
this Joint Proxy Statement/Prospectus incorporates. Requests for such copies
should be directed to Weatherford, 1360 Post Oak Blvd., Suite 1000, Houston,
Texas 77056, Attention: Investor Relations (Telephone number (713) 439-9400).
4
12
FORWARD-LOOKING STATEMENTS
This Joint Proxy Statement/Prospectus and other public filings and releases
by EVI and Weatherford contain statements relating to future results of EVI and
Weatherford (including certain projections and business trends) that are
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995. These forward-looking statements may include, but are not
limited to, future sales, earnings, margins, production levels and costs,
expected savings from acquisitions, demand for products and services, product
deliveries, market trends in the oil and gas industry and the oilfield service
sector thereof, effects of the Merger on sales, business, expenses, cash flow
and profits, research and development, environmental and other expenditures,
currency fluctuations and various business trends. Forward-looking statements
may be made by EVI's and Weatherford's management orally or in writing
including, but not limited to, the Management's Discussion and Analysis of
Financial Condition and Results of Operations section and other sections of
EVI's and Weatherford's filings with the Commission under the Exchange Act and
the Securities Act.
Actual results and trends in the future may differ materially depending on
a variety of factors including, but not limited to, changes in the price of oil
and gas, the impact of recent declines in the price of oil on the demand for
EVI's and Weatherford's products and services, changes in the domestic and
international rig count, global trade policies, domestic and international
drilling activities, worldwide political stability and economic growth,
including currency fluctuations, government export and import policies,
technological advances involving EVI's and Weatherford's products and services,
EVI's successful execution of internal operating plans and manufacturing
consolidations and restructurings, changes in the market for EVI's drilling
tools and other products and Weatherford's products and services, performance
issues with key suppliers and subcontractors, the ability of EVI to maintain
pricing levels and market shares, raw material cost changes, collective
bargaining labor disputes, availability of personnel, regulatory uncertainties
and legal proceedings. Future results will also be dependent upon the ability of
EVI to successfully integrate the operations of Weatherford with EVI and EVI's
ability to continue to identify and complete successful acquisitions at
acceptable prices, integrate those acquisitions with EVI's other operations and
penetrate existing and new markets. For additional information regarding risks
and uncertainties relating to EVI and Weatherford, see EVI's and Weatherford's
respective reports filed with the Commission referred to under "Incorporation of
Certain Documents by Reference".
5
13
SUMMARY
The following is a summary of certain information contained or incorporated
by reference in this Joint Proxy Statement/Prospectus. This summary is not
intended to be complete and is qualified in its entirety by reference to the
more detailed information and financial statements contained or incorporated by
reference in this Joint Proxy Statement/Prospectus and the appendices attached
hereto, all of which should be reviewed carefully. As used in this Joint Proxy
Statement/Prospectus, unless the context otherwise requires, the term "EVI"
means EVI, Inc. and its consolidated subsidiaries and the term "Weatherford"
means Weatherford Enterra, Inc. and its consolidated subsidiaries. Certain
capitalized terms used in this summary are defined elsewhere in this Joint Proxy
Statement/Prospectus.
THE COMPANIES
EVI. EVI is an international manufacturer and supplier of engineered
oilfield tools and equipment. EVI's products are used both for the drilling and
production phases of oil and natural gas wells. EVI has grown substantially
through the years through a process of selected acquisitions and internal
development designed to take advantage of the consolidation in the oil and gas
service industry. Acquisitions have focused on the acquisition of name brand
products, the development of complete product lines and savings through
consolidation. Internal development has focused on product development and
geographic deployment. See "EVI".
EVI's principal products consist of drill pipe and other drilling tools,
premium connectors and associated high grade tubulars, marine connectors,
artificial lift systems, packers and completion tools. EVI's growth strategy has
resulted in EVI becoming the largest manufacturer of drill pipe in the world,
the largest manufacturer of engineered connections and premium tubulars in North
America and one of the largest providers of artificial lift and completion
equipment in the world. EVI's product lines are divided into a drilling products
segment consisting of drill pipe, premium tubulars and marine connectors, and a
production equipment segment consisting of completion and artificial lift
equipment.
EVI was incorporated in 1972 as a Massachusetts corporation and was
reincorporated in Delaware in 1980. EVI's corporate office is located at 5 Post
Oak Park, Suite 1760, Houston, Texas 77027-3415, and its telephone number is
(713) 297-8400.
Weatherford. Weatherford is a diversified international energy service and
manufacturing company that provides a variety of services and equipment to the
exploration, production and transmission sectors of the oil and gas industry.
Weatherford operates in virtually every oil and gas exploration and production
region in the world. Weatherford's principal business segments include (i) the
oilfield services segment, which consists of renting specialized oilfield
equipment, providing fishing, milling, whipstock installation and retrieval,
well control assistance and other downhole services and related tools, and
providing tubular running services and related tools, (ii) the oilfield products
segment, which consists of manufacturing, selling and servicing a variety of
products, including cementation products, liner hangers, gas lift equipment and
equipment used to provide oilfield services and (iii) the gas compression
segment, which consists of manufacturing, packaging, renting, selling and
providing parts and services for gas compressor units over a broad horsepower
range. See "Weatherford".
Weatherford has grown significantly through acquisitions, having acquired
more than 20 businesses since 1991. These acquisitions have allowed Weatherford
to expand its product and service lines, improve its worldwide market position
and realize significant consolidation cost savings. Weatherford believes it has
positioned itself as a market leader in its primary businesses while
significantly expanding and diversifying its geographic operations.
Weatherford was incorporated under the laws of the State of Delaware in
1970. Weatherford's corporate office is located at 1360 Post Oak Boulevard,
Suite 1000, Houston, Texas 77056, and its telephone number is (713) 439-9400.
6
14
THE COMBINED COMPANIES
The combined company following the Merger will be the fourth largest
oilfield service and manufacturing company in the world in terms of revenues.
The combined company will also be a leading provider of downhole and tubular
running services and rental tools to the oil and gas industry and will offer a
comprehensive completion system product line. In addition, the combined company
will be a leading provider of four of the five major types of artificial lift
and will be a leading provider of gas compressor units. The combined company
will have over 59 manufacturing facilities located throughout the world and over
449 sales, rental and service facilities located in substantially all of the oil
and gas producing regions of the world. See "The Merger -- Background", "The
Merger -- EVI's Reasons for the Merger", "The Merger -- Weatherford's Reasons
for the Merger", "EVI Selected Condensed Consolidated Financial Data",
"Weatherford Selected Consolidated Financial Data" and "Unaudited Pro Forma
Condensed Consolidated Financial Statements".
THE SPECIAL MEETINGS
Time, Date, Place and Purpose. The EVI Special Meeting will be held at
a.m., C.D.T., on , 1998, at
, Houston, Texas, for the purpose of approving and adopting the Merger
and the Merger Agreement. The Weatherford Special Meeting will be held at
a.m., C.D.T., on , 1998, at
, Houston, Texas, for the purpose of approving and adopting the Merger
and the Merger Agreement. See "General Information about the Special Meetings".
Record Date and Vote Required. The EVI Board and the Weatherford Board have
fixed the close of business on , 1998, as the record date
("Record Date") for the determination of stockholders entitled to notice of, and
to vote at, the respective Special Meetings and any adjournments thereof. Only
holders of record of EVI Common Stock and holders of record of Weatherford
Common Stock at the close of business on the Record Date are entitled to notice
of, and to vote at, the EVI Special Meeting and the Weatherford Special Meeting,
respectively.
Under Delaware law, approval and adoption of the Merger and the Merger
Agreement requires the affirmative vote of the holders of a majority of the
shares of EVI Common Stock and Weatherford Common Stock outstanding on the
Record Date and entitled to vote thereon. See "General Information About the
Special Meetings -- Vote Required".
At the close of business on the Record Date, there were shares of
EVI Common Stock outstanding and entitled to vote at the EVI Special Meeting, of
which the directors and officers of EVI and their affiliates held
shares, representing approximately % of the outstanding shares. Such persons
have indicated to EVI that they intend to vote their shares in favor of the
approval and adoption of the Merger and the Merger Agreement. See "General
Information About the Special Meetings". In addition, as described in "Terms of
the Merger -- Voting Agreements", the holders of an aggregate of 7,496,294
shares of EVI Common Stock, representing approximately 15.7% of the outstanding
shares, have agreed to vote their shares in favor of the Merger at the EVI
Special Meeting. Included in such shares are 3,897,462 shares of EVI Common
Stock currently held by Christiana Companies, Inc. ("Christiana"), which EVI is
proposing to acquire in exchange for, among other consideration, an equal number
of shares of EVI Common Stock. See "EVI -- Christiana Acquisition". If EVI's
acquisition of Christiana occurs prior to the Record Date, the shares held by
Christiana will not be eligible to be voted in favor of the Merger. However,
certain stockholders of Christiana who would receive approximately 2,036,135
shares (approximately 4.3%) of EVI Common Stock in the Christiana acquisition
have indicated that they would vote their shares of EVI Common Stock in favor of
the Merger. See "Terms of the Merger -- Voting Agreements".
At the close of business on the Record Date, there were shares of
Weatherford Common Stock outstanding and entitled to vote at the Weatherford
Special Meeting. At the close of business on the Record Date, the directors and
officers of Weatherford and their affiliates held shares, representing
approximately % of the outstanding shares. Such persons have indicated to
Weatherford that they intend to
7
15
vote their shares in favor of the approval and adoption of the Merger and the
Merger Agreement. See "General Information About the Special Meetings". In
addition, as described in "Terms of the Merger -- Voting Agreements", the
holders of an aggregate of 6,585,968 shares of Weatherford Common Stock,
representing approximately 12.8% of the outstanding shares, have agreed to vote
their shares in favor of the Merger at the Weatherford Special Meeting.
THE MERGER
General Terms and Exchange Ratio. Under the terms of the Merger Agreement,
at the Effective Time (as hereinafter defined), Weatherford will be merged with
and into EVI, with EVI being the surviving corporation, and each outstanding
share of Weatherford Common Stock will be converted into the right to receive
.95 of a share of EVI Common Stock. See "The Merger -- General Description of
the Merger".
Based upon the number of shares of EVI Common Stock and Weatherford Common
Stock outstanding as of the Record Date, approximately shares of EVI
Common Stock will be outstanding immediately following the Effective Time, of
which approximately shares, representing % of the total, will be held
by current holders of EVI Common Stock and approximately shares,
representing % of the total, will be held by the former holders of
Weatherford Common Stock.
Recommendations of the Boards of Directors. THE EVI BOARD BELIEVES THAT THE
TERMS OF THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, EVI AND THE
HOLDERS OF EVI COMMON STOCK AND UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF EVI
COMMON STOCK APPROVE AND ADOPT THE MERGER AND THE MERGER AGREEMENT. See "The
Merger -- Background", "-- EVI's Reasons for the Merger" and "-- Recommendation
of the EVI Board".
THE WEATHERFORD BOARD BELIEVES THAT THE TERMS OF THE MERGER ARE FAIR TO,
AND IN THE BEST INTERESTS OF, WEATHERFORD AND THE HOLDERS OF WEATHERFORD COMMON
STOCK AND UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF WEATHERFORD COMMON STOCK
APPROVE AND ADOPT THE MERGER AND THE MERGER AGREEMENT. See "The
Merger -- Background", "-- Weatherford's Reasons for the Merger" and
"-- Recommendation of the Weatherford Board".
OPINIONS OF FINANCIAL ADVISORS
EVI. Morgan Stanley & Co. Incorporated ("Morgan Stanley"), financial
advisor to EVI, has rendered to the EVI Board a written opinion, dated as of
March 4, 1998, to the effect that, as of such date and based upon and subject to
the assumptions made, matters considered and limitations on the review
undertaken, as stated in such opinion, the Exchange Ratio pursuant to the Merger
Agreement was fair to EVI from a financial point of view. A copy of the opinion
of Morgan Stanley dated March 4, 1998 is attached hereto as Appendix B and
should be read carefully in its entirety with respect to the procedures
followed, assumptions made, matters considered and limitations on the review
undertaken in connection with such opinion. The opinion of Morgan Stanley is
directed to the EVI Board and relates only to the fairness of the Exchange Ratio
from a financial point of view to EVI, does not address any other aspect of the
proposed Merger or any related transaction and does not constitute a
recommendation to any stockholder as to how such stockholder should vote at the
EVI Special Meeting. See "Opinions of Financial Advisors -- Morgan Stanley
Opinion".
Weatherford. Each of Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and Simmons & Company International ("Simmons") acted as a
financial advisor to Weatherford and rendered to the Weatherford Board a written
opinion, dated as of March 4, 1998, to the effect that, as of such date and
based upon and subject to certain matters stated in each such opinion, the
Exchange Ratio was fair from a financial point of view to the holders of
Weatherford Common Stock. Copies of each of those opinions are attached hereto
as Appendices C and D, respectively, and each should be read carefully in its
entirety with respect to the procedures followed, assumptions made, matters
considered and limitations on the review undertaken in connection with such
opinion. The opinions of Merrill Lynch and Simmons are directed to the
8
16
Weatherford Board and relate only to the fairness of the Exchange Ratio from a
financial point of view to the holders of Weatherford Common Stock, do not
address any other aspect of the proposed Merger or any related transaction and
do not constitute a recommendation to any stockholder as to how such stockholder
should vote at the Weatherford Special Meeting. See "Opinions of Financial
Advisors -- Merrill Lynch and Simmons Opinions."
TERMS OF THE MERGER
Effective Time of the Merger. The Merger will become effective at such time
as the Certificate of Merger is duly filed with the Secretary of State of the
State of Delaware, or at such other time as EVI and Weatherford shall agree
should be specified in the Certificate of Merger (the "Effective Time"). At the
Effective Time, Weatherford will merge with and into EVI, with EVI being the
surviving corporation (unless the context otherwise requires, references to EVI
following the Merger shall mean EVI as the surviving corporation). Assuming all
conditions to the Merger contained in the Merger Agreement are satisfied or
waived prior thereto, it is anticipated that the Effective Time will occur as
soon as practicable following the EVI Special Meeting and the Weatherford
Special Meeting. See "Terms of the Merger -- Effective Time of the Merger".
Exchange of Weatherford Stock Certificates. As soon as practicable after
the Effective Time, American Stock Transfer & Trust Company (the "Exchange
Agent") will mail a letter of transmittal and other information to each holder
of record of Weatherford Common Stock immediately prior to the Effective Time
for use in exchanging certificates formerly representing shares of Weatherford
Common Stock for certificates representing shares of EVI Common Stock and cash
in lieu of any fractional shares. SHARE CERTIFICATES SHOULD NOT BE SURRENDERED
FOR EXCHANGE BY STOCKHOLDERS OF WEATHERFORD PRIOR TO THE APPROVAL OF THE MERGER
AND THE RECEIPT OF A LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT. See "Terms
of the Merger -- Manner and Basis of Converting Shares".
Conditions to the Merger. In addition to the approval and adoption of the
Merger and the Merger Agreement by the requisite votes of the stockholders of
each of EVI and Weatherford and the receipt of certain regulatory approvals, the
respective obligations of EVI and Weatherford to effect the Merger are subject
to the satisfaction or waiver, where permissible, of certain other conditions,
including (i) delivery of the tax opinions, (ii) the receipt of accountants'
advice confirming that the transaction qualifies to be accounted for as a
"pooling of interests" under generally accepted accounting principles ("GAAP"),
(iii) the receipt by each party of various legal opinions, certificates and
consents, (iv) the opinions of the financial advisors were not revoked or
modified in a materially adverse manner, (v) as of the date of the Merger
Agreement and as of the date of the closing of the Merger (the "Closing Date"),
the representations and warranties of EVI and Weatherford are true in all
material respects and the agreements and covenants of EVI and Weatherford to be
performed on or before the Closing Date were complied with in all material
respects and (vi) no material adverse change occurred with respect to EVI or
Weatherford since the date of the Merger Agreement. There can be no assurance
that all of the conditions set forth in the Merger Agreement will be satisfied.
See "Terms of the Merger -- Conditions to the Merger".
Conduct of Business Prior to the Merger. Prior to the Effective Time, EVI
and Weatherford have agreed to operate their respective businesses in the usual,
regular and ordinary course in substantially the same manner as previously
conducted and to use all reasonable efforts to preserve intact their current
business organizations. Weatherford also has agreed to certain restrictions on
its activities prior to the Effective Time, including certain restrictions with
respect to (i) declaring or paying dividends or other distributions with respect
to its capital stock, (ii) issuing, delivering, selling, pledging or otherwise
encumbering shares of its capital stock, (iii) acquiring its own capital stock,
(iv) amending its Corrected Restated Certificate of Incorporation or Amended and
Restated By-laws, (v) incurring obligations for borrowed money, (vi) paying or
discharging any liabilities or obligations other than in the ordinary course of
business, (vii) changing any material accounting principle, (viii) selling,
leasing, mortgaging, pledging, granting a lien or otherwise encumbering or
disposing of properties or assets, with certain exceptions, (ix) making
acquisitions for aggregate consideration in excess of $100 million, (x) making
any material election relating to taxes or settling or compromising any material
tax liability and (xi) adopting a plan of complete or partial liquidation. In
9
17
addition, EVI has agreed to certain restrictions on its activities prior to the
Effective Time, including certain restrictions with respect to (i) paying
dividends or other distributions with respect to its capital stock, (ii)
issuing, delivering, selling, pledging or otherwise encumbering shares of its
capital stock other than in connection with employee benefit plans and issuances
of no more than 10% of its outstanding shares in connection with acquisitions,
(iii) making acquisitions for aggregate consideration in excess of $250 million,
(iv) amending its Restated Certificate of Incorporation or By-laws, (v)
incurring obligations for borrowed money, (vi) selling, leasing, mortgaging,
pledging, granting a lien or otherwise encumbering or disposing of properties or
assets, with certain exceptions, (vii) changing any material accounting
principle, (viii) acquiring its own common stock, (ix) incurring obligations for
borrowed money and (x) adopting a plan of complete or partial liquidation. EVI's
proposed acquisition of Christiana will not be subject to the above limitations
and will not be considered in the general baskets relating to limitations on
acquisitions and issuances of shares of EVI Common Stock. See "Terms of the
Merger -- Conduct of Business of EVI and Weatherford Prior to the Merger".
Board of Directors and Management Following the Merger. At the Effective
Time, the number of directors of EVI will be ten, of which six members have been
named by EVI and four have been named by Weatherford. The six members named by
EVI are Bernard J. Duroc-Danner, who shall serve as Chairman, David J. Butters,
Sheldon S. Gordon, Sheldon B. Lubar, Robert B. Millard and Robert A. Rayne. The
four members named by Weatherford are Thomas R. Bates, Jr., Philip Burguieres,
William E. Macaulay and Robert K. Moses, Jr. See "Management -- Directors of EVI
Following the Merger". Additionally, Mr. Duroc-Danner will serve as the Chief
Executive Officer of EVI and Mr. Bates will serve as President and Chief
Operating Officer of EVI following the Effective Time. The other persons who are
expected to serve as executive officers of EVI after the Effective Time are set
forth under "Management -- Executive Officers of EVI Following the Merger".
Amendment and Restatement of the Certificate of Incorporation and By-laws
of EVI. At the Effective Time, the Restated Certificate of Incorporation of EVI
will be amended and restated to, among other things, (i) change the name of EVI
to "EVI Weatherford, Inc.", (ii) increase the authorized number of shares of EVI
Common Stock to 250,000,000 shares, (iii) grant to the EVI Board the power and
authority to amend the By-laws of EVI and (iv) require for any stockholder
amendments to the By-laws of EVI that such amendments be approved by the
affirmative vote of the holders of 80% or more of the combined voting power of
the then outstanding shares of stock of all classes and series of stock of EVI
that are entitled to vote generally in the election of directors. As so amended,
such Amended and Restated Certificate of Incorporation will be the Amended and
Restated Certificate of Incorporation of EVI following the Merger ("EVI's
Certificate of Incorporation"). Additionally, at the Effective Time, the By-laws
of EVI will be amended and restated to establish the powers and duties of
certain officers of EVI. As so amended, such Amended and Restated By-Laws will
be the By-laws of EVI following the Merger ("EVI's By-laws"). A copy of each of
EVI's Certificate of Incorporation and EVI's By-laws following the Merger is
attached as Exhibit A and B, respectively, to the Merger Agreement, which is
attached as Appendix A hereto. See "Terms of the Merger -- Amendment and
Restatement of the Certificate of Incorporation and By-laws of EVI".
No Solicitation. The Merger Agreement provides that Weatherford will not,
and will not permit any of its subsidiaries to, nor will it authorize or permit
any of its or any of its subsidiaries' officers, directors, employees,
investment bankers, attorneys or other advisors, agents or representatives to,
directly or indirectly, (i) solicit, initiate, encourage the submission of, or
enter into any agreement with respect to, any proposal or offer from any person
(other than EVI or any of its affiliates) for a merger, share exchange or other
business combination, acquisition of a material amount of its assets or
acquisition of more than 15% of its outstanding voting stock, or (ii)
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 such transaction.
Notwithstanding the foregoing, prior to the vote of its stockholders for
approval and adoption of the Merger Agreement and the Merger, to the extent the
Weatherford Board determines, in good faith based on the advice of outside
counsel, that such actions are required by its fiduciary obligations,
Weatherford may furnish information to a third party in response to a request
therefor in connection with an unsolicited proposal for such a transaction and
may engage in discussions with such third party for the limited purpose of
determining whether such proposal is a superior proposal. Either party may
subsequently terminate
10
18
the Merger Agreement if the Weatherford Board withdraws or modifies its approval
or recommendation of the Merger Agreement or the Merger due to a superior
proposal to the Merger. See "Terms of the Merger -- No Solicitation; Payments in
the Event of Certain Takeover Proposals".
The Merger Agreement also provides that EVI will not, and will not permit
any of its subsidiaries to, nor will it authorize or permit any of its or any of
its subsidiaries' officers, directors, employees, investment bankers, attorneys
or other advisors, agents or representatives to, directly or indirectly,
solicit, initiate or encourage the submission of any transaction that would be
in lieu of the Merger or that would reasonably be expected to result in an
agreement that would prohibit or otherwise preclude the consummation of the
Merger. See "Terms of the Merger -- No Solicitation; Payments in the Event of
Certain Takeover Proposals".
Payments in the Event of Certain Takeover Proposals. Pursuant to the Merger
Agreement, Weatherford has agreed to pay EVI a fee of $60 million promptly upon
the termination of the Merger Agreement (i) by Weatherford as a result of the
withdrawal or modification by the Weatherford Board of its approval or
recommendation of the Merger Agreement or the Merger due to its receipt of a
superior proposal to the Merger, (ii) by EVI as a result of (a) the withdrawal
or modification by the Weatherford Board of its approval or recommendation of
the Merger Agreement or the Merger or (b) the approval or recommendation, or
proposal to approve or recommend, of the Weatherford Board of any takeover
proposal or (iii) by either EVI or Weatherford if (a) after the date of the
Merger Agreement and before the termination of the Merger Agreement a takeover
proposal is made and publicly announced by any person or group of persons (an
"Acquiring Person"), (b) the holders of shares of Weatherford Common Stock do
not approve the Merger and (c) after the date of the Merger Agreement and at or
prior to 12 months after the date of termination of the Merger Agreement, the
Acquiring Person or any Affiliate of the Acquiring Person effects an Alternative
Transaction (as defined below). An Alternative Transaction is defined to mean
(i) a merger, share exchange or other business combination or other transaction
in which more than 15% of the voting securities of Weatherford or a material
amount of the assets of Weatherford and its subsidiaries, taken as a whole, is
acquired, including an investment in or acquisition of securities of a
subsidiary of Weatherford to the extent so material or (ii) any acquisition from
the stockholders of Weatherford by tender offer, exchange offer or otherwise of
more than 15% of the outstanding shares of Weatherford Common Stock. See "Terms
of the Merger -- No Solicitation; Payments in the Event of Certain Takeover
Proposals".
In the event the EVI Board receives a proposal for a transaction that would
be in lieu of the Merger or that would reasonably be expected to result in an
agreement that would prohibit or otherwise preclude the consummation of the
Merger (a "Preclusive Transaction") or other takeover proposal involving EVI
because of which, in the exercise of its fiduciary obligations, it determines,
in good faith based on advice of its outside counsel, it is necessary to
withdraw its recommendation or modify its approval or recommendation of the
Merger Agreement or the Merger, the Merger Agreement provides that EVI may
terminate the Merger Agreement, provided the stockholders of EVI have not yet
voted upon the Merger and EVI shall have paid $60 million to Weatherford. EVI
has further agreed to pay $60 million to Weatherford if the stockholders of EVI
do not approve the Merger as a result of a hostile takeover of EVI after the
date of the Merger Agreement.
Termination or Amendment of Merger Agreement. In addition to circumstances
as set forth above, the Merger Agreement may be terminated: (i) by mutual
written consent of EVI and Weatherford; (ii) by either party if any court of
competent jurisdiction or governmental authority shall have issued an order
permanently enjoining, restraining or otherwise prohibiting the Merger; (iii) by
either party if the stockholders of either Weatherford or EVI fail to approve
the Merger and the Merger Agreement; (iv) by either party if the Merger is not
effected on or before September 30, 1998; or (v) by either party if there has
been a breach by the other party of any representation or warranty or a failure
by the other party to perform in any material respect any of its covenants,
agreements or obligations set forth in the Merger Agreement. The Merger
Agreement may be amended by an instrument in writing signed on behalf of each
party, provided that after the Merger Agreement has been approved and adopted by
the stockholders of EVI and Weatherford, it may be amended only as may be
permitted under applicable law. See "Terms of the Merger -- Termination or
Amendment of Merger Agreement".
11
19
Indemnification. Pursuant to the Merger Agreement, EVI has agreed that all
rights to indemnification for acts or omissions occurring prior to the Effective
Time existing in favor of the current or former directors or officers of
Weatherford and its subsidiaries (the "Indemnified Parties") as provided in
their respective certificates of incorporation or by-laws and indemnity
agreements shall survive the Merger, and EVI shall continue such indemnification
rights in full force and effect in accordance with their terms and be
financially responsible therefor. EVI has further agreed that if EVI or any of
its successors or assigns (i) consolidates with or merges into any other person
and EVI is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then in each such case, proper provisions
shall be made so that the successors and assigns of EVI, which shall be
financially responsible persons or entities, assume the indemnification
obligations. See "Terms of the Merger -- Indemnification".
EVI has further agreed to use its reasonable best efforts to purchase and
maintain for the benefit of the Indemnified Parties for a period of six years
after the Effective Time directors and officers liability insurance with respect
to acts, omissions and other matters occurring prior to the Effective Time;
provided, however, that EVI may substitute therefor a "runoff" policy of
insurance having a term of six years following the Effective Time with
comparable coverage. Notwithstanding the foregoing, EVI is not required to
expend more than $1 million in premiums for the aggregate six-year period to
obtain such coverage. See "Terms of the Merger -- Indemnification".
Assumption of Weatherford Options. Immediately after the Effective Time,
each Weatherford Option (as hereinafter defined) that remains unexercised in
whole or in part will be replaced by a substitute option to purchase a number of
shares of EVI Common Stock equal to the number of shares of Weatherford Common
Stock subject to such Weatherford Option multiplied by .95 with a per share
option price equal to the per share option price of the Weatherford Option
divided by .95. There are currently outstanding options to purchase an aggregate
of 1,474,114 shares of Weatherford Common Stock (equivalent to 1,400,408 shares
of EVI Common Stock). The Merger will constitute a "change of control" under
Weatherford's stock option plans and all Weatherford Options, except for such
options granted on or after March 4, 1998, will become fully vested and
immediately exercisable as of the Effective Time. See "Terms of the
Merger -- Weatherford Options and Stock Plans".
Voting Agreements. As a condition to EVI's agreement to enter into the
Merger Agreement, First Reserve Corporation and the various funds over which it
exercises control (collectively, the "First Reserve Entities"), William E.
Macaulay and John A. Hill, who collectively own an aggregate 6,585,968 shares
(approximately 12.8%) of Weatherford Common Stock, executed a voting agreement
pursuant to which each agreed to vote all shares of Weatherford Common Stock
held by them in favor of the Merger and the Merger Agreement at the Weatherford
Special Meeting, unless the Weatherford Board is recommending, at the time of
such meeting, that the stockholders of Weatherford vote against such adoption in
view of the pendency of a superior proposal. Mr. Hill is Chairman of the Board
of First Reserve Corporation and is a current director of Weatherford, and Mr.
Macaulay is the President and Chief Executive Officer of First Reserve
Corporation, a current director of Weatherford and will become a director of EVI
following the Merger. See "Terms of the Merger -- Interests of Certain Persons
in the Merger -- Directors of EVI Following the Merger" and
"Management -- Directors of EVI Following the Merger". As a result of such
voting agreement, approval of the Merger will only require the approval of the
holders of approximately an additional 37.2 % of the outstanding shares of
Weatherford Common Stock as of the Record Date. See "Terms of the Merger --
Voting Agreements".
As a condition to Weatherford's agreement to enter into the Merger
Agreement, each of Christiana and Lehman Brothers Holdings Inc. ("Lehman
Holdings"), which owns 3,897,462 and 3,598,832 shares, respectively, or an
aggregate of 7,496,294 shares (approximately 15.7 %), of EVI Common Stock
executed a voting agreement pursuant to which each agreed to vote all shares of
EVI Common Stock held by them in favor of the Merger and the Merger Agreement at
the EVI Special Meeting, unless the EVI Board is recommending, at the time of
such meeting, that the stockholders of EVI vote against such adoption in view of
the pendency of a superior proposal. As a result of such voting agreements,
approval of the Merger will only require the approval of the holders of
approximately an additional 34.3% of the outstanding shares of EVI
12
20
Common Stock as of the Record Date. However, as more fully described in
"EVI -- Christiana Acquisition", EVI has entered into an agreement to acquire
Christiana in consideration for, among other things, the issuance of
approximately 3.9 million shares of EVI Common Stock. If EVI's acquisition of
Christiana occurs prior to the Record Date, the shares held by Christiana will
not be eligible to be voted in favor of the Merger. In such case, certain
stockholders of Christiana who would receive approximately 2,036,135 shares
(approximately 4.3%) of EVI Common Stock in the Christiana acquisition have
indicated that in such case they would vote their shares of EVI Common Stock in
favor of the Merger. See "Terms of the Merger -- Voting Agreements".
Certain U.S. Federal Income Tax Consequences. On or prior to the Effective
Time, each of EVI and Weatherford will have received an opinion of its counsel
to the effect that for U.S. federal income tax purposes (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and (ii) each of Weatherford and
EVI is a party to the reorganization within the meaning of Section 368(b) of the
Code. In addition, on or prior to the Effective Time, counsel for EVI will have
opined that for U.S. federal income tax purposes no gain or loss will be
recognized by EVI or Weatherford as a result of the Merger. Counsel for
Weatherford will have opined that for U.S. federal income tax purposes no gain
or loss will be recognized by the stockholders of Weatherford upon the receipt
by them of shares of EVI Common Stock in exchange for their shares of
Weatherford Common Stock pursuant to the Merger (other than with respect to cash
received in lieu of fractional shares). See "Terms of the Merger -- Certain U.S.
Federal Income Tax Consequences".
Accounting Treatment. EVI and Weatherford believe that, based on
consultations with Arthur Andersen LLP ("Arthur Andersen"), EVI's and
Weatherford's independent public accountants, the Merger qualifies to be
accounted for as a "pooling of interests" under GAAP and the applicable rules
and regulations of the Commission. It is a condition to the closing of the
Merger that Arthur Andersen deliver a letter to each of EVI and Weatherford to
the effect that EVI and Weatherford are each eligible to be a party to a merger
accounted for as a "pooling of interests" and that Arthur Andersen is not aware
of any matters or conditions that prohibit EVI's accounting for the Merger as a
"pooling of interests". See "Terms of the Merger -- Accounting Treatment".
Governmental and Regulatory Approvals. Consummation of the Merger is
conditioned upon the expiration or termination of the waiting period applicable
to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). On March 30, 1998, EVI and Weatherford each filed
notification reports under the HSR Act with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Department
of Justice"). See "Terms of the Merger -- Governmental and Regulatory
Approvals". EVI and Weatherford are aware of no other governmental or regulatory
approvals required for the consummation of the Merger, other than compliance
with applicable federal securities law and securities laws of the various
states.
Interests of Certain Persons. In considering the recommendation of the
Weatherford Board with respect to the Merger, Weatherford's stockholders should
be aware that certain members of the Weatherford Board and certain officers of
Weatherford have interests in respect of the Merger separate from their
interests as holders of Weatherford Common Stock. Such interests include (i)
potential change in control payments of $3,711,000, $1,731,150, $930,000,
$1,299,600, $981,000 and $1,299,600 for Thomas R. Bates, Jr., James R. Burke,
Jon Nicholson, Norman W. Nolen, Randall D. Stilley and H. Suzanne Thomas,
respectively, if the employment of any such person is terminated by EVI without
cause or by any such employee for good reason during the three years following
the Merger (such payments having been calculated assuming termination on
approximately June 30, 1998 and assuming no gross-up payment for taxes), (ii) an
employment agreement between Mr. Bates and Weatherford that will expire on May
31, 2002, unless earlier terminated in accordance therewith and provides for the
payment to Mr. Bates, in the event of early termination by Weatherford without
cause or by Mr. Bates for good reason, of an amount equal to three times his
salary plus car allowance and bonus for the prior year (approximately
$2,586,000), which amount would be in lieu of, at Mr. Bates' option, the payment
described in (i) above, (iii) an employment agreement between Philip Burguieres,
Chairman of the Weatherford Board, and Weatherford that will expire on October
16, 2001, unless earlier terminated by Weatherford or by Mr. Burguieres, at his
option, following the Merger, in which case Mr. Burguieres would
13
21
receive approximately $1,012,500 (such payment having been calculated assuming
termination on approximately June 30, 1998), and (iv) the maintenance by EVI of
directors and officers liability insurance for the benefit of the Weatherford
directors and officers for a period of six years after the Merger at an
aggregate cost not to exceed $1.0 million. In addition, unvested options to
purchase 120,000, 10,667, 5,167, 7,334, 20,000 and 7,334 shares of Weatherford
Common Stock held by Messrs. Bates, Burke, Nicholson, Nolen and Stilley and Ms.
Thomas, respectively, will become vested as a result of the Merger. The value of
these unvested options, based on the difference between the exercise price and
the closing sale price of the Weatherford Common Stock on March 30, 1998, is
$1,455,000, $128,169, $62,201, $87,941, $21,240 and $87,941 for Messrs. Bates,
Burke, Nicholson, Nolen and Stilley and Ms. Thomas, respectively. Also, unvested
options to purchase 55,000, 12,000, 6,000, 8,000, 12,000 and 8,000 shares of
Weatherford Common Stock granted on March 16, 1998 to Messrs. Bates, Burke,
Nicholson, Nolen and Stilley and Ms. Thomas, respectively, will become vested if
the employment of any of such persons is terminated by EVI without cause or by
any of such persons for good reason within three years following the Merger. The
value of these unvested options, based on the difference between the exercise
price and the closing sale price of the Weatherford Common Stock on March 30,
1998, is $228,580, $49,872, $24,936, $33,248, $49,872 and $33,248. Also,
ownership restrictions on 65,041, 3,125, 1,125, 2,625, and 2,625 shares of
Weatherford Common Stock granted to Messrs. Bates, Burke, Nicholson and Nolen
and Ms. Thomas, respectively, pursuant to an employee restricted stock plan will
terminate as a result of the Merger. The value of these shares, based on the
closing sale price per share of Weatherford Common Stock on March 30, 1998, is
$2,788,633, $133,984, $48,234, $112,547 and $112,547. Additionally, ownership
restrictions on 20,000, 5,000, 3,000, 5,000 and 4,000 shares of Weatherford
Common Stock granted to Messrs. Bates, Burke, Nicholson and Stilley and Ms.
Thomas, respectively, pursuant to such plan on March 16, 1998 will terminate if
the employment of any of such persons is terminated by EVI without cause or by
any of such persons for good reason within three years following the Merger. The
value of these shares, based on the closing sale price per share of Weatherford
Common Stock on March 30, 1998, is $857,500, $214,375, $128,625, $214,375 and
$171,500. Finally, ownership restrictions on 1,364 shares of Weatherford Common
Stock granted to each of Thomas J. Edelman, William E. Greehey, John A. Hill,
John W. Johnson, William E. Macaulay, Robert K. Moses, Jr. and Roger A. Widmann,
and 1,290 shares granted to Thomas N. Amonett, pursuant to a director restricted
stock plan will terminate as a result of the Merger. See "Terms of the
Merger -- Interests of Certain Persons in the Merger".
Considering the recommendation of the EVI Board with respect to the Merger,
EVI's stockholders should be aware that the Merger will accelerate the vesting
of unvested options to purchase 280,000, 117,500, 70,400, 45,000 and 24,000
shares of EVI Common Stock held by Bernard J. Duroc-Danner, James G. Kiley, John
C. Coble, Robert R. Stiles and Frances R. Powell, respectively. The value of
such options on March 31, 1998, calculated based on the difference between the
exercise price and the closing sale price of the EVI Common Stock on such date,
was $8,713,125, $3,494,375, $2,093,925, $832,500 and $444,000, respectively. See
"Terms of the Merger -- Interests of Certain Persons in the Merger".
No Dissenters' Rights. Delaware law does not provide holders of Weatherford
Common Stock or EVI Common Stock who object to the Merger and who vote against
or abstain from voting in favor of the Merger and the Merger Agreement with any
appraisal rights or the right to receive cash for shares of stock in lieu of the
consideration to be paid pursuant to the Merger Agreement, and neither
Weatherford nor EVI intends to make available any such rights to its
stockholders. See "Terms of the Merger -- No Dissenters' Rights".
COMPARATIVE RIGHTS OF STOCKHOLDERS OF EVI AND WEATHERFORD
The rights of holders of Weatherford Common Stock are currently governed by
Delaware law, Weatherford's Corrected Restated Certificate of Incorporation
("Weatherford's Certificate of Incorporation") and Weatherford's Amended and
Restated By-laws ("Weatherford's By-laws"). Upon consummation of the Merger,
holders of Weatherford Common Stock will become holders of EVI Common Stock, and
their rights as holders of EVI Common Stock will still be governed by Delaware
law, but will then be governed by EVI's Certificate of Incorporation and EVI's
By-laws, each as amended and restated as of the Effective Time. See "Comparative
Rights of Stockholders of EVI and Weatherford" and "Description of EVI Capital
Stock".
14
22
MARKET PRICES AND DIVIDEND INFORMATION
EVI Common Stock is traded on the NYSE under the symbol "EVI", and
Weatherford Common Stock is traded on the NYSE under the symbol "WII". The
following table sets forth the range of high and low sale prices for EVI Common
Stock and Weatherford Common Stock for the periods indicated, as reported on the
NYSE. The prices for EVI Common Stock have been adjusted to reflect a
two-for-one stock split effected in May 1997.
EVI WEATHERFORD
--------------- ---------------
HIGH LOW HIGH LOW
----- ----- ----- -----
TWELVE MONTHS ENDED DECEMBER 31, 1996
Quarter ended March 31, 1996................. $14 7/16 $11 1/8 $35 7/8 $26
Quarter ended June 30, 1996.................. 17 1/2 12 7/8 37 3/4 28 1/2
Quarter ended September 30, 1996............. 20 1/4 14 32 3/4 23 1/8
Quarter ended December 31, 1996.............. 25 3/4 19 1/2 32 3/8 26 7/8
TWELVE MONTHS ENDED DECEMBER 31, 1997
Quarter ended March 31, 1997................. $31 7/8 $23 7/8 $38 1/8 $28 1/2
Quarter ended June 30, 1997.................. 45 1/2 28 38 3/4 26 1/4
Quarter ended September 30, 1997............. 64 42 1/16 55 11/16 38 1/4
Quarter ended December 31, 1997.............. 73 40 1/4 56 5/16 39 3/16
TWELVE MONTHS ENDING DECEMBER 31, 1998
Quarter ended March 31, 1998................. $53 7/8 $37 1/2 $47 1/2 $29 7/8
Quarter ending June 30, 1998 (through April
, 1998).................................
EVI has not paid any dividends on EVI Common Stock since 1984 and currently
anticipates that, for the foreseeable future, any earnings will be retained for
the development of EVI's business. See "Market Prices and Dividend Information".
On March 3, 1998, the last trading day prior to the announcement by EVI and
Weatherford that they had reached an agreement concerning the Merger, the
closing sale prices of EVI Common Stock and Weatherford Common Stock as reported
by the NYSE were $52 13/16 and $44 per share, respectively. The equivalent per
share price of Weatherford Common Stock on March 3, 1998, calculated by
multiplying the closing sale price of EVI Common Stock on the same date by the
Exchange Ratio, was $50.17.
On , 1998, the closing sale prices of EVI Common Stock and
Weatherford Common Stock as reported by the NYSE were $ and $
per share, respectively.
Following the Merger, the EVI Common Stock will continue to be traded on
the NYSE under the symbol "EVI" and the Weatherford Common Stock will cease to
be traded and there will be no further market for such stock.
15
23
EVI SUMMARY HISTORICAL FINANCIAL DATA
The following table sets forth certain summary historical condensed
consolidated financial data of EVI. This information should be read in
conjunction with EVI Selected Consolidated Financial Data, the Unaudited Pro
Forma Condensed Consolidated Financial Statements and related notes thereto
included herein, and EVI's Management's Discussion and Analysis of Financial
Condition and Results of Operations and Consolidated Financial Statements and
notes thereto contained in its Annual Report on Form 10-K for the year ended
December 31, 1997, incorporated by reference in this Joint Proxy
Statement/Prospectus.
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Revenues.......................... $892,264 $478,020 $271,675 $185,285 $171,638
Cost of sales..................... 639,758 373,509 205,230 139,901 126,541
Selling, general and
administrative expenses........ 110,502 58,224 48,480 41,746 38,339
-------- -------- -------- -------- --------
Operating income.................. 142,004 46,287 17,965 3,638 6,758
Interest expense.................. (23,134) (16,454) (16,287) (13,537) (7,574)
Other, net........................ 9,784 1,713 684 412 1,482
Income tax (provision) benefit.... (44,959) (7,041) 240 3,795 (589)
-------- -------- -------- -------- --------
Income (loss) from continuing
operations..................... $ 83,695 $ 24,505 $ 2,602 $ (5,692) $ 77
======== ======== ======== ======== ========
Earnings (loss) per share from
continuing operations:
Basic.......................... $ 1.81 $ 0.60 $ 0.09 $ (0.23) $ --
Diluted........................ 1.77 0.59 0.09 (0.23) --
Weighted average shares
outstanding:
Basic.......................... 46,243 40,706 29,448 25,258 24,134
Diluted........................ 47,367 41,489 29,727 25,258 24,217
DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA:
Total assets..................... $1,366,066 $852,843 $453,125 $311,497 $251,377
Long-term debt................... 43,198 126,710 124,183 125,108 38,982
5% Convertible Subordinated
Preferred Equivalent
Debentures.................... 402,500 -- -- -- --
Stockholders' equity............. 527,233 454,084 228,066 110,913 107,736
Cash dividends per share......... -- -- -- -- --
16
24
WEATHERFORD SUMMARY HISTORICAL FINANCIAL DATA
The following table sets forth certain summary historical condensed
consolidated financial data of Weatherford. This information should be read in
conjunction with (i) the Weatherford Selected Consolidated Financial Data, (ii)
the Unaudited Pro Forma Condensed Consolidated Financial Statements and related
notes thereto and (iii) Weatherford's Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in its Annual Report on
Form 10-K for the year ended December 31, 1997, incorporated by reference in
this Joint Proxy Statement/Prospectus.
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1997 1996 1995(1) 1994(2) 1993(3)
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Revenues................... $1,083,965 $ 994,468 $ 858,907 $ 676,749 $ 500,491
Acquisition-related costs
and other unusual
charges................. -- -- 88,182 2,500 4,000
Operating income........... 193,082 125,756 182 65,704 49,671
Net income (loss).......... 112,900 70,073 (10,558) 41,977 35,175
Earnings (loss) per share:
Basic...................... $ 2.15 $ 1.35 $ (0.21) $ 0.94 $ 0.89
Diluted.................... 2.14 1.35 (0.21) 0.94 0.88
Weighted average shares
outstanding:
Basic...................... 52,430 51,722 50,681 44,646 38,415
Diluted.................... 52,837 52,097 50,681 44,845 38,607
DECEMBER 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA:
Total assets................ $1,377,995 $1,397,723 $1,258,860 $1,153,970 $635,602
Long-term debt.............. 209,124 291,266 292,290 178,746 17,598
Stockholders' equity........ 934,126 841,608 730,843 734,634 474,472
Cash dividends per share.... -- -- -- -- --
- ---------------
(1) Includes acquisition-related costs and other unusual charges of $88.2
million, or $1.17 per common share.
(2) Includes acquisition-related costs of $2.5 million, or $0.06 per common
share.
(3) Includes acquisition-related costs of $4.0 million, or $0.10 per common
share.
17
25
UNAUDITED SUMMARY COMBINED PRO FORMA FINANCIAL INFORMATION
OF EVI AND WEATHERFORD
The following unaudited pro forma financial information of EVI and
Weatherford has been derived from the EVI and Weatherford Financial Statements,
Selected Financial Data and related notes included elsewhere or incorporated by
reference in this Joint Proxy Statement/Prospectus and gives effect to the
Merger under the pooling-of-interests method. The pro forma information is
presented for illustrative purposes only and is not necessarily indicative of
the operating results or financial position that would have occurred if the
Merger had been consummated at such time, nor is it indicative of future
operating results or financial position.
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1997 1996 1995(1) 1994(2) 1993(3)
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Revenues........................... $1,969,089 $1,467,270 $1,125,803 $ 858,993 $ 671,470
Cost of sales...................... 1,368,388 1,090,814 831,231 630,850 482,878
Selling, general and administrative
expenses........................ 264,553 209,433 195,747 155,860 127,966
Acquisition-related costs and other
unusual charges................. -- -- 88,182 2,500 4,000
---------- ---------- ---------- ---------- ----------
Operating income................... 336,148 167,023 10,643 69,783 56,626
Interest expense................... (43,273) (39,368) (33,504) (22,384) (11,601)
Other, net......................... 12,086 5,019 9,886 1,784 4,947
Income tax (provision) benefit..... (108,188) (40,513) 4,707 (13,137) (14,741)
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing
operations...................... $ 196,773 $ 92,161 $ (8,268) $ 36,046 $ 35,231
========== ========== ========== ========== ==========
Earnings per share from continuing
operations:
Basic........................... $ 2.05 $ 1.03 $ (0.11) $ 0.53 $ 0.58
Diluted......................... 2.02 1.01 (0.11) 0.53 0.58
Weighted average shares
outstanding:
Basic........................... 96,052 89,842 77,595 67,672 60,628
Diluted......................... 97,562 90,981 77,595 68,032 60,894
DECEMBER 31,
------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA:
Total assets........................ $2,744,061 $2,250,566 $1,711,985 $1,465,467 $886,979
Long-term debt...................... 252,322 417,976 416,473 303,854 56,580
5% Convertible Subordinated
Preferred Equivalent
Debentures....................... 402,500 -- -- -- --
Stockholders' equity................ 1,461,359 1,295,692 958,909 845,547 582,208
Cash dividends per share............ -- -- -- -- --
- ---------------
(1) Includes acquisition-related costs and other unusual charges of $88.2
million, or $1.14 per share.
(2) Includes acquisition-related costs of $2.5 million, or $0.04 per share.
(3) Includes acquisition-related costs of $4.0 million, or $0.07 per share.
18
26
COMPARATIVE UNAUDITED PER SHARE INFORMATION
The following table sets forth certain historical and pro forma earnings
per share and book value per share for EVI and Weatherford. The table also
reflects the equivalent per share earnings and book value with respect to one
share of Weatherford Common Stock on a pro forma basis after giving effect to
the Merger on a pooling-of-interests basis. The information presented in the
table should be read in conjunction with the Unaudited Pro Forma Condensed
Consolidated Financial Statements and the separate historical consolidated
financial statements of EVI and Weatherford and the related notes included or
incorporated by reference in this Joint Proxy Statement/Prospectus.
YEAR ENDED DECEMBER 31,
--------------------------
1997 1996 1995
------ ------ ------
BASIC EARNINGS PER SHARE:
EVI Historical Earnings Per Share from Continuing
Operations......................................... $ 1.81 $ 0.60 $ 0.09
Weatherford Historical Earnings (Loss) Per Share...... 2.15 1.35 (0.21)
EVI and Weatherford Pro Forma Earnings (Loss) Per
Share from Continuing Operations(1)................ 2.05 1.03 (0.11)
Weatherford Equivalent Combined Pro Forma Earnings
(Loss) Per Share from Continuing Operations(2)..... 1.95 0.98 (0.10)
DILUTED EARNINGS PER SHARE:
EVI Historical Earnings Per Share from Continuing
Operations......................................... $ 1.77 $ 0.59 $ 0.09
Weatherford Historical Earnings (Loss) Per Share...... 2.14 1.35 (0.21)
EVI and Weatherford Combined Pro Forma Earnings (Loss)
Per Share from Continuing Operations(2)............ 2.02 1.01 (0.11)
Weatherford Equivalent Combined Pro Forma Earnings
(Loss) Per Share from Continuing Operations(2)..... 1.92 0.96 (0.10)
DECEMBER 31,
1997
------------
BOOK VALUE PER SHARE:
EVI Historical Book Value Per Share................... $11.19
Weatherford Historical Book Value Per Share........... 17.83
EVI and Weatherford Combined Pro Forma Book Value Per
Share(1)........................................... 15.09
Weatherford Equivalent Combined Pro Forma Book Value
Per Share(2)....................................... 14.34
- ---------------
(1) Gives pro forma effect to the Merger based on the assumption that Merger is
accounted for as a pooling of interests.
(2) Represents the pro forma earnings per share and book value per share of .95
of one share of EVI Common Stock issuable in the Merger.
19
27
EVI
GENERAL
EVI is an international manufacturer and supplier of engineered oilfield
tools and equipment. EVI's products are used both for the drilling and
production phases of oil and natural gas wells. EVI has achieved significant
growth in recent years through a consistent strategy of synergistic acquisitions
and internal development. EVI's acquisitions have focused on consolidation and
vertical integration, development of complete product lines and technology.
EVI's internal growth has focused on technology, product development,
manufacturing efficiencies and productivity enhancements.
EVI's principal products consist of drill pipe and other drilling tools,
premium connectors and associated high grade tubulars, marine connectors,
artificial lift systems, packers and completion tools. EVI's growth strategy has
resulted in EVI becoming the largest manufacturer of drill pipe in the world,
the largest manufacturer of engineered connections and premium tubulars in North
America and one of the largest providers of artificial lift and completion
equipment in the world. EVI's product lines are divided into the drilling
products segment consisting of drill pipe, premium tubulars and marine
connectors, and the production equipment segment consisting of artificial lift
and completion equipment.
EVI was incorporated in 1972 as a Massachusetts corporation and was
reincorporated in Delaware in 1980. EVI's corporate office is located at 5 Post
Oak Park, Suite 1760, Houston, Texas 77027-3415, and its telephone number is
(713) 297-8400.
CHRISTIANA ACQUISITION
In December 1997, EVI entered into a merger agreement (the "Christiana
Merger Agreement") with Christiana and C2, Inc., a Wisconsin corporation,
pursuant to which approximately 3.9 million shares of Common Stock will be
issued to the stockholders of Christiana in a merger of a subsidiary of EVI with
and into Christiana ("Christiana Acquisition"). Prior to the Christiana
Acquisition, Christiana is required to sell two-thirds of its interest in Total
Logistic Control ("Logistic"), a wholly owned subsidiary of Christiana, to C2,
Inc. for approximately $10.7 million. Following the Logistic sale, the remaining
assets of Christiana will consist of (i) approximately 3.9 million shares of
Common Stock, (ii) a one-third interest in Logistic and (iii) cash and other
assets with a book value of approximately $10.0 million. It is anticipated that
Christiana will have no material debt as of the consummation of the Christiana
Acquisition, but will have various tax liabilities which will be paid with the
cash remaining in Christiana after the Christiana Acquisition.
The Christiana Acquisition is subject to various conditions, including the
approval by the stockholders of EVI and Christiana. Although there can be no
assurance that the Christiana Acquisition will close, EVI currently anticipates
that the acquisition will be consummated shortly after the approval of the
Christiana Acquisition by the shareholders of EVI and Christiana.
WEATHERFORD
Weatherford is a diversified international energy service and manufacturing
company that provides a variety of services and equipment to the exploration,
production and transmission sectors of the oil and gas industry. Weatherford
operates in virtually every oil and gas exploration and production region in the
world. Weatherford's principal business segments include (i) the oilfield
services segment, which consists of renting specialized oilfield equipment,
providing fishing, milling, whipstock installation and retrieval, well control
assistance and other downhole services and related tools, and providing tubular
running services and related tools; (ii) the oilfield products segment, which
consists of manufacturing, selling and servicing a variety of products,
including cementation products, liner hangers, gas lift equipment and equipment
used to provide oilfield services; and (iii) the gas compression segment, which
consists of manufacturing, packaging, renting, selling and providing parts and
services for gas compressor units over a broad horsepower range.
20
28
Weatherford has grown significantly through acquisitions, having acquired
more than 20 businesses since 1991. These acquisitions have allowed Weatherford
to expand its product and service lines, improve its worldwide market position
and realize significant consolidation cost savings. Weatherford management
believes it has positioned Weatherford as a market leader in its primary
businesses while significantly expanding and diversifying Weatherford's
geographic operations.
Weatherford was incorporated under the laws of the State of Delaware in
1970. Weatherford's corporate office is located at 1360 Post Oak Boulevard,
Suite 1000, Houston, Texas 77056, and its telephone number is (713) 439-9400.
GENERAL INFORMATION ABOUT THE SPECIAL MEETINGS
DATE, TIME AND PLACE OF SPECIAL MEETINGS
The EVI Special Meeting will be held at a.m., C.D.T., on
, 1998, at , Houston, Texas. The Weatherford Special Meeting will
be held at a.m., C.D.T., on , 1998, at , Houston,
Texas.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of EVI Common Stock and holders of record of
Weatherford Common Stock at the close of business on , 1998 (the
"Record Date"), are entitled to notice of, and to vote at, the EVI Special
Meeting and the Weatherford Special Meeting, respectively.
At the close of business on the Record Date, there were holders of record
of EVI Common Stock with shares issued and outstanding and holders of
record of Weatherford Common Stock with shares issued and outstanding. Each
share of EVI Common Stock and Weatherford Common Stock entitles the holder
thereof to one vote on each matter submitted for stockholder approval at the
respective stockholders' meetings.
PURPOSES OF THE SPECIAL MEETINGS
The purposes of the EVI Special Meeting and the Weatherford Special Meeting
are to consider and vote upon (i) a proposal to approve and adopt the Merger and
the Merger Agreement and (ii) such other matters as may properly be brought
before the Special Meeting.
VOTE REQUIRED
EVI. EVI's By-laws provide that the presence at the EVI Special Meeting, in
person or by proxy, of the holders of a majority of the outstanding shares of
EVI Common Stock entitled to vote at the meeting will constitute a quorum for
the transaction of business. Under Delaware law, approval and adoption of the
Merger and the Merger Agreement require the affirmative vote of the holders of a
majority of the shares of EVI Common Stock outstanding on the Record Date, or
shares. At the close of business on the Record Date, the directors and
officers of EVI and their affiliates held shares of EVI Common Stock,
representing approximately % of the outstanding shares. Such persons have
indicated to EVI that they intend to vote their shares in favor of the approval
and adoption of the Merger and the Merger Agreement. In addition, as described
in "Terms of the Merger -- Voting Agreements", the holders of an aggregate of
7,496,294 shares of EVI Common Stock, representing approximately 15.7% of the
outstanding shares, have agreed, subject to certain conditions, to vote their
shares in favor of the Merger. Included in such shares are 3,897,462 shares of
EVI Common Stock currently held by Christiana, which EVI is proposing to acquire
in exchange for, among other consideration, an equal number of shares of EVI
Common Stock. See "EVI -- Christiana Acquisition". If EVI's acquisition of
Christiana occurs prior to the Record Date, the shares held by Christiana will
not be eligible to be voted in favor of the Merger. However, certain
stockholders of Christiana who would receive approximately 2,036,135 shares
(4.3%) of EVI Common Stock in the Christiana acquisition have indicated
21
29
that in such case they would vote their shares of EVI Common Stock in favor of
the Merger. See "Terms of the Merger -- Voting Agreements".
Weatherford. Weatherford's By-laws provide that the presence at the
Weatherford Special Meeting, in person or by proxy, of the holders of a majority
of the Weatherford Common Stock issued and outstanding and entitled to vote at
the meeting will constitute a quorum for the transaction of business. Under
Delaware law, approval and adoption of the Merger and the Merger Agreement
require the affirmative vote of the holders of a majority of the shares of
Weatherford Common Stock outstanding on the Record Date, or shares. At the
close of business on the Record Date, the directors and officers of Weatherford
and their affiliates held shares of Weatherford Common Stock, representing
approximately % of the outstanding shares. Such persons have indicated to
Weatherford that they intend to vote their shares in favor of the approval and
adoption of the Merger and the Merger Agreement. In addition, as described in
"Terms of the Merger -- Voting Agreements", the holders of an aggregate of
6,585,968 shares of Weatherford Common Stock, representing approximately 12.8%
of the outstanding shares, have agreed, subject to certain conditions, to vote
their shares in favor of the Merger at the Weatherford Special Meeting.
VOTING AND REVOCATION OF PROXIES
All properly executed proxies that are not revoked will be voted at the EVI
Special Meeting and the Weatherford Special Meeting, as applicable, in
accordance with the instructions contained therein. If a holder of EVI Common
Stock or a holder of Weatherford Common Stock executes and returns a proxy and
does not specify otherwise, the shares represented by such proxy will be voted
"FOR" approval and adoption of the Merger and the Merger Agreement in accordance
with the recommendation of the EVI Board and the Weatherford Board,
respectively. Checking the abstention box on the proxy card or failing to return
the proxy card has the same effect as voting against the Merger and the Merger
Agreement. A stockholder of EVI or a stockholder of Weatherford who has executed
and returned a proxy may revoke it at any time before it is voted at the
respective Special Meeting by executing and returning a proxy bearing a later
date, by filing written notice of such revocation with the Secretary of EVI or
Weatherford, as appropriate, stating that the proxy is revoked, or by attending
the respective Special Meetings and voting in person.
Under applicable stock exchange rules, brokers will not be permitted to
submit proxies authorizing a vote on the Merger and the Merger Agreement in the
absence of specific instructions from beneficial owners. Broker non-votes and
abstentions will have the effect of votes against the Merger and the Merger
Agreement. Under Delaware law, both abstentions and broker non-votes contained
on a returned proxy card will be considered present for purposes of determining
the existence of a quorum at the EVI Special Meeting or the Weatherford Special
Meeting, as appropriate.
SOLICITATION OF PROXIES
In addition to solicitation by mail, the directors, officers and employees
of each of EVI and Weatherford may solicit proxies from their respective
stockholders by personal interview, telephone, facsimile or otherwise. EVI and
Weatherford will each bear the costs of the solicitation of proxies from their
respective stockholders. Arrangements also will be made with brokerage firms and
other custodians, nominees and fiduciaries who hold the voting securities of
record for the forwarding of solicitation materials to the beneficial owners
thereof. EVI and Weatherford will reimburse such brokers, custodians, nominees
and fiduciaries for the reasonable out-of-pocket expenses incurred by them in
connection therewith. EVI and Weatherford have each engaged the services of
, a proxy solicitation firm, to distribute proxy solicitation
materials to brokers, banks and other nominees and to assist in the solicitation
of proxies from their respective stockholders for an aggregate anticipated fee
of $ plus mailing expenses.
OTHER MATTERS
As of the date of this Joint Proxy Statement/Prospectus, the EVI Board and
the Weatherford Board do not know of any business to be presented at their
respective Special Meetings other than as set forth in the notices accompanying
this Joint Proxy Statement/Prospectus. If any other matters should properly come
22
30
before the respective Special Meetings, it is intended that the shares
represented by proxies will be voted with respect to such matters in accordance
with the judgment of the persons voting such proxies. Proxies voted "against"
the approval and adoption of the Merger and Merger Agreement will not be used to
vote for any adjournment pursuant to this authority.
THE MERGER
GENERAL DESCRIPTION OF THE MERGER
The Merger Agreement provides that, at the Effective Time, Weatherford will
merge with and into EVI, with EVI becoming the surviving corporation. At the
Effective Time, EVI will change its name to "EVI Weatherford, Inc." Pursuant to
the Merger, each outstanding share of Weatherford Common Stock will be converted
into the right to receive .95 of a share of EVI Common Stock. See "Terms of the
Merger -- Manner and Basis of Converting Shares".
As of the Record Date, there were shares of EVI Common Stock issued
and outstanding and shares of Weatherford Common Stock issued and
outstanding. Based upon the number of shares of EVI Common Stock and Weatherford
Common Stock outstanding as of the Record Date, approximately shares of
EVI Common Stock will be outstanding immediately following the Effective Time,
of which approximately shares, representing % of the total, will be
held by current holders of EVI Common Stock and approximately shares,
representing % of the total, will be held by the former holders of
Weatherford Common Stock.
BACKGROUND
EVI has grown substantially through the years through a process of selected
acquisitions and internal development designed to take advantage of the
consolidation in the oil and gas service industry. Acquisitions have focused on
the acquisition of name brand products, the development of complete product
lines and savings through consolidation. Internal development has focused on
product development and geographic deployment. These efforts have resulted in
EVI becoming the largest manufacturer of drill pipe in the world, the largest
manufacturer of engineered connections and premium tubulars in North America and
one of the largest manufacturers of artificial lift and completion equipment in
the world.
In recent periods, EVI has focused its acquisition and development
activities on the completion and production side of the industry as a result of
its belief that this segment of the life cycle of an oil and gas well should
experience substantial growth in the future as the world's oil producing fields
mature and require artificial lift and maintenance. EVI further believes that
technological advances relating to production improvements will need to occur in
this segment of the industry to meet client objectives for cost savings and that
those companies with the strongest market presence should be in a position to
develop and achieve the greatest market benefits from the improvements. EVI has
also focused its acquisition efforts on completing its product line and
expanding its international presence so as to better position its products as
international demand for completion and production products increases.
Weatherford has similarly grown in recent years through acquisitions and
internal development. Weatherford's growth strategy has generally focused on
acquiring and developing name brand products and services and taking advantage
of Weatherford's worldwide infrastructure and service expertise at the wellsite.
Weatherford is currently the world's largest provider of rental tools and
tubular running services for the oil and gas industry and one of the leading
providers of downhole services, with over 200 locations throughout the world.
Weatherford is also a leading provider of cementation products, liner hangers,
gas lift products and gas compression units and it manufactures a range of other
products utilized in the drilling, completion and production phases of the
industry.
In the fall of 1996, in part due to the resignation of Philip Burguieres as
President and Chief Executive Officer of Weatherford, Weatherford commenced a
review of alternatives to enhance stockholder value, including among other
things, the continued focus on improving the profitability of its core rental,
service,
23
31
manufacturing and compression businesses and the divestiture of certain non-core
businesses. In connection with such review, Weatherford engaged Merrill Lynch
and Simmons as its financial advisors. In November 1996, Weatherford received an
unsolicited offer from a third party, and in December 1996, the Board decided to
pursue possible business combinations with third parties. This process resulted
in discussions and data exchange between Weatherford and various companies,
including EVI, and two proposals involving a possible combination (one of which
was subsequently withdrawn) being presented to the Weatherford Board by third
parties. EVI elected not to make a proposal to Weatherford at that time because
of differentials in the market prices of EVI Common Stock and Weatherford Common
Stock and EVI's desire to focus at that time on building its production
equipment businesses. After a review of the third party proposal presented to
it, the Weatherford Board determined that it was in the best interests of
Weatherford and its stockholders to continue as an independent company and to
continue its plan to dispose of certain non-core businesses. The Weatherford
Board then focused its efforts on a search for a new president and chief
executive officer of Weatherford to fill the vacancy created by Mr. Burguieres'
resignation from these positions. In May 1997, the Weatherford Board elected
Thomas R. Bates, Jr. as President and Chief Executive Officer and as a director
of the Company, effective June 1, 1997.
From July 1997 to January 1998, Weatherford management engaged in a
comprehensive strategic planning process involving its key executives. Among the
objectives identified by this process as key to obtaining the strategic and
financial goals established were the following: (i) leveraging Weatherford's
existing distribution and service system with additional product offerings; (ii)
reducing Weatherford's dependence on drilling-related products and services by
expanding its product and service offerings in the completion and production
phases of the industry; (iii) expanding Weatherford's technology and market
leadership in its core business lines, including well completion products and
services; (iv) increasing revenues by bundling complementary products and
services and (v) expanding significantly through acquisitions.
On February 12, 1998, at the request of Mr. Duroc-Danner, Messrs.
Duroc-Danner and Bates met to discuss a proposal by EVI to combine EVI and
Weatherford. At this meeting, Mr. Duroc-Danner advised that EVI was interested
in pursuing a merger of the two companies at an exchange ratio of .95 of a share
of EVI Common Stock for each share of Weatherford Common Stock. Mr. Duroc-Danner
also advised that EVI would be willing to provide Weatherford with appropriate
representation on the Board of Directors of the combined company and that he
envisioned that the management of the combined company would include Mr.
Duroc-Danner as Chairman and Chief Executive Officer and Mr. Bates as President
and Chief Operating Officer.
At the February 12, 1998 meeting, Messrs. Duroc-Danner and Bates also
discussed the potential benefits of a combination of the two companies and their
mutual desire to focus on the growth of their businesses, particularly in the
well completion and production phases of the industry. Mr. Duroc-Danner noted
EVI's recent acquisitions of various companies engaged in the production phase
of the industry, most notably BMW Monarch (Lloydminster) Ltd. and BMW Pump, Inc.
(collectively, "BMW"), Trico Industries, Inc. ("Trico"), Houston Well Screen
Company and Ampscot Equipment Ltd., and the benefits that could result though a
combination of EVI's extensive completion and production product lines with
Weatherford's extensive worldwide distribution system and market presence.
On February 12, 1998, Mr. Bates advised each member of the Executive
Committee of the Weatherford Board (the "Weatherford Executive Committee")
(Robert K. Moses, Jr., William E. Macaulay, Philip Burguieres, John A. Hill and
John W. Johnson) by telephone of Mr. Duroc-Danner's proposal. The Executive
Committee appointed Messrs. Bates, Burguieres, Macaulay and Moses as a
subcommittee (the "Subcommittee") to review the proposal and report back to the
Weatherford Executive Committee.
On February 13, 1998, Mr. Duroc-Danner contacted the members of the EVI
Board to advise them of the possible transaction with Weatherford.
From February 13, 1998, through March 4, 1998, representatives of EVI and
Weatherford and their respective legal, financial and accounting advisors
participated in various meetings in which the terms of the Merger Agreement were
negotiated and legal and business information concerning the companies was
24
32
exchanged. During this period, EVI and Weatherford met with representatives of
their respective financial advisors with respect to the terms of the Merger and
its impact on their respective companies.
On February 18, 1998, Mr. Duroc-Danner and James G. Kiley, Vice President
and Chief Financial Officer of EVI, met with Robert B. Millard, David J. Butters
and Eliot Fried, each of whom is a director of EVI and an employee of Lehman
Brothers, Inc. ("Lehman Brothers"), to discuss the potential transaction and its
impact on EVI.
On February 18, 1998, the Subcommittee met to review the proposed Merger
Agreement and discuss the proposed transaction.
On February 19, 1998, the Subcommittee recommended to the Weatherford
Executive Committee that EVI's proposal should be evaluated fully. On February
20, 1998, Mr. Bates notified by telephone the remainder of Weatherford's
directors (Thomas N. Amonett, Thomas J. Edelman, William E. Greehey and Roger A.
Widmann) of EVI's proposal and obtained authority to proceed with the evaluation
process and to inform management, Weatherford's financial advisors, lawyers and
accounting advisors.
On February 26, 1998, the EVI Board met to review, among other things, the
potential combination with Weatherford and the terms thereof. At this meeting, a
representative of Fulbright & Jaworski L.L.P. ("Fulbright & Jaworski"), EVI's
outside counsel, reviewed with the EVI Board the terms of the proposed Merger
Agreement and issues relating to the proposed Merger. Messrs. Duroc-Danner and
Kiley also discussed with the EVI Board the potential financial impact of the
proposed Merger on EVI and its stockholders.
On March 2, 1998, all of Weatherford's directors and certain key employees
met to review the proposed transaction. At this meeting, Mr. Bates reviewed the
strategic rationale for the combination with EVI and the potential benefits to
Weatherford and its stockholders. Representatives of Merrill Lynch and Simmons
gave a preliminary review of synergies of the combined company, the pro forma
results of operations assuming the Merger was consummated and the potential
impact of the proposed Merger on Weatherford and its stockholders.
Representatives of Baker & Botts, L.L.P. ("Baker & Botts") summarized certain
terms of the Merger Agreement and the fiduciary duties of the Weatherford Board
in connection therewith, while a representative of Arthur Andersen reviewed,
among other things, various issues relating to the accounting treatment of the
proposed transaction. The Weatherford Board voted to go forward with the
negotiations.
On March 4, 1998, the EVI Board met to review the final terms of the
proposed Merger. At this meeting, representatives of Fulbright & Jaworski
discussed with the EVI Board the final terms of the Merger Agreement.
Representatives of Morgan Stanley also provided to the EVI Board a review of the
proposed Merger from a financial point of view and provided an oral opinion
(which was confirmed in writing on March 4, 1998) to the EVI Board that the
Exchange Ratio pursuant to the Merger Agreement was fair, from a financial point
of view, to EVI. Messrs. Duroc-Danner and Kiley also discussed with the EVI
Board the business impact of the proposed Merger on EVI and the potential
benefits thereof to EVI. After discussion, the directors participating at the
meeting unanimously approved the Merger Agreement and approved a resolution
recommending that the stockholders of EVI approve the Merger and the Merger
Agreement.
On March 4, 1998, the Weatherford Board met to review the final terms of
the proposed Merger. At this meeting, representatives of Baker & Botts discussed
with the Weatherford Board the final terms of the Merger Agreement.
Representatives of Merrill Lynch and Simmons also provided to the Weatherford
Board a review of the proposed Merger from a financial point of view and each
provided an oral opinion (each of which was confirmed in writing on March 4,
1998) that the exchange ratio of .95 of a share of EVI Common Stock for each
share of Weatherford Common Stock was fair, from a financial point of view, to
the stockholders of Weatherford. The expected business synergies, consolidation
benefits and various other qualitative aspects of the proposed transaction were
also discussed. After discussion, and after receiving notice that the EVI Board
had unanimously approved the Merger and the Merger Agreement, the Weatherford
Board unanimously approved the Merger and the Merger Agreement and approved a
resolution recommending that the stockholders of Weatherford approve the Merger
and the Merger Agreement.
On March 4, 1998, the Merger Agreement was executed.
25
33
EVI'S REASONS FOR THE MERGER
The Merger is being proposed by the EVI Board to further EVI's strategy of
taking advantage of opportunities in the oilfield service industry, more
particularly the well construction and production life cycle segments. EVI
believes that the combination of EVI's broad range of completion and artificial
lift products with Weatherford's worldwide oilfield services infrastructure and
reputation should provide the combined company with a firm foundation for
growth. The Merger also is being pursued by EVI to (i) provide EVI with a
greater and more diversified line of products and services to serve its
customers' needs, (ii) expand EVI's international presence and (iii) provide EVI
with benefits through product leveraging and consolidation savings.
The EVI Board considered various strategic benefits that EVI expects to
realize from the Merger in approving the Merger Agreement. Among the strategic
benefits currently expected to be realized by EVI are as follows:
- The combined company following the Merger will be the fourth largest
oilfield service and manufacturing company in the world in terms of
revenues. The combined company will also be a leading provider of
downhole and tubular running services and rental tools to the oil and gas
industry and will offer a comprehensive completion system product line.
In addition, the combined company will be a leading provider of four of
the five major types of artificial lift, will be a leading provider of
gas compressor units and will have over 59 manufacturing facilities
located throughout the world and over 449 sales, rental and service
facilities located in substantially all of the oil and gas producing
regions of the world.
- The ability of the combined company to become a leader in the life of the
well segment of the industry through the combination of EVI's and
Weatherford's respective products and services.
- Weatherford's 150 international rental and service locations and
on-the-ground experience should assist in the introduction of EVI's well
construction and production equipment in those markets.
- The combined company will be able to offer to its customers an integrated
package of well construction and production equipment and services.
- The ability of the combined company to take advantage of future
consolidations in the industry and to expand and acquire new businesses
and product lines.
- The existence of complementary product lines with only minor overlap
within product groupings. While cost savings are expected, the Merger is
aimed at growth and its success is not dependent on the consolidation of
overlapping businesses, but rather the implementation of EVI's strategy.
EVI anticipates consolidation savings of approximately $40 million per
year beginning in 1999.
- The availability of the cash flows of the combined company to finance
future acquisitions and technological and product development.
- The combined company will be more diversified than EVI and Weatherford
individually and more immune to downturns in one or more segments of the
industry.
In reaching its decision to approve the Merger and the Merger Agreement,
the EVI Board also considered the following factors:
(i) The recent historical performance of EVI Common Stock and Weatherford
Common Stock.
(ii) Certain historical and prospective financial information regarding EVI
and Weatherford, in particular, the impact of Weatherford's operations on the
combined company's results of operations and future cash flow.
(iii) The potential realization of the synergistic benefits described above
through the marketing and expansion of EVI's products through Weatherford's
broad worldwide customer relationships and strategic alliances.
26
34
(iv) The long-term growth potential of the combined company in the life of
the well phase of the industry as a result of the combination of EVI's and
Weatherford's businesses and operations.
(v) The creation of one of the broadest artificial lift product lines in
the industry.
(vi) An analysis of recent acquisitions in comparable industries.
(vii) A cash flow analysis of Weatherford, in particular, the impact on the
combined company's results of operations and future cash flow.
(viii) The anticipated immediate accretive effect on EVI's cash flow.
(ix) The anticipated slightly dilutive effect on EVI's earnings for 1998
and the anticipated accretive benefit of the Merger on EVI's earnings beginning
in 1999.
(x) The accretive effect on the book value of EVI to the holders of the EVI
Common Stock.
(xi) The impact of Weatherford's historical results and anticipated
long-term and short-term contribution to EVI's future operating results and
liquidity.
(xii) The creation of a more diversified company.
(xiii) Weatherford's low level of debt and its beneficial impact on EVI's
ability to continue to grow and make future acquisitions and capital investments
utilizing its existing capital resources.
(xiv) The terms of the Merger Agreement.
(xv) The opinion of Morgan Stanley as to the fairness, from a financial
point of view, of the Exchange Ratio, described below.
Prior to taking action on the Merger Agreement, the EVI Board received
presentations from, and reviewed the terms and conditions of the Merger
Agreement with, EVI's management, legal counsel and outside financial advisors.
The reasons for the Merger and the factors considered described under "The
Merger -- Background" and above in this section reflect all the material reasons
of EVI for pursuing the Merger and the factors considered by the EVI Board in
approving the Merger. The EVI Board did not quantify or otherwise attempt to
assign any relative weight to the factors considered by it in approving the
Merger. The EVI Board, however, did give substantial consideration to those
factors that related to the potential growth prospects of the combined company
in the life of the well phase in the oil and gas industry and the benefits to
EVI of the Merger over the long term and the projected earnings effect of the
Merger on the EVI stockholders.
RECOMMENDATION OF THE EVI BOARD
For the reasons set forth under "-- Background" and "-- EVI's Reasons for
the Merger", the EVI Board believes that the terms of the Merger are fair to,
and in the best interests of, EVI and the holders of EVI Common Stock. THE EVI
BOARD HAS APPROVED THE MERGER AND THE MERGER AGREEMENT AND RECOMMENDS THAT THE
HOLDERS OF EVI COMMON STOCK VOTE "FOR" ADOPTION AND APPROVAL OF THE MERGER AND
THE MERGER AGREEMENT.
WEATHERFORD'S REASONS FOR THE MERGER
The Weatherford Board believes that the terms of the Merger are fair to and
in the best interests of Weatherford and its stockholders and has unanimously
approved the Merger Agreement and recommends its approval and adoption by
Weatherford's stockholders.
From July 1997 to January 1998, Weatherford Management engaged in a
comprehensive strategic planning process involving its key executives. Among the
objectives identified by this process as key to obtaining the strategic and
financial goals established were the following: (i) leveraging Weatherford's
existing distribution and service system with additional product offerings; (ii)
reducing Weatherford's dependence on drilling-related products and services by
expanding its product and service offerings in the completion and
27
35
production phases of the industry; (iii) expanding Weatherford's technology and
market leadership in its core business lines, including well completion products
and services; (iv) increasing revenues by bundling complementary products and
services; and (v) expanding significantly through acquisitions.
The Weatherford Board views the Merger as a means of achieving the
long-term strategic and financial goals established during Weatherford
management's recent planning process and believes the Merger offers a number of
synergistic opportunities, including the ability to: (i) leverage Weatherford's
existing distribution and service system with additional product offerings; (ii)
accelerate the geographic expansion of existing products and services; (iii)
increase market share and revenues by integrating and bundling complementary
products and services; (iv) gain broader access to the complete well life cycle;
(v) become a market leader in completion products and services; (vi) increase
critical mass in technology and product development; (vii) create one of the
world's largest energy service companies, thereby expanding the capital base and
access to capital while reducing capital cost as a percentage of revenue and
(viii) reduce combined corporate and field operating costs as a percentage of
revenue.
In reaching its conclusion to approve the Merger, the Weatherford Board
also considered the following factors:
(i) Information concerning the financial performance and condition,
business operations and prospects of each of Weatherford and EVI, and
Weatherford's projected future performance and prospects as a separate entity
and on a combined basis with EVI.
(ii) Current industry, economic and market conditions, which have
encouraged business combinations and other strategic alliances in the oil and
gas industry.
(iii) Recent and historical market prices of Weatherford Common Stock and
EVI Common Stock.
(iv) The structure of the transaction and terms of the Merger Agreement and
the Exchange Ratio, which were the result of arm's-length negotiations between
EVI and Weatherford.
(v) The financial analyses and opinions of Merrill Lynch and Simmons
described below.
(vi) The fact that the Merger would provide holders of Weatherford Common
Stock with the opportunity to receive a premium over historical market prices
for Weatherford Common Stock.
(vii) Consolidation benefits that would be available to the combined entity
after the Merger which would primarily involve revenue enhancements, associated
margin improvements and non-personnel related cost reductions.
(viii) The terms of the Merger Agreement that permit the Weatherford Board,
in the exercise of its fiduciary duties and subject to certain conditions, to
terminate the Merger Agreement if the Weatherford Board receives a takeover
proposal which the Weatherford Board deems to be a "superior proposal" as that
term is defined in the Merger Agreement. In that regard, the Weatherford Board
noted that if it so terminates the Merger Agreement, Weatherford will be
obligated to pay EVI a $60 million fee. The Weatherford Board noted that the
Merger Agreement also provides that if, another proposal is outstanding and
Weatherford's stockholders do not approve the Merger, then if Weatherford
consummates certain other transactions within 12 months, Weatherford will be
obligated to pay EVI a $60 million fee. The Weatherford Board did not view the
termination fee provision of the Merger Agreement as unreasonably impeding any
interested third party from proposing a superior transaction. See "Terms of the
Merger -- No Solicitation; Payments in the Event of Certain Takeover Proposals".
(ix) The terms of the Merger Agreement that restrict EVI from soliciting
other transactions which would preclude the closing of the Merger, and that
require EVI to pay Weatherford a $60 million termination fee in certain
circumstances if the Merger does not close.
(x) The expectation that the Merger will afford Weatherford's stockholders
the opportunity to receive EVI Common Stock in a transaction that is not
expected to have any immediate U.S. federal income tax impact.
(xi) The expectation that the combination will be able to be accounted for
as a "pooling of interests".
(xii) Opportunities to deliver an expanded range of product offerings to a
wider range of customers after the Merger.
28
36
(xiii) The likelihood that the Merger would be consummated.
(xiv) Opportunities for Weatherford's employees in the combined
organization after the Merger.
In determining the Merger was fair to and in the best interest of
Weatherford's stockholders, the Weatherford Board considered the factors above
as a whole and did not assign specific or relative weights to such factors. The
Weatherford Board believes that the Merger is an opportunity for Weatherford's
stockholders to participate in a combined enterprise that has significantly
greater business and financial resources than Weatherford would have absent the
Merger and to receive, on a tax-deferred basis, a premium for their Weatherford
Common Stock based on recent market prices.
RECOMMENDATION OF THE WEATHERFORD BOARD
For the reasons set forth under "-- Background" and "-- Weatherford's
Reasons for the Merger", the Weatherford Board believes that the terms of the
Merger are fair to, and in the best interests of, Weatherford and the holders of
Weatherford Common Stock. THE WEATHERFORD BOARD HAS UNANIMOUSLY APPROVED THE
MERGER AND THE MERGER AGREEMENT AND RECOMMENDS THAT THE HOLDERS OF WEATHERFORD
COMMON STOCK VOTE "FOR" ADOPTION AND APPROVAL OF THE MERGER AND THE MERGER
AGREEMENT.
OPINIONS OF FINANCIAL ADVISORS
MORGAN STANLEY OPINION
Morgan Stanley was retained by EVI to provide a financial opinion in
connection with the Merger. Morgan Stanley is an internationally recognized
investment banking firm and was selected by EVI based on Morgan Stanley's
expertise. On March 4, 1998, Morgan Stanley rendered to the EVI Board an oral
opinion, which was subsequently confirmed in writing, to the effect that, as of
such date and based on and subject to certain matters stated therein, the
Exchange Ratio pursuant to the Merger Agreement is fair from a financial point
of view to EVI.
THE FULL TEXT OF MORGAN STANLEY'S WRITTEN OPINION, WHICH SETS FORTH THE
ASSUMPTIONS MADE AND MATTERS CONSIDERED AND THE LIMITS OF THE REVIEW UNDERTAKEN,
IS ATTACHED AS APPENDIX B TO THIS JOINT PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. HOLDERS OF SHARES OF EVI COMMON STOCK ARE
URGED TO, AND SHOULD, READ THE OPINION CAREFULLY AND IN ITS ENTIRETY. MORGAN
STANLEY'S OPINION ADDRESSES THE FAIRNESS OF THE EXCHANGE RATIO PURSUANT TO THE
MERGER AGREEMENT FROM A FINANCIAL POINT OF VIEW TO EVI. IT DOES NOT ADDRESS ANY
OTHER ASPECT OF THE MERGER NOR DOES IT CONSTITUTE A RECOMMENDATION TO ANY
STOCKHOLDER OF EVI SHARES AS TO HOW TO VOTE AT THE SPECIAL MEETING. THE SUMMARY
OF THE OPINION OF MORGAN STANLEY SET FORTH IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT
OF SUCH OPINION.
Morgan Stanley has consented to the use of Appendix B containing its
written opinion in this Joint Proxy Statement/Prospectus and to the references
to Morgan Stanley under the headings "Summary", "The Merger" and "Opinions of
Financial Advisors" in this Joint Proxy Statement/Prospectus. In giving such
consent, Morgan Stanley does not admit that it comes within the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission promulgated thereunder, nor does Morgan
Stanley admit that it is an expert with respect to any part of the Registration
Statement in which this Joint Proxy Statement/Prospectus is included, within the
meaning of the term "expert" as used in the Securities Act or the rules and
regulations of the Commission promulgated thereunder.
For purposes of the opinion set forth herein, Morgan Stanley, among other
things, (i) reviewed certain publicly available financial statements and other
information of Weatherford and EVI, respectively; (ii) reviewed certain internal
financial statements and other financial and operating data concerning
Weatherford and EVI prepared by the managements of Weatherford and EVI,
respectively; (iii) analyzed certain financial projections prepared by the
managements of Weatherford and EVI, respectively; (iv) discussed the past and
current operations and financial condition and the prospects of Weatherford with
29
37
senior executives of Weatherford; (v) discussed the past and current operations
and financial condition and the prospects of EVI with senior executives of EVI;
(vi) reviewed the pro forma impact of the Merger on EVI's earnings per share,
cash flow, consolidated capitalization and financial ratios; (vii) discussed
with senior management of EVI and Weatherford their estimates of the synergies
and cost savings expected to be derived from the Merger; (viii) reviewed the
reported prices and trading activity for Weatherford Common Stock and EVI Common
Stock; (ix) compared the financial performance of Weatherford and EVI and the
prices and trading activity of Weatherford Common Stock and EVI Common Stock
with that of certain other comparable publicly-traded companies and their
securities; (x) reviewed the financial terms, to the extent publicly available,
of certain comparable merger transactions; (xi) reviewed the Merger Agreement
and related documents; and (xii) performed such other analyses as Morgan Stanley
deemed appropriate.
Morgan Stanley assumed and relied upon, without independent verification,
the accuracy and completeness of the information reviewed by Morgan Stanley for
the purposes of its opinion. With respect to the financial projections,
including the estimates of the synergies and cost savings expected to be derived
from the Merger, Morgan Stanley has assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of Weatherford and EVI. In
addition, Morgan Stanley has assumed that the Merger will be consummated in
accordance with the terms set forth in the Merger Agreement, including, among
other things, that the Merger will be accounted for as a "pooling-of-interests"
business combination in accordance with GAAP and the Merger will be treated as a
tax-free reorganization and/or exchange, each pursuant to the Code. Morgan
Stanley has not made any independent valuation or appraisal of the assets or
liabilities of Weatherford, nor has Morgan Stanley been furnished with any such
appraisals. Morgan Stanley's opinion is necessarily based on economic, market
and other conditions as in effect on, and the information made available to
Morgan Stanley as of the date hereof.
The following is a brief summary of the financial analyses performed by
Morgan Stanley and reviewed with the EVI Board in connection with rendering
Morgan Stanley's opinion on March 4, 1998.
Comparable Public Company Analysis. As part of its analysis, Morgan Stanley
compared certain financial information of EVI and Weatherford with that of a
group of publicly traded oilfield service companies of comparable market value
(collectively, the "Oilfield Service Companies"). Such financial information
included the price to earnings multiple, price to cash flow multiple and market
capitalization to earnings before interest, tax, depreciation and amortization
("EBITDA"). Such analyses indicated that as of February 27, 1998 and based on a
compilation of earnings projections by securities research analysts, EVI and
Weatherford traded at 15.1 and 13.3 times forecasted earnings for the calendar
year 1998, respectively; 11.4 and 6.8 times forecasted cash flow for the
calendar year 1998, respectively; and EVI's and Weatherford's market
capitalization represented 9.2 and 5.3 times forecasted EBITDA for the calendar
year 1998, respectively; compared to a range of 14.5 to 30.4 times 1998
earnings, 7.6 to 18.0 times 1998 cash flow and a market capitalization of 7.2 to
12.1 times 1998 EBITDA for the Oilfield Service Companies.
No company utilized in the comparable public company analysis is identical
to EVI or Weatherford. Accordingly, an analysis of the results of the foregoing
necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of EVI and Weatherford and other
factors that could affect the public trading value of the companies to which
they are being compared. In evaluating the comparable companies, Morgan Stanley
made judgments and assumptions with regard to industry performance, general
business, economic, market and financial conditions and other matters, many of
which are beyond the control of EVI or Weatherford, such as the impact of
consolidation on EVI or Weatherford and the industry generally, industry growth
and/or cyclicality and the absence of any adverse material change in the
financial conditions and prospects of EVI or Weatherford or the industry or in
the financial markets in general. Mathematical analysis (such as determining the
mean or median) is not, in itself, a meaningful method of using comparable
company data.
Historical Exchange Ratio Analysis. Morgan Stanley also reviewed the ratio
of the closing prices of Weatherford Common Stock to EVI Common Stock over the
intervals of three months, six months, one year, two years and three years prior
to the announcement of the Merger. Such implied ratios averaged 1.727 over
30
38
the three years, 1.316 over the two years, 0.891 over the one year, 0.841 over
the six months and 0.850 over the three months.
Discounted Cash Flow Analysis. Morgan Stanley performed a discounted cash
flow ("DCF") analysis of Weatherford and EVI based on certain financial
projections prepared in consultation with the respective managements for each
company for the calendar years 1998 through 2007. Morgan Stanley discounted the
unlevered free cash flows of each company over the forecast period at a range of
discount rates, representing an estimated weighted average cost of capital for
Weatherford and EVI, and terminal values based on a range of EBITDA multiples
based on public market valuation implied EBITDA multiples of comparable
companies. Unlevered free cash flow of each company was calculated as net income
available to common stockholders plus the aggregate of depreciation and
amortization, deferred taxes, and other noncash expenses and after-tax net
interest expense less the sum of capital expenditures and investment in non-cash
working capital. The present values determined from these analyses were then
adjusted for long-term liabilities including debt net of cash to arrive at a net
asset value. Based on this analysis, Morgan Stanley calculated per share values
for Weatherford ranging from $63.74 to $75.28 and for EVI ranging from $71.77 to
$83.29.
Analysis of Selected Precedent Transactions. Using publicly available
information, Morgan Stanley reviewed the terms of six recently announced pending
or completed oilfield service acquisition transactions (collectively, the
"Oilfield Services Transactions") and five recently announced pending or
completed merger of equals transactions (collectively, the "MOE Transactions").
For the Oilfield Service Transactions, the premium to unaffected market price
ranged from 31% to 169%. For the MOE Transactions, the premium to unaffected
market price ranged from 1.0% to 27.3%.
No transaction utilized as a comparison in the analysis of selected
precedent transactions is identical to the Merger. Accordingly, an analysis of
the results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics and
other factors that would affect the acquisition value of the companies to which
it is being compared. In evaluating the precedent transactions, Morgan Stanley
made judgments and assumptions with regard to industry performance, global
business, economic, market and financial conditions and other matters, many of
which are beyond the control of EVI or Weatherford, such as the impact of
competition on EVI or Weatherford and the industry generally, industry growth
and/or cyclicality and the absence of any adverse material change in the
financial conditions and prospects of EVI or Weatherford or the industry or the
financial markets in general. Mathematical analysis (such as determining the
mean or median) is not, in itself, a meaningful method of using precedent
transactions data.
Contribution Analysis. Morgan Stanley analyzed the pro forma contribution
of each of EVI and Weatherford to the combined company. Such analysis included,
among other things, relative contributions of projected net income, cash flow
from operations and book value for 1998 and 1999 and DCF net asset value. The
analysis indicated that EVI would contribute approximately 52% and 54% of the
projected combined net income, 43% and 46% of the projected cash flow from
operations and 40% and 44% of book value in 1998 and 1999 respectively, and 51%
of the DCF net asset value. Morgan Stanley noted these contribution statistics
implied exchange ratios ranging from 0.81 to 1.44.
Pro Forma Analysis of the Merger. Morgan Stanley analyzed the pro forma
impact of the Merger on earnings per share and cash flow per share for EVI for
the fiscal years 1998 through 2000. The pro forma results were calculated as if
the Merger had closed at the beginning of 1998, and were based on projected
earnings and cash flow derived from financial projections prepared by the
respective managements of each company. The pro forma analysis also took into
account the synergies and cost savings expected to be derived from the Merger as
estimated by the respective managements of each company. Morgan Stanley noted
that, assuming the Merger would be treated as a pooling of interests for
accounting purposes, the Merger would be slightly dilutive in 1998 and slightly
accretive in 1999 and beyond with respect to earnings per share and
significantly accretive with respect to cash flow per share in 1998 and beyond.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to a partial analysis or summary description. Morgan
Stanley believes that its analyses must be considered as a whole and that
selecting portions of its analyses and the factors considered by it, without
considering all analyses and
31
39
factors, would create an incomplete view of the process underlying its opinion.
In addition, Morgan Stanley may have deemed various assumptions more or less
probable than other assumptions, so that the range of valuations resulting for
any particular analysis described above should therefore not be taken to be
Morgan Stanley's view of the actual value of EVI or Weatherford.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of EVI or Weatherford. The
analyses performed by Morgan Stanley are not necessarily indicative of actual
value which may be significantly more or less favorable than suggested by such
analyses. Such analyses were prepared solely as part of Morgan Stanley's
analysis of the fairness of the Exchange Ratio pursuant to the Merger Agreement
from a financial point of view to EVI and were provided to the EVI Board in
connection with the delivery of Morgan Stanley's written opinion dated March 4,
1998. The analyses do not purport to be appraisals or to reflect the prices at
which EVI or Weatherford might actually be sold.
As described above, Morgan Stanley's opinion and presentation to the EVI
Board were among the many factors taken into consideration by the EVI Board in
making its determination to approve the Merger. Consequently, the Morgan Stanley
analyses described above should not be viewed as determinative of the opinion of
the EVI Board or the management of EVI with respect to the value of EVI or
Weatherford or whether the EVI Board would have been willing to agree to a
different Exchange Ratio pursuant to the Merger Agreement. The Exchange Ratio
pursuant to the Merger Agreement was determined through negotiations between EVI
and Weatherford and approved by the EVI Board and the Weatherford Board.
EVI retained Morgan Stanley based upon its experience and expertise. Morgan
Stanley is an internationally recognized investment banking and advisory firm.
As part of its investment banking business, Morgan Stanley is regularly engaged
in the valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuation for estate, corporate and other purposes. In the ordinary course of
its business, Morgan Stanley and its affiliates may actively trade the debt and
equity securities of EVI and Weatherford for their own account or for the
account of customers and may, from time to time, hold a long or short position
in, and buy and sell, securities of EVI or Weatherford. In the past, Morgan
Stanley and its affiliates have provided financial advisory and financing
services to EVI and its affiliates and have received customary fees in
connection with these services.
EVI has agreed to pay Morgan Stanley a fee for its financial opinion of (i)
$2 million at the time Morgan Stanley's written or oral opinion is first
delivered and (ii) $2 million at the time a proxy statement incorporating (in
whole or in reference) Morgan Stanley's opinion is mailed to the stockholders of
EVI. EVI has also agreed to reimburse Morgan Stanley for its expenses related to
the engagement and to indemnify Morgan Stanley and its affiliates against
certain liabilities and expenses, including liabilities under federal securities
laws, in connection with Morgan Stanley's engagement.
In addition to the fees paid to Morgan Stanley, EVI also has agreed to pay
certain fees to Credit Suisse First Boston Corporation ("First Boston"),
Jefferies & Company, Inc. ("Jefferies") and Lehman Brothers for the assistance
rendered by such firms in connection with the Merger. Pursuant to agreements
with such firms, upon consummation of the Merger, EVI has agreed to pay $3
million, $3 million and $1 million to Lehman Brothers, Jefferies and First
Boston, respectively. Additionally, Lehman Holdings, an affiliate of Lehman
Brothers, owns 3,598,832 shares of Common Stock (approximately 7.5% of the
47,821,121 shares of Common Stock outstanding as of March 31, 1998). David J.
Butters and Robert B. Millard, who are employees of Lehman Brothers, constitute
two of the seven members of EVI's current Board of Directors, and Mr. Butters is
the current Chairman of the EVI Board. Additionally, each of Messrs. Butters and
Millard has been selected to be members of the EVI Board following the Merger.
See "Management -- Directors of EVI Following the Merger".
MERRILL LYNCH AND SIMMONS OPINIONS
Weatherford retained Merrill Lynch and Simmons to act as its financial
advisors in connection with the Merger. On March 4, 1998, Merrill Lynch and
Simmons rendered their oral opinions to the Weatherford
32
40
Board, later confirmed in writing (collectively, the "Fairness Opinions"), to
the effect that, as of such date and based upon and subject to the factors and
assumptions set forth therein, the Exchange Ratio was fair from a financial
point of view to holders of Weatherford Common Stock. No limitations were
imposed by the Weatherford Board upon Merrill Lynch or Simmons with respect to
the investigations made or procedures followed by Merrill Lynch or Simmons in
rendering the Fairness Opinions except as set forth below.
THE FULL TEXT OF EACH OF THE FAIRNESS OPINIONS, WHICH SETS FORTH THE
ASSUMPTIONS MADE, MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY MERRILL LYNCH AND SIMMONS, ARE ATTACHED AS APPENDICES C AND
D HERETO AND ARE INCORPORATED HEREIN BY REFERENCE. THE SUMMARY OF THE FAIRNESS
OPINIONS SET FORTH IN THIS PROXY STATEMENT/PROSPECTUS IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF SUCH OPINIONS. HOLDERS OF WEATHERFORD
COMMON STOCK ARE URGED TO READ SUCH OPINIONS IN THEIR ENTIRETY. THE FAIRNESS
OPINIONS WERE PROVIDED TO THE WEATHERFORD BOARD FOR ITS INFORMATION AND ARE
DIRECTED ONLY TO THE FAIRNESS FROM A FINANCIAL POINT OF VIEW OF THE EXCHANGE
RATIO TO HOLDERS OF WEATHERFORD COMMON STOCK AND DO NOT ADDRESS THE MERITS OF
THE UNDERLYING DECISION BY WEATHERFORD TO ENGAGE IN THE MERGER AND DO NOT
CONSTITUTE RECOMMENDATIONS TO THE HOLDERS OF WEATHERFORD COMMON STOCK AS TO HOW
SUCH STOCKHOLDERS SHOULD VOTE ON THE APPROVAL OF THE MERGER OR ANY MATTER
RELATED THERETO.
Merrill Lynch and Simmons have consented to the use of Appendices C and D
containing the Fairness Opinions, in this Joint Proxy Statement/Prospectus, and
to the references to Merrill Lynch and Simmons under the headings "Summary",
"The Merger" and "Opinions of Financial Advisors" in this Joint Proxy
Statement/Prospectus. In giving such consent, Merrill Lynch and Simmons do not
admit that they come within the category of persons whose consent is required
under Section 7 of the Securities Act or the rules and regulations of the
Commission promulgated thereunder, nor do Merrill Lynch or Simmons admit that
they are experts with respect to any part of the Registration Statement in which
this Joint Proxy Statement/Prospectus is included, within the meaning of the
term "experts" as used in the Securities Act or the rules and regulations of the
Commission promulgated thereunder.
The Exchange Ratio was determined through negotiations between EVI and
Weatherford and was authorized by the Weatherford Board.
The summary set forth below does not purport to be a complete description
of the analyses underlying the Fairness Opinions or the presentation made by
Merrill Lynch and Simmons to the Weatherford Board. The preparation of a
fairness opinion is a complex and analytical process involving various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances
and, therefore, such opinion is not readily susceptible to partial analysis or
summary description. In arriving at their opinions, Merrill Lynch and Simmons
did not attribute any particular weight to any analysis or factor considered by
it, but rather made qualitative judgments as to the significance and relevance
of each analysis and factor. Accordingly, Merrill Lynch and Simmons each
believes that its analyses must be considered as a whole and that selecting
portions of its analyses, without considering all of its analyses, would create
an incomplete view of the process underlying each of the Fairness Opinions.
In performing their analyses, numerous assumptions were made by Merrill
Lynch and Simmons with respect to industry performance, general business,
economic, market and financial conditions and other matters, many of which are
beyond the control of Merrill Lynch, Simmons, EVI or Weatherford. Any estimates
contained in the analyses performed by Merrill Lynch and/or Simmons are not
necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.
Additionally, estimates of the value of businesses or securities do not purport
to be appraisals or to reflect the prices at which such businesses or securities
might actually be sold. Accordingly, such analyses and estimates are inherently
subject to substantial uncertainty. In addition, the Fairness Opinions were
among several factors taken into consideration by the Weatherford Board in
making its determination to approve the Merger Agreement. Consequently, the
Merrill Lynch and Simmons analyses described below should not be viewed as
determinative of the decision of the Weatherford Board or Weatherford's
management with respect to the fairness of the Exchange Ratio.
In arriving at its opinion, Merrill Lynch, among other things, (i) reviewed
certain publicly available business and financial information relating to
Weatherford and EVI that Merrill Lynch deemed to be relevant;
33
41
(ii) reviewed certain information, including financial forecasts, relating to
the business, earnings, cash flow, assets, liabilities and prospects of
Weatherford and EVI furnished to Merrill Lynch by the management of Weatherford
and EVI, respectively, as well as the amount and timing of the cost savings and
related expenses and synergies expected to result from the Merger furnished to
Merrill Lynch by the management of Weatherford (the "Expected Synergies"); (iii)
conducted discussions with members of senior management and representatives of
Weatherford and EVI concerning the matters described in clauses (i) and (ii)
above, as well as their respective businesses and prospects before and after
giving effect to the Merger and the Expected Synergies; (iv) reviewed the market
prices and valuation multiples for the Weatherford Common Stock and EVI Common
Stock and compared them with those of certain publicly traded companies that
Merrill Lynch deemed to be relevant; (v) reviewed the results of operations of
Weatherford and EVI and compared them with those of certain publicly traded
companies which Merrill Lynch deemed to be relevant; (vi) compared the proposed
financial terms of the Merger with the financial terms of certain other
transactions that Merrill Lynch deemed to be relevant; (vii) participated in
certain discussions and negotiations among representatives of Weatherford and
EVI and their financial and legal advisors; (viii) reviewed the potential pro
forma impact of the Merger; (ix) reviewed a draft of the Merger Agreement; and
(x) reviewed such other financial studies and analyses and took into account
such other matters as Merrill Lynch deemed necessary including its assessment of
general economic, market and monetary conditions.
In arriving at its opinion, Simmons reviewed and analyzed, among other
things, the following: (i) a draft of the Merger Agreement dated March 4, 1998
and related disclosure letters furnished to Simmons by Weatherford; (ii)
financial statements and other information concerning Weatherford, including the
Annual Reports on Form 10-K of Weatherford for the years ended December 31, 1994
through 1996, the Quarterly Reports on Form 10-Q of Weatherford for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997, Proxy Solicitation
Materials on Schedule 14A dated April 10, 1997; (iii) certain other internal
information, primarily financial in nature and including fourth quarter 1997
results and financial forecasts, concerning the business and operations of
Weatherford furnished by Weatherford's management for purposes of Simmons'
analyses; (iv) certain publicly available information concerning the trading of
Weatherford Common Stock; (v) certain publicly available information concerning
EVI, including Annual Reports on Form 10-K of EVI for the years ended December
31, 1994 through 1996, Quarterly Reports on Form 10-Q of EVI for the quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997, Proxy Solicitation
Materials on Schedule 14A dated May 6, 1997, all Current Reports on Forms 8-K
and 8-K/A since January 1, 1997 and Registration Statements on Forms S-3, S-4
and S-4/A since January 1, 1997; (vi) certain other internal information,
primarily financial in nature and including fourth quarter 1997 results and
financial forecasts, concerning the business and operations of EVI furnished by
EVI's management for purposes of Simmons' analyses; (vii) certain publicly
available information concerning the trading of EVI Common Stock; (viii) certain
publicly available information with respect to certain other companies that
Simmons believes to be comparable to Weatherford or EVI and the trading markets
for certain of such other companies' securities; and (ix) certain publicly
available information concerning the nature and terms of certain other
transactions considered relevant to the inquiry. Simmons also met with certain
officers and employees of Weatherford and of EVI to discuss the foregoing as
well as other matters believed relevant to the inquiry.
In preparing its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch, discussed with or reviewed by or for Merrill Lynch, or publicly
available, and Merrill Lynch did not assume any responsibility for independently
verifying such information and did not undertake an independent evaluation or
appraisal of any of the assets or liabilities of Weatherford or EVI and was not
furnished with any such evaluation or appraisal. In addition, Merrill Lynch did
not assume any obligation to conduct any physical inspection of the properties
or facilities of Weatherford or EVI. With respect to the financial forecast
information and the Expected Synergies furnished to or discussed with Merrill
Lynch by Weatherford or EVI, Merrill Lynch assumed that they had been reasonably
prepared and reflected the best currently available estimates and judgment of
the management of Weatherford and EVI, respectively, as to the expected future
financial performance of Weatherford or EVI, as the case may be, and the
Expected Synergies. Merrill Lynch further assumed that the Merger will be
accounted for as a "pooling of interests" under GAAP and that it will qualify as
a tax-free reorganization for
34
42
U.S. federal income tax purposes. Merrill Lynch also assumed that the final form
of the Merger Agreement would be substantially similar to the last draft
reviewed by it.
In arriving at its opinion, Simmons assumed and relied upon the accuracy
and completeness of all of the financial and other information provided by
Weatherford and EVI, or publicly available, including, without limitation,
information with respect to asset conditions, tax positions, liability reserves
and insurance coverages, and did not assume any responsibility to independently
verify any such information. With respect to the financial forecasts and other
data reviewed by Simmons, Simmons assumed that such forecasts and other data,
including, without limitation, the information provided by the management of
Weatherford and EVI, respectively, with respect to projected cost savings and
operating efficiencies resulting from the Merger, had been reasonably prepared
and reflected the best currently available estimates and judgements of the
management of Weatherford and EVI, respectively, as to the expected future
financial performance of their respective companies and of the combined company
after the Merger. Simmons did not conduct a physical inspection of any of the
assets, properties or facilities of Weatherford, and Simmons did not make or
obtain any independent evaluations or appraisals of any of such assets,
properties or facilities. Simmons assumed that the Merger will be accounted for
as a "pooling of interests" under GAAP and that it will qualify as a tax-free
reorganization for U.S. federal income tax purposes. In addition, although
Simmons discussed the prospects of Weatherford and of EVI with certain
representatives of their respective managements, Simmons has been provided with
only limited financial projections and other similar analyses prepared by
Weatherford's management with respect to Weatherford's future performance and by
EVI's management with respect to EVI's future performance.
For purposes of rendering their opinions, Merrill Lynch and Simmons
assumed, in all respects material to their analyses, that the representations
and warranties of each party to the documents contained therein are true and
correct, that each party to the documents will perform all of the covenants and
agreements required to be performed by such party under such documents and that
all conditions to the consummation of the Merger will be satisfied without
waiver thereof.
Merrill Lynch and Simmons also assumed that all material governmental,
regulatory or other consents and approvals will be obtained in connection with
the Merger and that in the course of obtaining any necessary governmental,
regulatory or other consents and approvals, or any amendments, modifications or
waivers to any documents to which either Weatherford or EVI is party, no
restrictions will be imposed or amendments, modifications or waivers made that
would have any material adverse effect on the contemplated benefits to
Weatherford, EVI or the Merger.
The Fairness Opinions are necessarily based upon market, economic and other
conditions as they existed and could be evaluated on the date of such opinions.
Merrill Lynch and Simmons were not authorized by Weatherford or the Weatherford
Board to solicit, nor did they solicit, third-party indications of interest for
the acquisition of all or any part of Weatherford. Neither Merrill Lynch nor
Simmons expressed an opinion regarding the value that would be realized upon the
sale or liquidation of Weatherford, and the Fairness Opinions do not address the
relative merits of the Merger as compared to any alternative business
combination transaction that might be available to Weatherford, including the
acquisition of Weatherford by a third party. In addition, Merrill Lynch and
Simmons were not asked to consider, and the Fairness Opinions do not in any
manner address, the price at which shares of EVI will actually trade following
consummation of the Merger.
Both Weatherford and EVI provided Merrill Lynch and Simmons with forecasts
of their respective financial performance. Weatherford's management provided
Merrill Lynch and Simmons with a five-year financial forecast for the five-year
period ending December 31, 2002. EVI's management provided Merrill Lynch and
Simmons with a two-year financial forecast for the two-year period ending
December 31, 1999. These financial forecasts were relied upon by Merrill Lynch
and Simmons in performing their material analyses and in preparing the Fairness
Opinions.
The following is a brief summary of the material analyses presented to the
Weatherford Board by Merrill Lynch and Simmons in connection with their delivery
of the Fairness Opinions.
35
43
Contribution Analysis. Using management's projections for both Weatherford
and EVI for the years 1998 and 1999, Merrill Lynch and Simmons compared the
relative projected levels of net income, earnings before interest, taxes and
depreciation ("EBITD") and EBITD less capital expenditures ("EBITD-CapEx") for
each company during this period. The relative levels of EBITD and EBITD-CapEx
were used to develop implied enterprise value contributions, from which each
company's respective levels of net debt were subtracted to derive implied equity
market value contributions. The relative levels of net income were used to
develop implied equity market value contributions. Merrill Lynch and Simmons
estimated that, Weatherford's implied equity market value contribution to the
combined company is 47.7% and 46.0% based on projected net income in 1998 and
1999, respectively, 55.7% and 53.1% based on projected EBITD in 1998 and 1999,
respectively, and 44.6% and 41.1% based on projected EBITD-CapEx in 1998 and
1999, respectively. As Weatherford has a higher on-going level of maintenance
capital expenditures relative to EVI, Merrill Lynch and Simmons placed greater
emphasis on net income and EBITD-CapEx measures in their analyses, as such
measures better account for differences in relative capital expenditure
requirements. Additionally, using Weatherford management's five-year projections
and a discounted cash flow methodology, Merrill Lynch and Simmons calculated a
range of equity value per share for Weatherford. Merrill Lynch and Simmons based
such discounted cash flow methodology calculations on terminal EBITD multiples
of 5.0x and 6.0x and discount rates of 12.0% and 13.0%. The relevant range of
equity value per share for Weatherford resulting from such analysis was $34.81
to $42.58. Utilizing an identical discounted cash flow methodology, Merrill
Lynch and Simmons calculated a range of implied equity value per share for EVI.
Using EVI management's 1998 and 1999 projections, Merrill Lynch and Simmons
developed EVI projections for 2000, 2001 and 2002 based on similar revenue and
expense growth rates and margin assumptions as forecasted by Weatherford
management in their 2000, 2001 and 2002 forecasts. Based on terminal EBITD
multiples of 5.0x and 6.0x and discount rates of 12.0% and 13.0%, the relevant
range of implied equity value per share for EVI was $39.03 to $47.62. Based on
the relative levels of equity value derived from the discounted cash flow
analysis, Merrill Lynch and Simmons calculated an exchange ratio of 0.89.
Utilizing such equity market value contributions and focusing on those based on
net income, EBITD-CapEx and discounted cash flow, Merrill Lynch and Simmons
calculated a relevant range of implied exchange ratios of 0.66 to 0.89.
Discounted Cash Flow Analysis. Using Weatherford management's five-year
projections and a discounted cash flow methodology, Merrill Lynch and Simmons
calculated a range of equity value per share for Weatherford. Merrill Lynch and
Simmons based such discounted cash flow methodology calculations on a range of
terminal EBITD multiples of 4.0x to 7.0x and a range of discount rates of 11.0%
to 14.0%. The relevant range of equity value per share for Weatherford resulting
from such analysis was $34.81 to $42.58. Utilizing such a relevant range of
equity value per share for Weatherford and the EVI Common Stock price per share
of $50.75 on March 2, 1998, Merrill Lynch and Simmons calculated a relevant
range of implied exchange ratios of 0.69 to 0.84. Utilizing an identical
discounted cash flow methodology, Merrill Lynch and Simmons calculated a range
of equity value per share of EVI Common Stock. Using EVI management's 1998 and
1999 projections, Merrill Lynch and Simmons developed EVI projections for 2000,
2001 and 2002 based on similar revenue and expense growth rates and margin
assumptions as forecasted by Weatherford management in their 2000, 2001 and 2002
forecasts. Based on a range of terminal EBITD multiples of 4.0x to 7.0x and a
range of discount rates of 11.0% to 14.0%, the relevant range of implied equity
value per share for EVI was $39.03 to $47.62. This implied equity value per
share range of $39.03 to $47.62 was then compared to the EVI Common Stock price
per share of $50.75 on March 2, 1998.
Merger Premium Analysis. Merrill Lynch and Simmons examined premiums paid
over pre-announcement stock prices one week prior to announcement and four weeks
prior to announcement in (i) all stock transactions over $1.5 billion announced
since January 1, 1996, (ii) all stock transactions over $1.5 billion announced
since January 1, 1997 and (iii) selected oilfield services transactions since
January 1, 1994. Based on such merger premiums, Merrill Lynch and Simmons
calculated a relevant range of merger premiums of 23.9% to 29.4%. Based on such
merger premiums, Merrill Lynch and Simmons calculated a relevant range of
implied exchange ratios of 0.88 to 0.91.
Comparable Acquisition Analysis. Merrill Lynch and Simmons analyzed the
financial terms, to the extent publicly available, of 17 selected change of
control transactions in the oilfield services industry that have
36
44
closed since January 1, 1994 or are currently pending. In the judgement of
Merrill Lynch and Simmons, these transactions were generally comparable to the
transaction contemplated by the Merger. Selected transactions included, (listed
according to target/buyer) Baroid Corporation/Dresser Industries, Inc. (1993),
Wheatley TXT Corporation/Dresser Industries, Inc. (1994), Total Energy Services
Co./Enterra Corporation (1994), Halliburton Compression/Tidewater Inc. (1994),
Western Company of North America/BJ Services Company (1994), Enterra
Corporation/Weatherford International Incorporated (1995), Hornbeck Offshore
Services, Inc./Tidewater Inc. (1995), Drexel Oilfield Services/Tuboscope Vetco
International Corporation (1996), NOWSCO Well Service Ltd./BJ Services Company
(1996), Landmark Graphics Corporation/Halliburton Company (1996), Petrolite
Corporation/Baker Hughes Incorporated (1997), Production Operators Corp./Camco
International Inc. (1997), Drilex International Inc./Baker Hughes Incorporated
(1997), Dreco Energy Services Ltd./National-Oilwell, Inc. (1997), Tidewater
Compression/Castle Harlan (1997), Wilson Industries/Smith International, Inc.
(1998) and Dresser Industries, Inc./Halliburton Company (1998) (collectively,
the "Comparable Acquisitions"). Merrill Lynch and Simmons reviewed the prices
paid in such transactions in terms of (i) enterprise value as a multiple of
latest twelve months ("LTM") EBITD and (ii) equity market value as a multiple of
LTM net income. Due to the capital intensive nature of Weatherford's business,
when determining their relevant multiple ranges, Merrill Lynch and Simmons
focused on those transactions in which capital intensive companies were
acquired. Such transactions included, (listed according to target/buyer)
Halliburton Compression/Tidewater Inc., Enterra Corporation/Weatherford
International Incorporated, Drexel Oilfield Services/Tuboscope Vetco
International Corporation, Drilex International Inc./Baker Hughes Incorporated,
Tidewater Compression/Castle Harlan and Dresser Industries, Inc./Halliburton
Company. Such analysis indicated that (i) the relevant range for Weatherford of
enterprise value as a multiple of LTM EBITD ranged from 8.0x to 10.0x and (ii)
the relevant range for Weatherford of equity market value as a multiple of LTM
net income ranged from 20.0x to 25.0x (together, the "Relevant Comparable
Acquisition Multiples"). Merrill Lynch and Simmons then applied the Relevant
Comparable Acquisition Multiples to the corresponding Weatherford financial
measures and derived a relevant range of equity value per share of $42.99 to
$54.69. Utilizing such a relevant range of equity value per share for
Weatherford, Merrill Lynch and Simmons calculated a relevant range of implied
exchange ratios of 0.85 to 1.08.
Merrill Lynch and Simmons are of the view that no transaction reviewed was
identical to the Merger and that, accordingly, an analysis of the foregoing
necessarily involves complex considerations and judgments concerning differences
in financial and operational characteristics of Weatherford that could affect
the acquisition value of the companies to which it was being compared.
Comparable Company Trading Analysis. Merrill Lynch and Simmons reviewed and
compared certain financial information, ratios and public market multiples
relating to the Weatherford projections to corresponding financial information,
ratios and public market multiples for five publicly traded large-capitalization
companies in the oilfield services industry, including: Baker Hughes
Incorporated, Dresser Industries, Inc., Halliburton Company, Schlumberger Ltd.
and Western Atlas Inc., as well as six publicly traded mid-capitalization
companies in the oilfield services industry, including: BJ Services Company,
Camco International, Inc., Cooper Cameron Corporation, National-Oilwell, Inc.,
Smith International, Inc., and Tuboscope, Inc. As the size of Weatherford is
most comparable to the mid-capitalization oilfield services companies selected,
Merrill Lynch and Simmons, in performing their comparable company trading
analysis, focused on the mid-capitalization companies (collectively, the
"Comparable Companies"). The Comparable Companies were chosen because they are
publicly traded companies with financial and operating characteristics which
Merrill Lynch and Simmons deemed to be similar to those of Weatherford. Merrill
Lynch and Simmons calculated various financial ratios for the Comparable
Companies and compared them to those of Weatherford. The ratios for the
Comparable Companies were based on publicly available information, including
estimates provided by Simmons' research, Merrill Lynch's research and the
Institutional Brokers Estimate System ("IBES"). Merrill Lynch and Simmons
calculated the following financial ratios for the Comparable Companies: (i)
market value multiples of (a) 1998 estimated net income and (b) 1999 estimated
net income and (ii) adjusted market value (defined as market value of common
equity plus book value of debt less cash) multiples of (a) 1998 estimated EBITD,
(b) 1999 estimated EBITD, (c) 1998 estimated EBITD-CapEx and (d) 1999 estimated
EBITD-CapEx.
37
45
For the Comparable Companies, the relevant range of market value multiples
of 1998 and 1999 estimated net income were 15.0x to 17.0x and 12.0x to 14.0x,
respectively. The relevant range of adjusted market value multiples of 1998 and
1999 estimated EBITD were 8.0x to 9.0x and 7.0x to 8.0x, respectively. The
relevant range of adjusted market value multiples of 1998 and 1999 estimated
EBITD-CapEx were 11.0x to 15.0x and 9.0x to 11.0x, respectively. As Weatherford
has a higher on-going level of maintenance capital expenditures relative to EVI,
Merrill Lynch and Simmons placed greater emphasis on net income and EBITD-CapEx
measures in their analyses, as such measures better account for differences in
relative capital expenditure requirements. From the value ranges implied by
these ranges, Merrill Lynch and Simmons determined a composite relevant range of
equity value per share for Weatherford of $38.93 to $48.21. Utilizing such a
relevant range of equity value per share for Weatherford, Merrill Lynch and
Simmons calculated a relevant range of implied exchange ratios of 0.77 to 0.95.
No company utilized in the above comparable company trading analysis is
identical to Weatherford. Accordingly, an analysis of the results of the
foregoing is not purely mathematical. Rather, it involves complex considerations
and judgments concerning differences in financial and operational
characteristics of the Comparable Companies and other factors that could affect
the public trading value of the Comparable Companies or the company to which
they are being compared.
Relative Stock Price Analysis. Using closing stock prices for Weatherford
and EVI at March 2, 1998 as well as average closing stock prices for both
companies for the periods 30, 60, 90, 180, 210, 240 and 270 days prior to March
2, 1998, Merrill Lynch and Simmons calculated a relevant range of implied
exchange ratios of 0.78 to 0.90.
Merger Consequences. Merrill Lynch and Simmons analyzed certain pro forma
effects which could result from the Merger based on financial forecasts provided
by the management of Weatherford and EVI, respectively, for the years ending
December 31, 1998 and 1999. Merrill Lynch and Simmons were advised by the
management of Weatherford that the Merger would be accounted for as a "pooling
of interests" under GAAP. Management of Weatherford and EVI also provided
Merrill Lynch and Simmons with projections of certain combination benefits and
revenue enhancements which would occur as a result of the Merger. As part of
their analysis, Merrill Lynch and Simmons reviewed two separate merger scenarios
for both Weatherford and EVI: (i) Case I, $5.0 million and $35.0 million in
pre-tax cost savings in 1998 and 1999, respectively and (ii) Case II, $5.0
million and $35.0 million in pre-tax cost savings in 1998 and 1999,
respectively, with an additional revenue enhancement of $85.0 million providing
incremental EBITD equal to $25.0 million in 1999. This analysis indicated that
in Case I, the Merger would be 7.7% and 16.7% accretive to Weatherford's 1998
and 1999 earnings per share, respectively, 9.2% and 1.8% dilutive to
Weatherford's 1998 and 1999 cash flow from operations ("CFFO") per share,
respectively, 1.8% dilutive to Weatherford's 1998 EBITD per share and 6.0%
accretive to Weatherford's 1999 EBITD per share. This analysis indicated that in
Case II, the Merger would be 21.2% accretive to Weatherford's 1999 earnings per
share, 0.8% accretive to Weatherford's 1999 CFFO per share and 9.0% accretive to
Weatherford's 1999 EBITD per share. This analysis indicated that in Case I, the
Merger would be 4.7% and 3.3% dilutive to EVI's 1998 and 1999 earnings per
share, respectively, 13.8% and 10.7% accretive to EVI's 1998 and 1999 CFFO per
share, respectively, and 3.9% and 2.7% accretive to EVI's 1998 and 1999 EBITD
per share, respectively. This analysis indicated that in Case II, the Merger
would be 0.4% accretive to EVI's 1999 earnings per share, 13.6% accretive to
EVI's 1999 CFFO per share and 5.7% accretive to EVI's 1999 EBITD per share.
Merrill Lynch and Simmons also analyzed the effects of the Merger on the
balance sheet and credit statistics of the combined company. Treating EVI's
convertible securities as debt, the combined company's pro forma debt to total
book capitalization ratio as of January 31, 1998 was 32.8% as compared to 19.0%
for Weatherford on a stand-alone basis.
Financial Advisors Fee. Pursuant to letter agreements dated January 16,
1997 between Weatherford and Merrill Lynch and Weatherford and Simmons (the
"Letter Agreements"), Weatherford has agreed to pay Merrill Lynch and Simmons a
collective fee of 0.53% of the purchase price (as defined in Letter Agreement),
if, during the period Merrill Lynch and Simmons are retained by Weatherford or
within one year thereafter, (i) an Acquisition Transaction (as defined in the
Letter Agreement) is consummated with EVI or,
38
46
(ii) Weatherford or a Weatherford Affiliate (as defined in the Letter Agreement)
enters into an agreement with EVI which subsequently results in an Acquisition
Transaction, payable in cash upon the closing of such Acquisition Transaction.
Based on the closing sale price per share of EVI Common Stock on March 31, 1998,
approximately $6 million would be paid to each of Merrill Lynch and Simmons if
the Merger is consummated. Weatherford has also agreed to reimburse Merrill
Lynch and Simmons for their reasonable out-of-pocket expenses, including
reasonable fees and disbursements of their legal counsel. Additionally,
Weatherford agreed to indemnify Merrill Lynch and Simmons and certain related
persons for certain liabilities related to or arising out of their engagement,
including liabilities under federal securities laws.
Weatherford retained Merrill Lynch and Simmons based upon their experience
and expertise. Merrill Lynch is an internationally recognized investment banking
and advisory firm. Merrill Lynch, as part of its investment banking business, is
continuously engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. In the past, Merrill Lynch has
provided financial advisory and/or financing services to Weatherford and may
continue to do so and has received, and may receive, fees for the rendering of
such services. In the ordinary course of its business, Merrill Lynch and
affiliates may actively trade the debt and equity securities of Weatherford and
EVI (and anticipate trading after the Merger in the securities of EVI) for its
own account and for the accounts of customers and, accordingly, may at any time
hold a long or short position in such securities.
Simmons is an internationally recognized energy-related investment banking
and advisory firm continuously engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements of
debt and equity and the management and underwriting of sales of equity and debt
to the public. Simmons has previously rendered investment banking services to
Weatherford in connection with transactions for which Simmons received customary
compensation. In addition, in the ordinary course of business, Simmons may
actively trade the securities of Weatherford and EVI for its own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
39
47
TERMS OF THE MERGER
The detailed terms and conditions to the consummation of the Merger are
contained in the Merger Agreement, which is attached as Appendix A to this Joint
Proxy Statement/Prospectus, and incorporated herein by reference. The following
discussion sets forth a description of the material terms and conditions of the
Merger Agreement. The description in this Joint Proxy Statement/Prospectus of
the terms and conditions to the consummation of the Merger is qualified by, and
made subject to, the more complete information set forth in the Merger
Agreement.
EFFECTIVE TIME OF THE MERGER
Under the terms of the Merger Agreement, the Merger will become effective
at such time as the Certificate of Merger is duly filed with the Secretary of
State of the State of Delaware, or at such other time as EVI and Weatherford
shall agree should be specified in the Certificate of Merger. It is anticipated
that, if the Merger Agreement is approved at the EVI Special Meeting and the
Weatherford Special Meeting and all other conditions to the Merger contained in
the Merger Agreement have been satisfied or waived, the Effective Time will
occur on the date of the EVI Special Meeting and Weatherford Special Meeting or
as soon as practicable thereafter.
MANNER AND BASIS OF CONVERTING SHARES
The Merger Agreement provides that, at the Effective Time, each issued and
outstanding share of Weatherford Common Stock, other than shares held by
Weatherford or any wholly owned subsidiary of Weatherford or by EVI or any
wholly owned subsidiary of EVI (which shares will be canceled at the Effective
Time and no payment shall be made with respect thereto), will be converted into
the right to receive, upon the surrender of the certificate formerly
representing such Weatherford Common Stock, .95 of a share of EVI Common Stock.
As soon as practicable following the Effective Time, EVI will cause
American Stock Transfer & Trust Company, which will act as Exchange Agent for
the Weatherford Common Stock (the "Exchange Agent"), to mail to each holder of
record of Weatherford Common Stock immediately prior to the Effective Time a
letter of transmittal and instructions for use in exchanging Weatherford Common
Stock certificates for EVI Common Stock certificates and cash in lieu of
fractional shares. Letters of transmittal also will be available following the
Effective Time at the offices of the Exchange Agent. CERTIFICATES REPRESENTING
SHARES OF WEATHERFORD COMMON STOCK SHOULD NOT BE SURRENDERED FOR EXCHANGE BY
STOCKHOLDERS OF WEATHERFORD PRIOR TO THE APPROVAL OF THE MERGER AND THE RECEIPT
OF A LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT.
No fractional shares of EVI Common Stock will be issued in the Merger. Each
stockholder of Weatherford otherwise entitled to a fraction of a share of EVI
Common Stock will, upon surrender of Weatherford Common Stock certificates held
by such holder, be paid an amount in cash equal to the value of such fractional
share based upon the closing sale price per share of EVI Common Stock on the
NYSE on the first trading day immediately preceding the Effective Time. No
interest will be paid on such amount. All shares of Weatherford Common Stock
held by a record holder shall be aggregated for purposes of computing the number
of shares of EVI Common Stock to be issued in the Merger.
Until such time as a holder of Weatherford Common Stock surrenders his or
her outstanding stock certificates to the Exchange Agent, together with the
executed letter of transmittal, the shares of Weatherford Common Stock
represented thereby will be deemed from and after the Effective Time, for all
corporate purposes, other than the payment of earlier dividends and
distributions, to represent only the right to receive the number of full shares
of EVI Common Stock and cash in lieu of fractional shares, if any, into which
such shares of Weatherford Common Stock shall have been converted. Unless and
until such outstanding certificates are surrendered, no dividends or other
distributions payable to the holders of EVI Common Stock, with a record date as
of any time on or after the Effective Time, will be paid to the holders of such
outstanding certificates. Upon surrender of the certificates previously
representing Weatherford Common Stock, the holder thereof will receive
certificates representing the number of shares of EVI Common Stock to which such
holder is entitled, cash in lieu of fractional shares, and the amount of any
dividends or other distributions, if
40
48
any, payable to holders of EVI Common Stock on or after the Effective Time with
respect to such shares, without interest thereon.
CONDITIONS TO THE MERGER
The Merger Agreement provides that the respective obligations of EVI and
Weatherford to effect the Merger are subject to the satisfaction or waiver of
the following conditions: (i) that the Merger Agreement and the Merger shall
have been approved and adopted by the requisite vote of the stockholders of EVI
and the stockholders of Weatherford; (ii) that the EVI Common Stock issuable to
the Weatherford stockholders pursuant to the Merger shall have been approved for
listing on the NYSE, subject to official notice of issuance; (iii) that the
waiting period (and any extension thereof) applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated; (iv) that no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Merger shall be in effect; (v)
that 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; and (vi) that
there shall have been obtained any and all material permits, approvals and
consents of securities or blue sky authorities of any jurisdiction as are
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 the business,
financial condition or results of operations of EVI and its subsidiaries, taken
as a whole.
The Merger Agreement provides that the obligation of EVI to effect the
Merger is, at the option of EVI, further subject to the satisfaction or waiver
of the following conditions: (i) the agreements and covenants of Weatherford to
be complied with or performed on or before the Closing Date pursuant to the
Merger Agreement shall have been duly complied with or performed in all material
respects; (ii) Weatherford shall have furnished EVI with certified resolutions
of the Weatherford Board and stockholders approving the Merger and an opinion of
H. Suzanne Thomas, General Counsel of Weatherford, as to certain corporate
matters of Weatherford; (iii) the representations and warranties of Weatherford
contained in the Merger Agreement (other than those made as of a specific date)
shall be true in all material respects (except to the extent the representation
or warranty is already qualified by materiality, in which case it shall be true
in all respects) on and as of the Closing Date; (iv) EVI shall have received
from the "affiliates" of Weatherford, within the meaning of Rule 145 under the
Securities Act, written undertakings to the effect that no disposition will be
made by such persons of any shares of EVI Common Stock received pursuant to the
Merger except in compliance with the applicable provisions of the Securities Act
and the rules and regulations thereunder and that no shares will be sold until
such time that final results of EVI covering at least 30 days of combined
operations of EVI and Weatherford have been published; (v) EVI shall have
received an opinion of Fulbright & Jaworski, counsel to EVI, to the effect that
for U.S. federal income tax purposes, and conditioned upon certain
representations of Weatherford and EVI as to certain customary facts and
circumstances regarding the Merger, (a) the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, (b) each of
EVI and Weatherford is a party to the reorganization within the meaning of
Section 368(b) of the Code and (c) no gain or loss will be recognized by
Weatherford or EVI as a result of the Merger; (vi) EVI and Weatherford shall
have received a letter from Arthur Andersen to the effect that, in accordance
with GAAP and the applicable rules and regulations of the Commission, EVI and
Weatherford are each eligible to be a party to a merger accounted for as a
pooling of interests and that Arthur Andersen is not aware of any matters or
conditions that prohibit EVI's accounting for the Merger with Weatherford as a
pooling of interests; (vii) EVI shall have received evidence that all approvals
of governmental authorities and other third parties necessary for the
consummation of the Merger have been obtained, except those that are not,
individually or in the aggregate, material to EVI or Weatherford or the failure
of which to have been received would not have a material adverse effect on EVI
and its subsidiaries, taken as a whole, after giving effect to the Merger;
(viii) there shall not be pending or threatened by any governmental entity any
suit, action or proceeding (or by any other person any pending suit, action or
proceeding which has a reasonable likelihood of success), (a) challenging or
seeking to restrain or prohibit the consummation of the Merger or
41
49
any of the other transactions contemplated by the Merger Agreement or seeking to
obtain from EVI or any of its subsidiaries any damages that are material in
relation to EVI and its subsidiaries taken as a whole, (b) seeking to prohibit
or limit the ownership or operation by EVI or any of its subsidiaries of any
material portion of the businesses or assets of EVI, Weatherford or any of their
respective subsidiaries, or to dispose of or hold separate any material portion
of the businesses or assets of EVI, Weatherford or any of their respective
subsidiaries, as a result of the Merger or any of the other transactions
contemplated by the Merger Agreement, or (c) seeking to prohibit EVI or any of
its subsidiaries from effectively controlling in any material respect the
business or operations of EVI, Weatherford or any of their respective
subsidiaries; (ix) the fairness opinion from Morgan Stanley shall not have been
revoked or modified in a materially adverse manner; and (x) there shall not have
occurred any material adverse change with respect to Weatherford since the date
of the Merger Agreement.
The Merger Agreement provides that the obligation of Weatherford to effect
the Merger is, at the option of Weatherford, further subject to the satisfaction
or waiver of the following conditions: (i) the agreements and covenants of EVI
to be complied with or performed on or before the Closing Date pursuant to the
Merger Agreement shall have been duly complied with or performed in all material
respects; (ii) EVI shall have furnished Weatherford with certified resolutions
of the EVI Board and stockholders approving the Merger and an opinion of
Fulbright & Jaworski, counsel for EVI, as to certain corporate matters of EVI;
(iii) the representations and warranties of EVI contained in the Merger
Agreement (other than those made as of a specific date) shall be true in all
material respects (except to the extent the representation or warranty is
already qualified by materiality, in which case it shall be true in all
respects) on and as of the Closing Date; (iv) Weatherford shall have received an
opinion of Baker & Botts, counsel to Weatherford, to the effect that for U.S.
federal income tax purposes, and conditioned upon certain representations of EVI
and Weatherford as to certain customary facts and circumstances regarding the
Merger, (a) the Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code, (b) each of EVI and Weatherford is a party to the
reorganization within the meaning of Section 368(b) of the Code and (c) no gain
or loss will be recognized by the holders of Weatherford Common Stock as a
result of the Merger, except with respect to cash received in lieu of fractional
shares of EVI Common Stock; (v) the fairness opinions from Merrill Lynch and
Simmons shall not have been revoked or modified in a materially adverse manner;
(vi) there shall not have occurred any material adverse change with respect to
EVI since the date of the Merger Agreement; (vii) EVI and Weatherford shall have
received a letter from Arthur Andersen to the effect that, in accordance with
GAAP and the applicable rules and regulations of the Commission, EVI and
Weatherford are each eligible to be a party to a merger accounted for as a
pooling of interests and that Arthur Andersen is not aware of any matters or
conditions that prohibit EVI's accounting for the Merger with Weatherford as a
pooling of interests; (viii) Weatherford shall have received evidence that all
approvals of governmental authorities and other third parties necessary for the
consummation of the Merger have been obtained, except those that are not,
individually or in the aggregate, material to EVI and its subsidiaries taken as
a whole; and (ix) there shall not be pending or threatened by any governmental
entity any suit, action or proceeding, (a) challenging or seeking to restrain or
prohibit the consummation of the Merger or any of the other transactions
contemplated by the Merger Agreement or seeking to obtain from Weatherford, EVI
or any of their respective subsidiaries any damages that are material in
relation to Weatherford and its subsidiaries taken as a whole, (b) seeking to
prohibit or limit the ownership or operation by EVI or any of its subsidiaries
of any material portion of the businesses or assets of EVI, Weatherford or any
of their respective subsidiaries, or to dispose of or hold separate any material
portion of the businesses or assets of EVI, Weatherford or any of their
respective subsidiaries, as a result of the Merger or any of the other
transactions contemplated by the Merger Agreement, or (c) seeking to prohibit
EVI or any of its subsidiaries from effectively controlling in any material
respect the business or operations of Weatherford or any of its subsidiaries.
The various conditions to the obligations of EVI and Weatherford to
consummate the Merger may be waived by the party to which such conditions are
applicable subject to such restrictions as may exist under law that would
prohibit the consummation of the Merger notwithstanding such waiver. Such
conditions that could not be waived by law or without a material violation of
law are (i) the requirements of stockholder approval by EVI and Weatherford,
(ii) the expiration or termination of the waiting period under the HSR Act and
(iii) the effectiveness of the Registration Statement on the Closing Date. In
addition, neither EVI nor
42
50
Weatherford contemplates waiving any of the conditions relating to (i) the
receipt of legal or tax opinions, (ii) the receipt of the letters from Arthur
Andersen that EVI and Weatherford are each eligible to be a party to a merger
accounted for as a pooling of interests or (iii) the absence of any revocation
of modification in a material adverse manner of the fairness opinions of Morgan
Stanley, Merrill Lynch or Simmons.
REPRESENTATIONS AND WARRANTIES OF EVI AND WEATHERFORD
Under the Merger Agreement, EVI and Weatherford have made various
representations and warranties relating to, among other things, their respective
businesses and financial conditions, the accuracy of their various filings with
the Commission and their financial statements contained therein, the status of
various employee benefit plans, tax and environmental matters, the satisfaction
of certain legal requirements for the Merger and the existence of certain
litigation. The representations and warranties of each of the parties to the
Merger Agreement will expire upon consummation of the Merger.
CONDUCT OF BUSINESS OF EVI AND WEATHERFORD PRIOR TO THE MERGER
Pursuant to the Merger Agreement, Weatherford agreed that, prior to the
Effective Time, other than as expressly contemplated by the Merger Agreement,
Weatherford shall and shall cause its "significant subsidiaries" (as that term
is defined in the regulations promulgated under the Exchange Act) to carry on
their respective businesses in the usual, regular and ordinary course in
substantially the same manner as previously conducted and use all reasonable
efforts to preserve intact their current business organizations, keep available
the services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them, in each case consistent with past
practice, to the end that their goodwill and ongoing businesses shall be
unimpaired to the fullest extent possible at the Effective Time. Weatherford
also agreed that it would not, and would not permit any of its subsidiaries of
which it owns directly or indirectly more than 50% of the voting or equity
interests in to: (i) (a) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, other than (A)
dividends and distributions by any direct or indirect wholly owned subsidiary of
Weatherford to Weatherford or a wholly owned subsidiary of Weatherford or (B)
immaterial dividends, distributions and other similar transactions involving the
existing subsidiaries, (b) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in respect of its
capital stock or (c) purchase, redeem or otherwise acquire any shares of capital
stock of Weatherford or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities other than in connection
with the exercise of outstanding stock options and satisfaction of withholding
obligations under outstanding stock options and restricted stock; (ii) issue,
deliver, sell, pledge or otherwise encumber any shares of its capital stock, any
other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than the issuance of Weatherford Common Stock upon
the exercise of stock options outstanding on the date of the Merger Agreement
and those regular stock option and restricted stock grants of Weatherford that
may be made thereafter in the ordinary course of business pursuant to a form of
stock option agreement or restricted stock agreement previously approved by
EVI); (iii) amend its Certificate of Incorporation or By-laws; (iv) except as
previously disclosed to EVI, acquire or agree to acquire any business,
corporation, partnership, association, joint venture, limited liability company
or other entity or division thereof involving the payment of consideration in
excess of $100 million individually or in the aggregate without the written
consent of EVI, which consent shall not be unreasonably withheld; (v) sell,
lease, mortgage, pledge or grant a lien on or otherwise encumber or dispose of
any of its properties or assets, except (a) sales or leases in the ordinary
course of business consistent with past practice, (b) as may be required under
Weatherford's credit and debt facilities, (c) with respect to purchase money
security interests, (d) not relating to the borrowing of money and (e) other
immaterial transactions not in excess of $100 million in the aggregate; (vi)
incur any obligation for borrowed money or purchase money indebtedness, whether
or not evidenced by a note, bond, debenture or similar instrument, except for
such borrowings that would not result in the total outstanding indebtedness of
Weatherford and its subsidiaries on a consolidated basis being in excess of $300
million at any one time; (vii) make any material election relating to taxes or
settle or compromise any material tax liability; (viii) except for those
contemplated corporate transactions previously disclosed to EVI, adopt a plan of
43
51
complete or partial liquidation of Weatherford or any of its significant
subsidiaries or resolutions providing for or authorizing such a liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization; (ix) change any material accounting principle used by it, except
as required by regulations promulgated by the Commission; (x) adopt or amend
(except as may be required by law) any employee benefit plan, agreement, trust,
fund or other arrangement, for the benefit or welfare of any employee, director
or former director or employee, increase the compensation or fringe benefits of
any officer of Weatherford or any of its subsidiaries, or, except as provided in
an existing Weatherford stock option plan or in the ordinary course of business
consistent with past practice, increase the compensation or fringe benefits of
any employee or former employee or pay any benefit not required by any existing
plan, arrangement or agreement; (xi) grant any new or modified severance or
termination arrangement or increase or accelerate any benefits payable under its
severance or termination pay policies in effect on the date of the Merger
Agreement; (xii) authorize any of, or commit to take, any of the foregoing
actions; or (xiii) take any action that would, or could reasonably be expected
to, result in any of the representations and warranties of Weatherford set forth
in the Merger Agreement becoming untrue.
Pursuant to the Merger Agreement, EVI agreed that, prior to the Effective
Time, other than as expressly contemplated by the Merger Agreement, EVI shall
and shall cause each of its significant subsidiaries to carry on their
respective businesses in the usual, regular and ordinary course in substantially
the same manner as previously conducted and, to the extent consistent therewith,
use all reasonable efforts to preserve intact their current business
organizations, keep available the services of their current officers and
employees and preserve their relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with them, in each
case consistent with past practice, to the end that their goodwill and ongoing
businesses shall be unimpaired to the fullest extent possible at the Effective
Time. EVI also agreed that it shall not, and shall not permit any of its
subsidiaries of which it owns, directly or indirectly, more than 50% of the
voting or equity interests in to: (i) (a) declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its capital
stock, other than dividends and distributions by any direct or indirect wholly
owned subsidiary of EVI to EVI or a wholly owned subsidiary of EVI or immaterial
dividends, distributions and other similar transactions involving existing
subsidiaries, (b) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of its capital
stock or (c) purchase, redeem or otherwise acquire any shares of capital stock
of EVI or any of its subsidiaries or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities other than in
connection with exercise of outstanding stock options and satisfaction of
withholding obligations under outstanding stock options; (ii) issue, deliver,
sell, pledge or otherwise encumber any shares of its capital stock, any other
voting securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible securities
other than (a) the issuance of EVI Common Stock upon the exercise of stock
options outstanding on the date of the Merger Agreement in accordance with their
current terms, (b) those potential acquisitions previously disclosed to
Weatherford, including the proposed acquisition of Christiana, or (c) excluding
any shares issued pursuant to the proposed acquisition of Christiana, the
issuance of a number of shares of EVI Common Stock, not to exceed 10% of the
shares outstanding on the date of the Merger Agreement, in connection with the
acquisition of assets or equity securities of other entities or businesses;
(iii) amend EVI's Restated Certificate of Incorporation or By-laws; (iv) except
for the proposed acquisition of Christiana and other possible transactions
previously disclosed to Weatherford, acquire or agree to acquire any business,
corporation, partnership, association, joint venture, limited liability company
or other entity or division thereof involving the payment of consideration, in
aggregate for all such acquisitions, in excess of $250 million without the
written consent of Weatherford, which consent shall not be unreasonably
withheld; (v) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or similar
instrument, except for such borrowings that would not result in the total
outstanding indebtedness of EVI and its subsidiaries on a consolidated basis
being in excess of $1 billion at any one time; (vi) sell, lease, mortgage,
pledge or grant a lien on or otherwise encumber or dispose of any of its
properties or assets, except (a) sales or leases in the ordinary course of
business consistent with past practice, (b) as may be required under EVI's
credit or debt facilities, (c) with respect to purchase money security
interests, (d) not relating to the borrowing of money and (e) other transactions
not in excess of $100 million in the aggregate; (vii) except for those
contemplated
44
52
corporate transactions previously disclosed to Weatherford, adopt a plan of
complete or partial liquidation of EVI or any of its significant subsidiaries or
resolutions providing for or authorizing such a liquidation or a dissolution,
merger, consolidation, restructuring, recapitalization or reorganization; (viii)
change any material accounting principle used by it, except as required by
regulations promulgated by the Commission; (ix) authorize any of, or commit or
agree to take any of, the foregoing actions; or (x) take any action that would,
or could reasonably be expected to, result in any of the representations and
warranties of EVI set forth in the Merger Agreement becoming untrue.
BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER
At the Effective Time, the number of directors of EVI will be ten, of which
six members have been named by EVI and four have been named by Weatherford. The
six members named by EVI are Bernard J. Duroc-Danner, who will serve as
Chairman, David J. Butters, Sheldon S. Gordon, Sheldon B. Lubar, Robert B.
Millard and Robert A. Rayne. The four members named by Weatherford are Thomas R.
Bates, Jr., Philip Burguieres, William E. Macaulay and Robert K. Moses, Jr. See
"Management -- Directors of EVI Following the Merger". Additionally, Mr.
Duroc-Danner will serve as the Chief Executive Officer of EVI and Mr. Bates will
serve as President and Chief Operating Officer of EVI following the Effective
Time. The other persons expected to serve as executive officers of EVI after the
Effective Time are set forth under "Management -- Officers of EVI Following the
Merger".
AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS OF EVI
At the Effective Time, the Restated Certificate of Incorporation of EVI
will be amended and restated to (i) change the name of EVI to "EVI Weatherford,
Inc.", (ii) increase the authorized number of shares of EVI Common Stock to
250,000,000 shares, (iii) grant to the EVI Board the power and authority to
amend the By-laws of EVI and (iv) require for any stockholder amendments to
EVI'S By-laws that they be approved by the affirmative vote of the holders of
80% or more of the combined voting power of the then outstanding shares of stock
of all classes and series of stock of EVI that are entitled to vote generally in
the election of directors. As so amended, such Amended and Restated Certificate
of Incorporation will be EVI's Certificate of Incorporation following the
Merger. Additionally, at the Effective Time, the By-laws of EVI will be amended
and restated to establish the powers and duties of certain officers of EVI,
including the Chairman of the Board and Chief Executive Officer and the
President. As so amended, such Amended and Restated By-Laws will be EVI's
By-laws following the Merger. A copy of each of EVI's Certificate of
Incorporation and EVI's By-laws following the Merger is attached as Exhibit A
and B, respectively, to the Merger Agreement, which is attached as Appendix A
hereto.
NO SOLICITATION; PAYMENTS IN THE EVENT OF CERTAIN TAKEOVER PROPOSALS
The Merger Agreement provides that Weatherford will not, and will not
permit any of its subsidiaries to, nor will it authorize or permit any officer,
director or employee of or any 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 takeover
proposal, (ii) enter into any agreement (other than confidentiality and
standstill agreements in accordance with the immediately following proviso) with
respect to any takeover proposal, or (iii) participate in any discussions or
negotiations regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
takeover proposal; provided that, in the case of clause (iii), prior to the vote
of stockholders of Weatherford for approval of the Merger and to the extent
required by the fiduciary obligations of the Weatherford Board, determined in
good faith by a majority of the disinterested members thereof based on the
advice of outside counsel, Weatherford may, in response to an unsolicited
request therefor, furnish information to any person or "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) pursuant to a confidentiality
agreement on substantially the same terms as a confidentiality agreement with
EVI, including the standstill provisions thereof. "Takeover proposal" is defined
in the Merger Agreement as (i) any proposal or offer, other than a proposal or
offer by EVI or its affiliates, for a merger, share exchange or other business
combination involving Weatherford (excluding an
45
53
acquisition by Weatherford otherwise permitted to be made by Weatherford under
the Merger Agreement and which does not involve a direct merger with or into
Weatherford), (ii) any proposal or offer, other than a proposal or offer by EVI
or its affiliates, to acquire from Weatherford or any of its affiliates in any
manner, directly or indirectly, a greater than 15% voting or equity interest in
Weatherford or the acquisition of a material amount of the assets of Weatherford
and its subsidiaries, taken as a whole, including an investment in or
acquisition of securities of a subsidiary of Weatherford, to the extent so
material or (iii) any proposal or offer, other than by EVI or its affiliates, to
acquire from the stockholders of Weatherford, by tender offer, exchange offer or
otherwise, more than 15% of the outstanding shares of Weatherford Common Stock.
Notwithstanding the foregoing, Weatherford may engage in discussions with any
person or group that has made an unsolicited takeover proposal for the limited
purpose of determining whether such proposal is a superior proposal (as
hereinafter defined). In addition, Weatherford may take and disclose to its
stockholders a position contemplated by Rule 14e-2(a) of the Exchange Act
following Weatherford's receipt of a Notice of Superior Proposal (as hereinafter
defined).
The Merger Agreement also provides that neither the Weatherford Board nor
any committee thereof shall (i) withdraw or modify in a manner adverse to EVI
the approval or recommendation by the Weatherford Board or any such committee of
the Merger Agreement or the Merger or take any action having such effect or (ii)
approve or recommend, or propose to approve or recommend, any takeover proposal,
except in connection with the termination of the Merger Agreement (a) by reason
of mutual consent by EVI and Weatherford, (b) by either Weatherford or EVI as a
result of (1) the failure of the stockholders of Weatherford or EVI to approve
the Merger, (2) the termination of the Merger Agreement because a court of
competent jurisdiction or governmental authority shall have issued an order,
decree or ruling permanently enjoining, restraining or otherwise prohibiting the
Merger or (3) if the Merger is not consummated on or before September 30, 1998
(other than by reason of a material breach of the Merger Agreement by the
parties seeking to terminate the Merger Agreement), or (c) by Weatherford if EVI
breaches any of its representations or warranties in the Merger Agreement or
fails to perform in any material respect any of its covenants, agreements or
obligations under the Merger Agreement.
Notwithstanding the foregoing, in the event the Weatherford Board receives
a takeover proposal that, in the exercise of its fiduciary obligations (as
determined in good faith by a majority of the disinterested members thereof
based on the advice of outside counsel), it determines to be a superior
proposal, the Weatherford Board may withdraw or modify its approval or
recommendation of the Merger Agreement or the Merger and may (subject to the
following sentence) terminate the Merger Agreement, in each case at any time
after midnight on the third business day following EVI's receipt of written
notice (a "Notice of Superior Proposal") advising EVI that the Weatherford Board
has received a takeover proposal which it has determined to be a superior
proposal, specifying the material terms and conditions of such superior proposal
(including the proposed financing for such proposal and a copy of any documents
conveying such proposal) and identifying the person making such superior
proposal. Weatherford may also terminate the Merger Agreement pursuant to the
preceding sentence only if the stockholders of Weatherford have not voted upon
the Merger and Weatherford shall have paid to EVI $60 million. Any of the
foregoing to the contrary notwithstanding, Weatherford may engage in discussions
with any person or group that has made an unsolicited takeover proposal for the
limited purpose of determining whether such proposal (as opposed to any further
negotiated proposal) is a superior proposal.
The Merger Agreement also provides that Weatherford shall promptly pay $60
million to EVI if EVI terminates the Merger Agreement as a result of the
Weatherford Board or any committee thereof (i) withdrawing or modifying in a
manner adverse to EVI the approval or recommendation by the Weatherford Board or
any such committee of the Merger Agreement or the Merger or taking any action
having such effect or (ii) approving or recommending, or proposing to approve or
recommend, any takeover proposal.
In addition, if the Merger Agreement is terminated for any reason other
than a material breach by EVI, Weatherford has agreed to pay to EVI $60 million
if (i) after the date of the Merger Agreement and before the termination of the
Merger Agreement, a takeover proposal is made and publicly announced by any
person or group of persons (an "Acquiring Person"), (ii) the holders of shares
of Weatherford Common Stock do not
46
54
approve the Merger and (iii) after the date of the Merger Agreement and at or
prior to 12 months after the date of termination of the Merger Agreement, the
Acquiring Person or any Affiliate of the Acquiring Person effects an Alternative
Transaction (as defined below). An Alternative Transaction is defined to mean
(i) a merger, share exchange or other business combination or other transaction
in which more than 15% of the voting securities of Weatherford or a material
amount of assets of Weatherford and its subsidiaries, taken as a whole, is
acquired, including an investment in or acquisition of securities of a
subsidiary of Weatherford to the extent so material or (ii) any acquisition from
the stockholders of Weatherford by tender offer, exchange offer or otherwise of
more than 15% of the outstanding shares of Weatherford Common Stock.
The Merger Agreement defines a "superior proposal" as any bona fide
takeover proposal to acquire, directly or indirectly, more than 50% of the
shares of Weatherford Common Stock then outstanding or more than 50% of the
assets of Weatherford and its subsidiaries, and otherwise on terms which a
majority of the disinterested members of the Weatherford Board determines in its
good faith reasonable judgment (based on the written advice of a financial
advisor of nationally recognized reputation, a copy of which shall be provided
to EVI) to be more favorable to Weatherford's stockholders than the Merger.
Weatherford has agreed to promptly advise EVI of any takeover proposal or any
inquiry with respect to or which could lead to any takeover proposal, of the
material terms and conditions of any such inquiry or takeover proposal
(including the financing for such proposal and a copy of such documents
conveying such proposal), and of the identity of the person making any such
inquiry or takeover proposal.
The Merger Agreement also provides that EVI will not, and will not permit
any of its subsidiaries to, nor shall it authorize or permit any of its or their
officers, directors, employees, investment bankers, attorneys or other advisors,
agents or representatives to, directly or indirectly, solicit, initiate or
encourage the submission of any Preclusive Transaction (as hereinafter defined).
The Merger Agreement defines a "Preclusive Transaction" as a transaction that
would be in lieu of the Merger or that would reasonably be expected to result in
an agreement that would prohibit or otherwise preclude the consummation of the
Merger.
The Merger Agreement also provides that neither the EVI Board nor any
committee thereof shall (i) withdraw or modify in a manner adverse to
Weatherford the approval or recommendation by the EVI Board or any such
committee of the Merger Agreement or the Merger or take any action having such
effect or (ii) approve or recommend a Preclusive Transaction, except in
connection with the termination of the Merger Agreement (a) by reason of mutual
consent by EVI and Weatherford, (b) by either Weatherford or EVI as a result of
(1) the failure of the stockholders of Weatherford or EVI to approve the Merger,
(2) the termination of the Merger Agreement because a court of competent
jurisdiction or governmental authority shall have issued an order, decree or
ruling permanently enjoining, restraining or otherwise prohibiting the Merger or
(3) if the Merger is not consummated on or before September 30, 1998 (other than
by reason of a material breach of the Merger Agreement by the party seeking to
terminate the Merger Agreement), or (c) by EVI if Weatherford breaches any of
its representations or warranties in the Merger Agreement or fails to perform in
any material respect any of its covenants, agreements or obligations under the
Merger Agreement. Notwithstanding the foregoing, if the EVI Board receives a
proposal for a Preclusive Transaction or other takeover proposal involving EVI
because of which, in the exercise of its fiduciary obligations (as determined in
good faith by a majority of the disinterested members thereof based on advice of
outside counsel), it determines it is necessary to withdraw its recommendation
or modify its approval or recommendation of the Merger Agreement or the Merger,
the EVI Board may do so and EVI may terminate the Merger Agreement by advising
Weatherford that the EVI Board has received a takeover proposal which it has
determined requires such action, specifying the material terms and conditions of
such proposal (including the proposed financing for such proposal and a copy of
any documents conveying such proposal) and identifying the person making such
proposal, but only if the stockholders of EVI have not yet voted upon the Merger
and EVI shall have paid $60 million to Weatherford. EVI further agreed to pay
$60 million to Weatherford if the stockholders of EVI do not approve the Merger
as a result of a hostile takeover of EVI after the date of the Merger Agreement.
The Merger Agreement defines "takeover proposal involving EVI" as (i) any
proposal or offer for a merger, share exchange or other business combination
involving EVI (excluding an acquisition otherwise permitted to be made by EVI
under the Merger Agreement and which does not involve a direct merger with or
into EVI), (ii) any proposal or offer to acquire from EVI or any of its
affiliates in any manner, directly or indirectly, a
47
55
greater than 15% voting or equity interest in EVI or the acquisition of a
material amount of the assets of EVI and its subsidiaries taken as a whole,
including an investment in or acquisition of securities of a subsidiary of EVI
to the extent so material or (iii) any proposal or offer to acquire from the
stockholders of EVI by tender offer, exchange offer or otherwise, more than 15%
of the EVI Common Stock then outstanding.
TERMINATION OR AMENDMENT OF MERGER AGREEMENT
The Merger Agreement provides that it may be terminated at any time prior
to the Effective Time, whether prior to or after approval of the Merger by the
stockholders of EVI or the stockholders of Weatherford: (i) by mutual written
consent of EVI and Weatherford; (ii) by either EVI or Weatherford if (a) the
stockholders of Weatherford or EVI fail to give any required approval of the
Merger upon a vote at a duly held meeting; (b) any court of competent
jurisdiction or any governmental authority shall have issued an order
permanently enjoining, restraining or otherwise prohibiting the Merger; or (c)
the Merger has not been effected on or before September 30, 1998; and (iii) by
either EVI or Weatherford if the other party breaches any of its representations
or warranties in the Merger Agreement or fails to perform in any material
respect any of its covenants, agreements or obligations thereunder. The Merger
Agreement also may be terminated as described above under "-- No Solicitation;
Payments in the Event of Certain Takeover Proposals".
The Merger Agreement provides that it may be amended by an instrument in
writing signed on behalf of each party thereto, provided that after the Merger
Agreement has been approved and adopted by the stockholders of EVI and the
stockholders of Weatherford, it may be amended only as may be permitted by
applicable provisions of Delaware law.
INDEMNIFICATION
Pursuant to the Merger Agreement, EVI has agreed that all rights to
indemnification for acts or omissions occurring prior to the Effective Time
existing in favor of the current or former directors or officers of Weatherford
and its subsidiaries (the "Indemnified Parties") as provided in their respective
certificates of incorporation or by-laws and indemnity agreements shall survive
the Merger, and EVI shall continue such indemnification rights in full force and
effect in accordance with their terms and be financially responsible therefor.
EVI has also agreed that if EVI or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in each such case, proper provisions shall be made so that the
successors and assigns of EVI, which shall be financially responsible persons or
entities, assume such indemnification obligations. See "-- Interests of Certain
Persons in the Merger".
EVI has further agreed to use reasonable best efforts to purchase and
maintain for the benefit of the Indemnified Parties for a period of six years
after the Effective Time directors and officers liability insurance with respect
to acts, omissions and other matters occurring prior to the Effective Time;
provided, however, that EVI may substitute therefor a "runoff" policy of
insurance having a term of six years following the Effective Time with
comparable coverage. Notwithstanding the foregoing, EVI shall not be required to
expend more than $1 million in premiums for the aggregate six-year period to
obtain such coverage.
Further, pursuant to the terms of the Agreement and Plan of Merger between
Weatherford International Incorporated (the former name of Weatherford) and
Enterra Corporation dated as of June 23, 1995, EVI has agreed that effective as
of the Effective Time, the indemnification obligations of Weatherford as the
surviving corporation in the merger contemplated by such agreement will be
deemed expressly assumed by EVI.
WEATHERFORD OPTIONS AND STOCK PLANS
Pursuant to the Merger Agreement, on or prior to the Closing Date,
Weatherford shall take such action under the Weatherford stock option plans and
agreements to assure that options outstanding under Weatherford stock option
plans and agreements at the Effective Time ("Weatherford Options") shall no
longer permit the holder thereof to purchase Weatherford Common Stock and, in
lieu thereof, provide the
48
56
holder thereof the right to purchase a number of shares of EVI Common Stock
equal to the number of shares of Weatherford Common Stock subject to such
Weatherford Options multiplied by .95 with a per share option price equal to the
per share option price of the Weatherford option divided by .95 and further
provided that such substitute options comply with the applicable regulations of
the Internal Revenue Service (the "Service") to preserve the tax favored status
of any incentive stock options. EVI has agreed to assume the obligations of
Weatherford to issue such shares of EVI Common Stock upon exercise of such
options and to take all corporate action necessary to reserve for issuance a
sufficient number of shares of EVI Common Stock for delivery upon exercise of
such options. As soon as practicable after the Effective Time, EVI has agreed to
cause the shares of EVI Common Stock so issuable under Weatherford's stock
option plans to be registered under the Securities Act.
Based on the number of Weatherford Options outstanding at the Record Date,
EVI will be required at the Effective Time to reserve an aggregate of 1,400,408
shares of EVI Common Stock for issuance upon exercise of Weatherford Options
assumed by EVI pursuant to the Merger.
VOTING AGREEMENTS
As a condition to EVI's agreement to enter into the Merger Agreement, the
First Reserve Entities and Messrs. Hill and Macaulay executed a voting agreement
(the "First Reserve Voting Agreement") with respect to the approval of the
Merger and the Merger Agreement. No consideration was received by the First
Reserve Entities or Messrs. Hill or Macaulay for their execution of the First
Reserve Voting Agreement other than as an inducement to EVI to enter into the
Merger Agreement. Pursuant to the First Reserve Voting Agreement, the First
Reserve Entities and Messrs. Hill and Macaulay have agreed to vote an aggregate
of 6,585,968 shares (approximately 12.8%) of Weatherford Common Stock held by
them in favor of the Merger and the Merger Agreement at the Weatherford Special
Meeting, unless the Weatherford Board is recommending, at the time of such
meeting, that the stockholders of Weatherford vote against such adoption in view
of the pendency of a superior proposal as provided in the Merger Agreement. Mr.
Hill is the Chairman of First Reserve Corporation and is a current director of
Weatherford and Mr. Macaulay is the President and Chief Executive Officer of
First Reserve Corporation and is a current director of Weatherford, and a
proposed director of EVI following the Merger. See "-- Interests of Certain
Persons in the Merger -- Directors of EVI Following the Merger" and
"Management -- Directors of EVI Following the Merger".
Pursuant to the First Reserve Voting Agreement, the First Reserve Entities
and Messrs. Hill and Macaulay additionally each agreed that they will not: (i)
directly or indirectly (a) solicit, initiate or encourage the submission of any
takeover proposal with respect to Weatherford, (b) enter into any agreement with
respect to a takeover proposal with respect to Weatherford or (c) participate in
any discussion or negotiation 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 takeover proposal with respect to
Weatherford; provided that the foregoing clause (c) will not prohibit any of
their affiliates who serve as a director of Weatherford from acting, subject to
the Merger Agreement, solely in his capacity as a director of Weatherford; or
(ii) sell, contract to sell or otherwise transfer or dispose of any voting
securities of Weatherford over which they have dispositive power; provided,
however, First Reserve Secured Energy Assets Fund, L.P., one of the First
Reserve Entities which holds 650,000 shares of Weatherford Common Stock, may
sell or distribute its voting securities of Weatherford in connection with the
liquidation of such fund as long as the First Reserve Entities provide EVI with
evidence satisfactory to EVI that such sale or distribution would not adversely
affect the Merger from being accounted for as a pooling of interests.
Additionally, each of the parties agreed that, upon consummation of the Merger,
all stockholder agreements with Weatherford, including the Agreement dated as of
June 23, 1995, as amended (the "First Reserve Agreement"), among Weatherford
International Incorporated and American Gas & Oil Investors, L.P., AMGO II,
L.P., AMGO III, L.P., First Reserve Secured Energy Assets Fund, L.P., First
Reserve Fund V, L.P., First Reserve Fund V-2, L.P., First Reserve Fund VI, L.P.,
First Reserve Corporation, William E. Macaulay and John A. Hill, would be
terminated and that the First Reserve Entities and Messrs. Hill and Macaulay
would have no further rights thereunder.
49
57
As a result of the First Reserve Voting Agreement, approval of the Merger
will only require the approval of the holders of approximately an additional
37.2% of the outstanding shares of Weatherford Common Stock as of the Record
Date.
As a condition to Weatherford's agreement to enter into the Merger
Agreement, Weatherford required each of Christiana and Lehman Holdings to
execute a voting agreement with respect to the approval of the Merger and the
Merger Agreement. No consideration was received by either of Christiana or
Lehman Holdings for their execution of the voting agreements other than as an
inducement to Weatherford to enter into the Merger Agreement. As a result,
Christiana and Lehman Holdings have agreed to vote 3,897,462 and 3,598,832
shares, respectively, or an aggregate of 7,496,294 shares (approximately 15.7%),
of EVI Common Stock in favor of the Merger at the EVI Special Meeting, unless
the EVI Board is recommending, at the time of such meeting, that the
stockholders of EVI vote against such adoption in view of the pendency of a
superior proposal as provided in the Merger Agreement. Additionally, pursuant to
such voting agreements, each of Christiana and Lehman agreed not to directly or
indirectly (i) solicit, initiate or encourage the submission of any Preclusive
Transaction, (ii) enter into any agreement with respect to a Preclusive
Transaction or (iii) participate in any discussion or negotiation 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
Preclusive Transaction; provided that the foregoing clause (iii) shall not
prohibit any affiliate of Christiana or Lehman Holdings who serves as a director
of EVI from acting, subject to the Merger Agreement, solely in his capacity as a
director of EVI. The Voting Agreement with Christiana does not prohibit
Christiana from being acquired by EVI pursuant to a merger in which a number of
shares of EVI Common Stock approximating the number of shares of EVI Common
Stock currently held by Christiana would be issued to the Christiana
stockholders as partial consideration for EVI's acquisition of Christiana. To
the extent that EVI's proposed acquisition of Christiana occurs prior to the
Record Date, the 3,897,462 shares of EVI Common Stock (approximately 8.1%) held
by Christiana will not be able to be voted in favor of the Merger in that
Christiana will be a wholly owned subsidiary of EVI. However, approximately
2,036,135 shares (approximately 4.3%) of EVI Common Stock, will be issued in the
Christiana merger to Sheldon Lubar, a director of EVI, and certain members of
his immediate family. Mr. Lubar and such family members have advised EVI that
they intend to vote those shares in favor of the Merger.
As a result of such voting agreements, approval of the Merger will only
require the approval of the holders of approximately an additional 34.3% of the
outstanding shares of EVI Common Stock as of the Record Date (38.2% if the
Christiana acquisition is completed prior to the Record Date) and approximately
48,832,815 shares, representing 50.5% of the total, will be held by the prior
holders of the Weatherford Common Stock.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material U.S. federal income tax
consequences of the Merger to the holders of Weatherford Common Stock and is
based upon current provisions of the Code, existing regulations thereunder,
current administrative rulings of the Service and court decisions, all of which
are subject to change. No attempt has been made to comment on all federal income
tax consequences of the Merger that may be relevant to particular holders,
including holders that are subject to special tax rules which may modify or
alter the following discussion, such as dealers in securities, foreign persons,
mutual funds, insurance companies, tax-exempt entities and holders who do not
hold their shares as capital assets. HOLDERS OF WEATHERFORD COMMON STOCK ARE
ADVISED AND EXPECTED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER IN LIGHT OF THEIR PERSONAL
CIRCUMSTANCES AND THE CONSEQUENCES OF THE MERGER UNDER STATE, LOCAL AND FOREIGN
TAX LAWS.
Neither EVI nor Weatherford has requested a ruling from the Service in
connection with the Merger. On or prior to the Effective Time, EVI will have
received from its counsel, Fulbright & Jaworski, an opinion to the effect that,
for U.S. federal income tax purposes, (i) the Merger will constitute a
"reorganization" within the meaning of Section 368(a) of the Code, (ii) each of
EVI and Weatherford is a party to the reorganization within the meaning of
Section 368(b) of the Code and (iii) no gain or loss will be recognized by EVI
or
50
58
Weatherford as a result of the Merger. On or prior to the Effective Time,
Weatherford will have received from its counsel, Baker & Botts, an opinion to
the effect that, for U.S. federal income tax purposes (i) the Merger will
constitute a "reorganization" within the meaning of Section 368(a) of the Code,
(ii) each of EVI and Weatherford is a party to the reorganization within the
meaning of Section 368(b) of the Code and (iii) no gain or loss will be
recognized by the stockholders of Weatherford upon the receipt by them of shares
of EVI Common Stock in exchange for their shares of Weatherford Common Stock
pursuant to the Merger, except with respect to cash received in lieu of
fractional shares of EVI Common Stock. Such opinions are subject to certain
assumptions and based on certain representations of EVI and Weatherford.
Weatherford stockholders should be aware that such opinions are not binding upon
the Service and no assurance can be given that the Service will not adopt a
contrary position or that a contrary Service position would not be sustained by
a court.
In the event the Merger qualifies as a reorganization under 368(a) of the
Code, the following U.S. federal income tax consequences should occur:
(a) no gain or loss will be recognized by EVI or Weatherford by reason
of the Merger;
(b) no gain or loss will be recognized by a holder of Weatherford
Common Stock who exchanges all of his or her shares of Weatherford Common
Stock solely for shares of EVI Common Stock in the Merger;
(c) the aggregate basis of the shares of EVI Common Stock to be
received by a Weatherford stockholder in the Merger (including any
fractional share not actually received) will be the same as the aggregate
basis of the shares of Weatherford Common Stock surrendered in exchange
therefor;
(d) the holding period of the shares of EVI Common Stock to be
received by a Weatherford stockholder in the Merger (including any
fractional share not actually received) will include the holding period of
the shares of Weatherford Common Stock surrendered in exchange therefor,
provided that such shares of Weatherford Common Stock are held as capital
assets at the Effective Time; and
(e) cash payments in lieu of a fractional share will be treated as if
a fractional share of EVI Common Stock had been received in the Merger and
then redeemed by EVI. Such a redemption should qualify as a distribution in
full payment in exchange for the fractional share rather than as a
distribution of a dividend. Accordingly, a Weatherford stockholder
receiving cash in lieu of a fractional share will recognize gain or loss
treatment upon such payment equal to the difference, if any, between such
stockholder's basis in the fractional share (as described in paragraph (c)
above) and the amount of cash received. Such gain or loss will be eligible
for long-term capital gain or loss treatment if the Weatherford Common
Stock is held as a capital asset at the Effective Time and the holding
period for the fractional share (as described in paragraph (d) above) is
more than 12 months. If the holding period for such fractional share is
more than 18 months, any such gain will be taxed at a maximum rate of 20
percent. If there is a gain with respect to a fractional share and the
holding period thereof (as described in paragraph (d) above) is more than
12 months but not more than 18 months, such gain will be taxed at a maximum
rate of 28 percent.
ACCOUNTING TREATMENT
The Merger will be accounted for using the "pooling of interests" method of
accounting pursuant to Opinion No. 16 of the Accounting Principles Board. The
pooling of interests method of accounting assumes that the combining companies
have been merged from inception, and the historical financial statements for
periods prior to consummation of the Merger are restated as though the companies
had been combined from inception. The restated financial statements are adjusted
to conform the accounting policies of the companies.
The Merger is conditioned on EVI and Weatherford receiving a letter from
Arthur Andersen, in form and substance satisfactory to EVI and Weatherford, to
the effect that, in accordance with GAAP and the applicable rules and
regulations of the Commission, EVI and Weatherford are each eligible to be a
party to a merger accounted for as a "pooling of interests" and that Arthur
Andersen is not aware of any matters or conditions that prohibit EVI's
accounting for the Merger with Weatherford as a "pooling of interests".
51
59
GOVERNMENTAL AND REGULATORY APPROVALS
Under the provisions of the HSR Act, the Merger may not be consummated
until such time as the specified waiting period requirements of the HSR Act have
been satisfied. EVI and Weatherford filed notification reports, together with
requests for early termination of the waiting period, with the Department of
Justice and the FTC on March 30, 1998.
At any time before or after the Effective Time, the Department of Justice,
the FTC or a private person or entity could seek under the antitrust laws, among
other things, to enjoin the Merger or to cause EVI, Weatherford or the surviving
corporation to sell, license, dispose of or hold separate, or to operate in any
specified manner any material assets or businesses of EVI, Weatherford or the
surviving corporation. There can be no assurance that a challenge to the Merger
will not be made or that, if such a challenge is made, EVI and Weatherford will
prevail.
EVI and Weatherford are aware of no other governmental or regulatory
approvals required for consummation of the Merger, other than compliance with
applicable securities laws of the various states.
NYSE LISTING
As a condition to the closing of the Merger, the shares of EVI Common Stock
to be issued upon consummation of the Merger and the shares reserved for
issuance in connection with Weatherford's stock option plans will be approved
for listing on the NYSE, subject to official notice of issuance.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Weatherford Board with respect to
the Merger, Weatherford's stockholders should be aware that certain members of
the Weatherford Board and certain officers of Weatherford have certain interests
respecting the Merger separate from their interests as holders of Weatherford
Common Stock, including those referred to below. In addition, Merrill Lynch and
Simmons, Weatherford's financial advisors, will receive additional compensation
if the Merger is effected. See "Opinions of Financial Advisors".
Weatherford Stock Options and Awards. There are currently outstanding
options to purchase an aggregate of 1,474,114 shares of Weatherford Common Stock
(equivalent to 1,400,408 shares of EVI Common Stock). The Merger will constitute
a "change of control" under Weatherford's stock option plans and all Weatherford
Options, except for those stock options granted on or after March 4, 1998 and an
option granted to a former employee, will become fully vested and immediately
exercisable as of the Effective Time. As of March 30, 1998, Messrs. Bates,
Burke, Nicholson, Nolen and Stilley and Ms. Thomas held unvested options to
purchase 120,000, 10,667, 5,167, 7,334, 20,000 and 7,334 shares of Weatherford
Common Stock, respectively, that will become fully vested and exercisable as a
result of the Merger. The value of these unvested options, based on the
difference between the exercise price and the closing sale price per share of
Weatherford Common Stock on March 30, 1998, is $1,455,000, $128,169, $62,201,
$87,941, $21,240 and $87,941 for Messrs. Bates, Burke, Nicholson, Nolen and
Stilley and Ms. Thomas, respectively. Also, unvested options to purchase 55,000,
12,000, 6,000, 8,000, 12,000 and 8,000 shares of Weatherford Common Stock
granted on March 16, 1998 to Messrs. Bates, Burke, Nicholson, Nolen and Stilley
and Ms. Thomas, respectively, will become vested if the employment of any of
such persons is terminated by EVI without cause or by any of such persons for
good reason within three years following the Merger. The value of these unvested
options, based on the difference between the exercise price and the closing sale
price of the Weatherford Common Stock on March 30, 1998, is $228,580, $49,872,
$24,936, $33,248, $49,872 and $33,248.
The Merger also will constitute a "change of control" under Weatherford's
Restricted Stock Plan and ownership restrictions on all shares of Weatherford
Common Stock granted pursuant to such plan, except for those shares granted on
or after March 4, 1998, will terminate as of the Effective Time. As of March 30,
1998, Messrs. Bates, Burke, Nicholson and Nolen and Ms. Thomas held 65,041,
3,125, 1,125, 2,625 and 2,625 shares of Weatherford Common Stock subject to
ownership restrictions that will terminate as of the Effective Time. The value
of these shares, based on the closing sale price per share of Weatherford Common
52
60
Stock on March 30, 1998 is $2,788,633, $133,984, $48,234, $112,547 and $112,547,
respectively. Additionally, ownership restrictions on 20,000, 5,000, 3,000,
5,000 and 4,000 shares of Weatherford Common Stock granted to Messrs. Bates,
Burke, Nicholson and Stilley and Ms. Thomas, respectively, pursuant to such plan
on March 16, 1998 will terminate if the employment of such person is terminated
by EVI without cause or by any of such persons for good reason within three
years following the Merger. The value of these shares, based on the closing sale
price per share of Weatherford Common Stock on March 30, 1998, is $857,500,
$214,375, $128,625, $214,375 and $171,500. As of March 30, 1998, each of Messrs.
Edelman, Greehey, Hill, Johnson, Macaulay, Moses and Widmann held 1,364 shares,
and Mr. Amonett held 1,290 shares, of Weatherford Common Stock subject to
ownership restrictions that will terminate as of the Effective Time. The value
of these shares, based on the closing sales price per share of Weatherford
Common Stock on March 30, 1998 is $58,482 and $55,309, respectively.
EVI Employee Stock Options and Awards. There are currently outstanding
unvested options to purchase an aggregate of shares of EVI Common
Stock. The Merger will constitute a "change of control" under EVI's employee
stock option plans and all EVI employee stock options will become fully vested
and immediately exercisable as of the Effective Time. As of March 31, 1998,
Messrs. Duroc-Danner, Kiley, Coble and Stiles and Ms. Powell held unvested
options to purchase 280,000, 117,500, 70,400, 45,000 and 24,000 shares of EVI
Common Stock, respectively, that will become fully vested and exercisable as a
result of the Merger. The value of these unvested options, based on the
difference between the exercise price and the EVI Common Stock on March 31,
1998, is $8,713,125, $3,494,375, $2,093,925, $832,500, and $444,000 for Messrs.
Duroc-Danner, Kiley, Coble and Stiles and Ms. Powell, respectively.
Indemnification. Pursuant to the Merger Agreement, EVI agreed that all
rights to indemnification for acts or omissions occurring prior to the Effective
Time in favor of the current or former directors or officers of Weatherford and
its subsidiaries as provided in their respective certificates of incorporation
or by-laws and indemnity agreements will survive the Merger, and EVI, as the
surviving corporation, shall continue such indemnification rights in full force
and effect in accordance with their terms as an obligation of EVI. Under the
terms of the Merger Agreement, EVI also agreed to use its reasonable best
efforts to purchase directors and officers insurance for the benefit of
Weatherford directors and officers for period of six years at a cost not to
exceed $1 million in aggregate. See "Terms of the Merger -- Indemnification".
Change of Control Agreements. Weatherford has entered into change of
control agreements with 10 of its executives ("Executive Change of Control
Agreements") and 36 of its key employees ("Key Employee Change of Control
Agreements"). These agreements give the executives and key employees certain
benefits in the event of a change of control (as defined therein) of Weatherford
(a "Weatherford Change of Control") and certain additional benefits if that
person is subsequently terminated other than for "cause" (as defined therein),
or elects to terminate his or her employment for "good reason" (as defined
therein), within a certain amount of time after a Weatherford Change of Control.
The Merger will constitute a Weatherford Change of Control.
Executive Change of Control Agreements. The Executive Change of Control
Agreements provide that, in the event of a Weatherford Change of Control, the
following provisions will apply: (i) the executive's base salary will not
decrease unless there is a company-wide salary reduction; (ii) the executive's
annual bonus may not be less than the highest bonus paid to him or her in the
three years immediately preceding the Weatherford Change of Control; (iii) the
executive will be entitled to the most favorable incentive, savings, retirement
and welfare plans, expense reimbursement, fringe benefits and vacation policies
in effect 120 days prior to the Weatherford Change of Control and at anytime
thereafter; (iv) if Weatherford is not the surviving corporation in a
Weatherford Change of Control, the surviving corporation must issue
substantially similar options and stock appreciation rights in replacement of
any Weatherford options or stock appreciation rights held by the executive; (v)
the executive's job title and responsibilities may not be materially reduced and
(vi) the executive cannot be forced to move more than 35 miles.
If the executive is terminated other than for cause ("Executive Cause") or
if the executive terminates his or her employment for good reason ("Executive
Good Reason"), in either case within two or three years after the Weatherford
Change of Control, depending on the terms of each executive's contract, the
executive will be
53
61
entitled to the following: (i) salary plus pro rata bonus owed through date of
termination; (ii) two or three times annual salary and bonus, depending on the
term of the contract; (iii) all amounts that would otherwise have been owed to
that executive under all retirement and savings plans during the next two or
three years, depending on the term of the contract; (iv) welfare plan coverage
for two or three years, depending on the contract term (if the executive pays
the required premium); (v) outplacement services; (vi) payment of the
unrecognized appreciation on all outstanding options and stock appreciation
rights within 30 days after termination (regardless of whether vested at
termination), or all outstanding options and stock appreciation rights vest
upon, and survive and will be exercisable for, seven months after termination
unless to do so would cause a transaction otherwise eligible for pooling of
interests accounting treatment under Accounting Principles Board Opinion No. 16
to be ineligible for such treatment, in which case the executive would receive
shares of EVI Common Stock equal in value to the cash he or she would have
received; (vii) ownership restrictions remaining on any shares granted under
Weatherford's Restricted Stock Incentive Plan ("Weatherford's Restricted Stock
Plan") will terminate; (viii) all club memberships will be transferred to the
executive; (ix) the executive's company car will be transferred to him or her,
if applicable, or the executive will be paid two or three times his or her
annual car allowance, depending on the term of the contract; (x) all benefits
under all retirement and savings plans will vest; and (xi) in the event any such
payments trigger excise taxes, the amounts paid will be grossed up to pay this
obligation of the executive.
"Executive Cause" is defined as willful and continued failure of the
executive to perform his or her job, after written demand is made by the Chief
Executive Officer or the Board of Directors, or the executive's willful
engagement in illegal conduct or gross misconduct.
"Executive Good Reason" is defined as (i) a material reduction in title
and/or responsibilities of executive, (ii) a required move of more than 35 miles
or (iii) any material reductions in benefits.
The following executives of Weatherford are parties to Executive Change of
Control Agreements: Thomas R. Bates, Jr., James R. Burke, Jon Nicholson, Norman
W. Nolen, Randall P. Stilley, H. Suzanne Thomas, James D. Green, Weldon D.
Walker, Philip D. Gardner and F. Thomas Tilton. If the employment arrangements
with Messrs. Bates, Burke, Nicholson, Nolen, Stilley, Green, Walker, Gardner and
Tilton and Ms. Thomas were to be terminated by EVI for reason other than for
Executive Cause or by the executive for Executive Good Reason, such persons
would be entitled to receive cash in an amount of $3,711,000, $1,731,150,
$930,000, $1,299,600, $981,000, $1,299,600, $483,600, $417,384 and $436,260, and
$436,500, respectively.
Key Employee Change of Control Agreements. The Key Employee Change of
Control Agreements provide that, in the event of a Weatherford Change of
Control, the following provisions will apply: (i) the key employee's base salary
will not decrease unless there is a company-wide salary reduction; (ii) the key
employee will be eligible for an annual bonus under the incentive plan
applicable to other peer key employees; (iii) if the key employee is located in
the U.S., he or she will be eligible for incentive, savings, retirement and
welfare plans and expense reimbursement; (iv) a company car or car allowance
applicable to other peer key employees; (v) if Weatherford is not the surviving
entity in a Weatherford Change of Control, the surviving corporation must issue
substantially similar options in replacement of any Weatherford options held by
the key employee; and (vi) the key employee's responsibilities may not be
materially reduced.
If the key employee is terminated for other than cause ("Key Employee
Cause") or if the key employee terminates his or her employment for good reason
("Key Employee Good Reason") within one or two years after the Weatherford
Change of Control, depending on the terms of the contract, the key employee will
be entitled to the following benefits: (i) salary plus pro rata bonus through
date of termination; (ii) one or two times annual salary and bonus, depending on
the term of the contract; (iii) if the key employee is located in the U.S., all
amounts that would otherwise have been owed under retirement and savings plans
during the next one or two years, depending on the term of the contract; (iv)
welfare plan coverage for the next one or two years, depending on the term of
the contract (if the key employee pays the required premium); (v) all
outstanding options vest upon, and survive and will be exercisable for, seven
months after termination; (vi) if the key employee is located in the U.S. and
has a company car or receives a car allowance, the car will be transferred to
the key employee or he or she will be paid one or two times the annual car
allowance, depending
54
62
on the term of the contract; and (vii) if the key employee is located in the
U.S., all benefits under retirement and savings plans will become vested;
provided, however, that if the aggregate of all such payments would result in
the occurrence of excise taxes, then the payments shall be reduced to an amount
that will not give rise to such excise taxes.
"Key Employee Cause" is defined as continued failure of the key employee to
perform his or her job after written notice from the employer, engaging in
illegal conduct or misconduct, conviction of a crime involving moral turpitude,
misappropriation of funds, disparagement of Weatherford and its management or
other cause determined by the Weatherford Board.
"Key Employee Good Reason" is defined as a material reduction in
responsibilities or benefits.
Weatherford Employment Agreements. Weatherford has entered into an
employment agreement with Mr. Bates, which will expire on May 31, 2002, unless
earlier terminated in accordance therewith. If Mr. Bates is terminated during
the term of his employment agreement by Weatherford for any reason other than
cause or by Mr. Bates for good reason (including any material change in his
responsibilities), he is entitled under the terms of his employment agreement to
a lump sum severance payment of $2,586,000, assuming termination during 1998. If
Mr. Bates' employment is terminated after a change of control under his
employment agreement, then Mr. Bates may elect to receive benefits either under
the employment agreement or under his Executive Change of Control Agreement, but
not both. Because Mr. Bates will cease to have the office of Chief Executive
Officer following the Merger, Mr. Bates will be entitled to terminate his
agreement for good reason at any time following the Merger, up to and including
May 31, 2002, and to receive benefits under his employment agreement. Prior to
three years following the Merger, he may elect to receive benefits under his
Executive Change of Control Agreement in lieu of his employment agreement.
Weatherford also has entered into an employment agreement with Mr.
Burguieres, which will expire on October 16, 2001. If this employment agreement
is terminated by Weatherford or by Mr. Burguieres, at his option, following a
change of control under this agreement, Mr. Burguieres will receive a lump sum
of $1,012,500 (assuming termination on approximately June 30, 1998) and all
ownership restrictions on 5,250 shares previously granted to Mr. Burguieres
under the Weatherford Restricted Stock Plan will terminate. The value of the
shares, based on the closing sale price per share of Weatherford Common Stock on
March 30, 1998, is $225,094.
EVI Employment Agreements. EVI has entered into employment agreements (each
an "Employment Agreement") with each of Bernard J. Duroc-Danner, James G. Kiley,
John C. Coble, Robert Stiles, Curtis W. Huff and Frances R. Powell. Each of the
Employment Agreements provides for a term of three years and is renewable
annually. Under the terms of the Employment Agreements, if the executive's
employment is terminated by the Company for any reason other than "cause" or
"disability" or by the executive for "good reason", in each case as such terms
are defined in the Employment Agreements, the executive will be entitled to
receive (i) an amount equal to three times the executive's current base
compensation plus the highest bonus paid to the executive during the three years
preceding the year of termination, (ii) any accrued salary or bonus (pro rated
to the date of termination), (iii) an amount equal to the amount that would be
payable if all retirement plans were vested, (iv) an amount equal to the amount
that would have been contributed as EVI's match under its 401(k) savings plan
and its Executive Deferred Compensation Stock Ownership Plan for three years and
(v) an amount equal to the amount the executive would have received as a car
allowance for three years. Under the EVI employment agreements, "cause" is
defined as the willful and continued failure to perform the executive's job,
after written demand is made by the Chief Executive Officer or the EVI Board, or
the willful engagement in illegal conduct or gross misconduct. Termination by
the executive for "good reason" is generally defined as (i) a material reduction
in title and/or responsibilities of the executive, (ii) certain relocations of
the executive or (iii) any material reduction in the executive's benefits. In
addition, under such circumstances, all stock options and restricted stock
granted to the executive will automatically vest. Further, with respect to
options, the executive would have the right to either exercise such options for
one year after his or her date of termination or to surrender for such cash all
such options unless to do so would cause a transaction otherwise eligible for
pooling of interests accounting treatment under Accounting Principles Board
Opinion No. 16 to be ineligible for such treatment, in which case the executive
would receive shares of EVI
55
63
Common Stock equal in value to the cash he or she would have received. All
health and medical benefits would also be maintained after termination for a
period of three years provided the executive makes his or her required
contribution. Under the Deficit Reduction Act of 1984, certain severance
payments that exceed a certain amount could subject both EVI and the executive
to adverse U.S. federal income tax consequences. Each of the Employment
Agreements provides that EVI would be required to pay the executive a "gross up
payment" to insure that the executive receives the total benefit intended by the
Employment Agreement. In addition, in connection with the retention of Mr. Huff
as Senior Vice President, General Counsel and Secretary of EVI, EVI has agreed
to grant to Mr. Huff a sign-on incentive bonus of 75,000 shares of restricted
EVI Common Stock subject to four year vesting on the basis of 25% per year and
options to purchase an aggregate of 100,000 shares of EVI Common Stock at the
per share market price of the EVI Common Stock on the date of his employment,
which is expected to be in June 1998, subject to vesting over a three year
period on the basis of one-third per year. The base compensation payable to
Messrs. Duroc-Danner, Kiley, Coble, Stiles and Huff and Ms. Powell under the
Employment Agreements are $700,000, $300,000, $300,000, $270,000, $350,000 and
$200,000, respectively.
Directors of EVI Following the Merger. At the Effective Time, the number of
directors of EVI will be ten, of which six members have been named by EVI and
four have been named by Weatherford. The six members named by EVI are Bernard J.
Duroc-Danner, who will serve as Chairman, David Butters, Sheldon Gordon, Sheldon
Lubar, Robert Millard and Robert Rayne. The four members named by Weatherford
are Thomas R. Bates, Jr., Philip Burguieres, William E. Macaulay and Robert K.
Moses, Jr. See "Management -- Directors of EVI Following the Merger". Upon their
appointment, each of Messrs. Burguieres, Macaulay and Moses will be eligible to
participate in EVI's Non-Employee Director Stock Option Plan and will receive an
option to acquire 10,000 shares of EVI Common Stock at an option price equal to
the closing sale price on such date, which option will be subject to vesting in
one year. Additionally, subject to the fiduciary duties of the EVI Board, and
the willingness of such persons to serve as directors of EVI, the EVI Board
shall submit each of Messrs. Bates, Burguieres, Macaulay and Moses as nominees
for election to the EVI Board at the Annual Meeting of Stockholders of EVI to be
held in 1999 and 2000. Mr. Macaulay, a Director of Weatherford and proposed
Director of EVI following the Merger, is the President and Chief Executive
Officer of First Reserve Corporation, which, together with the other First
Reserve Entities and Mr. Macaulay, owns an aggregate of 6,577,637 shares of
Weatherford Common Stock. Based upon the Exchange Ratio of .95, the First
Reserve Entities will own an aggregate of 6,248,755 shares, or approximately 6.5
% outstanding, of EVI Common Stock following the Merger.
RESTRICTIONS ON RESALES BY AFFILIATES
The shares of EVI Common Stock to be received by Weatherford stockholders
in connection with the Merger have been registered under the Securities Act and,
except as set forth below, may be traded without restriction. The shares of EVI
Common Stock to be issued in the Merger and received by persons who are deemed
to be "affiliates" (as that term is defined in Rule 144 under the Securities
Act) of Weatherford prior to the Merger may be resold by them only in
transactions permitted by the resale provisions of Rule 145 under the Securities
Act (or, in the case of such persons who become affiliates of EVI, Rule 144
under the Securities Act) or as otherwise permitted under the Securities Act. In
connection with the execution of the Merger Agreement, Weatherford delivered to
EVI written undertakings from each of the affiliates of Weatherford to the
effect that they will not dispose of any shares of EVI Common Stock received
pursuant to the Merger except in compliance with the Securities Act and the
rules and regulations promulgated thereunder.
Under GAAP, the sale of EVI Common Stock or Weatherford Common Stock by an
affiliate of either EVI or Weatherford within 30 days prior to the Effective
Time or thereafter prior to the publication of financial results that include at
least 30 days of combined operations of EVI and Weatherford after the Effective
Time could preclude pooling of interests accounting treatment of the Merger. In
connection with the execution of the Merger Agreement, Weatherford delivered to
EVI a written undertaking by each of Weatherford's affiliates that such
affiliates will not dispose of any of the EVI Common Stock received or to be
received by them pursuant to the Merger until final results of operations of EVI
covering at least 30 days of combined operations of EVI and Weatherford have
been so published. Additionally, EVI delivered to
56
64
Weatherford a written undertaking by each of EVI's affiliates that such
affiliates will not dispose of any of the EVI Common Stock owned by them until
final results of operations of EVI covering at least 30 days of combined
operations of EVI and Weatherford have been so published.
NO DISSENTERS' RIGHTS
Delaware law does not require that holders of Weatherford Common Stock or
EVI Common Stock who object to the Merger and who vote against or abstain from
voting in favor of the Merger and the Merger Agreement be afforded any appraisal
rights or the right to receive cash for their shares of Weatherford Common Stock
or EVI Common Stock in lieu of the consideration to be paid pursuant to the
Merger Agreement, and neither Weatherford nor EVI intends to make available such
rights to its stockholders.
57
65
COMPARATIVE RIGHTS OF STOCKHOLDERS OF EVI AND WEATHERFORD
The rights of holders of Weatherford Common Stock are currently governed by
Delaware law, Weatherford's Certificate of Incorporation and Weatherford's
By-laws. Upon consummation of the Merger, holders of Weatherford Common Stock
will become holders of EVI Common Stock, and their rights as holders of EVI
Common Stock will be governed by Delaware law and EVI's Certificate of
Incorporation and EVI's By-laws, each as amended and restated as of the
Effective Time. Set forth below is an explanation of material differences
between the rights of holders of Weatherford Common Stock and the rights of the
holders of EVI Common Stock following the Effective Time.
SPECIAL VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS
Section 203 of the Delaware General Corporation Law (the "DGCL") prohibits
a corporation from engaging in a "business combination" (as hereinafter defined)
with an "interested stockholder" (defined generally to mean a person who,
together with his affiliates, owns, or if the person is an affiliate of the
corporation did own within the last three years, 15% or more of the outstanding
voting stock of the corporation) for a period of three years after the time of
the transaction in which the person became an interested stockholder, unless (i)
prior to the time of the business combination, the board of directors of the
corporation approved the business combination or the transaction in which the
stockholder became an interested stockholder; (ii) as a result of the business
combination, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced or (iii) on
or subsequent to the date of the business combination, the board of directors
and the holders of at least 66 2/3% of the outstanding voting stock not owned by
the interested stockholder approve the business combination. The DGCL defines a
"business combination" generally as: (i) a merger or consolidation with the
interested stockholder or with any other corporation if the merger or
consolidation is caused by the interested stockholder; (ii) a sale or other
disposition to or with an interested stockholder of assets with an aggregate
market value greater than or equal to 10% or more of either the aggregate market
value of all assets of the corporation or the aggregate market value of all of
the outstanding stock of the corporation; (iii) with certain exceptions, any
transaction resulting in the issuance or transfer by the corporation or any
majority-owned subsidiary of any stock of the corporation or such subsidiary to
the interested stockholder; (iv) any transaction involving the corporation or a
majority-owned subsidiary that has the effect of increasing the proportionate
share of the stock of the corporation or any such subsidiary owned by the
interested stockholder; or (v) any receipt of the interested stockholder of the
benefit of any loans or other financial benefits provided by the corporation or
any majority-owned subsidiary.
Section 203 applies to EVI and Weatherford, but Weatherford has elected to
not be subject to Section 203 pursuant to a provision in Weatherford's By-laws.
However, Weatherford's Certificate of Incorporation and By-laws contain
provisions similar to Section 203 that require a higher percentage of
stockholders' vote to approve a Business Combination (as hereinafter defined).
Pursuant to these provisions, an "Interested Stockholder" is defined generally
to mean the owner of more than 20% of the voting power of the outstanding voting
stock and any affiliate of such person. The holders of at least 80% of the
voting power of the then outstanding shares of capital stock of Weatherford
entitled to vote must approve the Business Combination. The term "Business
Combination" is defined generally to include any of the following transactions
in which an Interested Stockholder is involved: (i) a merger or consolidation,
(ii) a sale or other disposition of assets having a fair market value of $1
million or more, (iii) an issuance or transfer of any securities having a fair
market value of $1 million or more, (iv) a plan of liquidation or dissolution or
(v) certain transactions that increase the proportionate share of the
outstanding shares of any class of equity or convertible securities owned by an
Interested Stockholder or any of its affiliates. The special stockholder voting
requirement of the fair price provisions is not applicable to a Business
Combination if either (i) a majority of the Continuing Directors (as hereinafter
defined) approves the Business Combination or (ii) certain minimum price, form
of consideration and procedural requirements are satisfied. Weatherford's
Certificate of Incorporation generally defines "Continuing Director" to mean a
director who either (i) was unaffiliated with the Interested Stockholder and was
a member of the Weatherford Board prior to the time that the Interested
Stockholder became an Interested Stockholder or (ii) was designated in the
appropriate
58
66
manner as a Continuing Director by the other Continuing Directors. EVI's
Certificate of Incorporation and EVI's By-laws do not contain similar
provisions.
VOTE REQUIRED FOR CORPORATE TRANSACTIONS AND OTHER MATTERS
Under the DGCL, an amendment to the corporation's certificate of
incorporation requires the affirmative vote of the holders of a majority of the
outstanding stock of the corporation entitled to vote thereon and a majority of
the outstanding stock of each class entitled to vote thereon as a class unless
the corporation's certificate of incorporation provides for a higher percentage.
The DGCL also provides that the holders of a majority of the outstanding stock
of the corporation entitled to vote thereon may approve an agreement of merger
or consolidation or the dissolution of a corporation.
EVI's Certificate of Incorporation provides that the Certificate of
Incorporation may be amended, altered, changed or repealed as prescribed by
statute. Under the DGCL, such amendment must be approved by a majority of the
outstanding EVI Common Stock. Under EVI's Certificate of Incorporation, any
amendment to the Certificate of Incorporation that affects any series of
outstanding preferred stock must be approved by a majority of the holders of
such series but not the holder of any other series. Under the DGCL, the Merger
must be approved by the holders of a majority of the outstanding EVI Common
Stock.
Weatherford's Certificate of Incorporation provides that the affirmative
vote of the holders of at least 80% of the outstanding stock entitled to vote
generally in the election of directors is required for amendments to
Weatherford's Certificate of Incorporation relating to written consents and
special meetings of stockholders, relating to the number, election, terms,
increase in the number, vacancy, removal and limitation on liability of
directors, and relating to certain mergers, consolidations or dissolutions of
Weatherford that involve an Interested Stockholder. See "-- Special Vote
Required for Certain Business Combinations".
DISPOSITION OF ASSETS
The DGCL provides that a corporation may sell, lease or exchange all or
substantially all of its property and assets for such consideration as its board
of directors deems expedient and in the best interest of the corporation, when
and as authorized by resolution adopted by the holders of a majority of the
outstanding stock of the corporation entitled to vote thereon. Neither EVI's
Certificate of Incorporation nor EVI's By-laws contain any provisions regarding
dispositions of assets. See "-- Special Vote Required for Certain Business
Combinations" for a description of the higher voting requirement in connection
with asset sales involving Business Combinations with Interested Stockholders as
provided in Weatherford's Certificate of Incorporation and By-laws.
ACTION BY WRITTEN CONSENT
Under the DGCL, except as restricted by a corporation's certificate of
incorporation, and under EVI's By-laws, any action required or permitted to be
taken by stockholders may be taken by written consent of the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize such action at a meeting at which all shares entitled to
vote thereon were present and voted. The rules of the NYSE, which are applicable
to both EVI and Weatherford, place severe limitations on the ability of
stockholders of companies listed on the NYSE to act by written consent.
Weatherford's Certificate of Incorporation and By-laws provide that any
action required or permitted to be taken by the stockholders must be taken at a
duly called annual or special meeting of the stockholders and may not be taken
by written consent.
CALLING OF SPECIAL MEETINGS OF STOCKHOLDERS
The DGCL provides that special meetings of stockholders may be called by
the board of directors or by such person or persons as may be authorized by the
certificate of incorporation or the by-laws of the corporation.
59
67
Weatherford's Certificate of Incorporation and By-laws provide that, unless
otherwise prescribed by statute, special meetings of stockholders of Weatherford
may be called only by the Weatherford Board of Directors pursuant to a
resolution approved by a majority of the entire Weatherford Board.
Neither EVI's Certificate of Incorporation nor EVI's By-laws contain any
provisions regarding calling of special meetings of stockholders.
NOTICE OF MEETINGS OF STOCKHOLDERS
The DGCL and EVI's By-laws provide that written notice of any meeting of
stockholders shall be given not less than 10 nor more than 60 days before the
date of the meeting. Weatherford's Bylaws provide that, unless otherwise
required by law, Weatherford's stockholders must be given not less than 10 nor
more than 50 days notice before any annual meeting of stockholders and not less
than 30 nor more than 60 days before any special meeting of stockholders.
ADVANCE NOTICE PROVISIONS
Neither EVI's Certificate of Incorporation nor EVI's By-laws contain any
provisions regarding advance notice provisions for stockholder business or
director nominations at meetings. Weatherford's By-laws provide that a
stockholder may bring business before an annual meeting of stockholders or may
nominate persons for election as directors of Weatherford only in accordance
with certain specified procedures stated in Weatherford's By-laws. Generally, to
bring business for an annual meeting or nominate persons for election as
directors, a stockholder must be a stockholder of record on the date of the
giving of notice and on the record date for the determination of stockholders
entitled to vote at such annual meeting and must give timely notice of such
business or nomination to the Secretary of Weatherford. To be timely, notice
must be delivered to or mailed and received at the principal executive offices
of Weatherford no less than 90 days nor more than 120 days prior to the
anniversary date of the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting is called for a
date that is not within 30 days before or after such anniversary date, notice by
the stockholder to be timely must be so received no later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or public disclosure of the annual meeting was made,
whichever first occurs.
REMOVAL OF DIRECTORS
The DGCL provides that a director shall hold office until a successor is
elected and qualified or until his earlier resignation and removal and that
unless the certificate of incorporation otherwise provides or the board of
directors of the corporation has been classified, any director or the entire
board of directors may be removed, with or without cause, by the holders of the
majority of the shares then entitled to vote at an election of directors.
EVI's By-laws provide that directors may be removed, with or without cause,
by the holders of a majority of the shares then entitled to vote at an election
of directors. In addition, EVI's By-laws provide that directors may be removed
from office, to the extent permitted by law, for cause by vote of the majority
of the directors then in office. Weatherford's Certificate of Incorporation and
By-laws provide that, subject to the rights of the holders of any outstanding
shares of Serial Preferred Stock, no director may be removed from office, except
for cause and upon the affirmative vote of the holders of at least 80% of the
outstanding stock entitled to vote for the election of directors. Additionally,
Weatherford's Certificate of Incorporation provides for three classes of
directors such that each class stands for reelection only once every three
years. EVI's Certificate of Incorporation contains no such provision, so the
stockholders of EVI will get to vote for the entire board of directors each
year.
POWER TO AMEND BY-LAWS
Under the DGCL, the power to adopt, amend or repeal by-laws shall be in the
stockholders of a corporation, provided that a corporation may, in its
certificate of incorporation, confer the power to adopt, amend or repeal by-laws
upon its directors.
60
68
EVI's current Restated Certificate of Incorporation does not authorize the
EVI Board to adopt, alter, amend or repeal the by-laws. Weatherford's
Certificate of Incorporation authorizes the Weatherford Board to make, alter or
repeal the by-laws and requires the affirmative vote of the holders of 80% or
more of the voting power of the then outstanding shares of capital stock
entitled to vote generally in the election of directors in order to be amended
by its stockholders. Under the terms of the Merger Agreement, EVI's Certificate
of Incorporation will be amended to conform to Weatherford's Certificate of
Incorporation as to this matter and will require the affirmative vote of the
holders of 80% or more of the combined voting power of the then outstanding
shares of stock of all classes and series of stock of EVI that are entitled to
vote generally in the election of directors to adopt, amend, alter or repeal any
provision of EVI's By-laws.
DIRECTOR ELECTIONS, QUALIFICATIONS AND NUMBER
The DGCL provides that the number of directors of a Delaware corporation
shall be fixed by, or in the manner provided in, the by-laws, unless the
certificate of incorporation fixes such number, in which case it can only be
changed by amending the certificate. Under the DGCL, a director need not be a
stockholder to be qualified unless so required by the corporation's certificate
of incorporation or by-laws.
EVI's By-laws provide that directors are to be elected by a plurality vote
of the stockholders; provided, however, that any vacancies occurring in the
board may be filled by the remaining directors. EVI's By-laws provide for the
number of directors to be ten, which number may be increased or decreased by the
EVI Board. Weatherford's By-laws provide that directors are to be elected by the
holders of a majority of the stock entitled to vote thereon; provided, however,
that any vacancies occurring in the board may be filled by a majority vote of
the directors then in office. Weatherford's By-laws provide for the number of
directors to be not less than six nor more than 15.
DESCRIPTION OF EVI CAPITAL STOCK
Prior to the Effective Time, EVI's authorized capital stock will consist of
80,000,000 shares of EVI Common Stock, par value $1.00 per share, and 3,000,000
shares of Preferred Stock, par value $1.00 per share ("EVI Preferred Stock").
Following the Effective Time, EVI's authorized capital stock will consist of
250,000,000 shares of EVI Common Stock, par value $1.00 per share, and 3,000,000
shares of EVI Preferred Stock.
At March 31, 1998, 47,880,482 shares of EVI Common Stock were outstanding,
including (i) 51,500 shares of EVI Common Stock remaining to be exchanged for
shares of common stock of GulfMark International, Inc. ("GulfMark") in
connection with EVI's prior acquisition of GulfMark and (ii) 7,861 shares of EVI
Common Stock remaining to be exchanged for common shares of Taro Industries
Limited ("Taro") in connection with EVI's prior acquisition of Taro. In
addition, at March 31, 1998, there were (i) 5,031,250 shares of EVI Common Stock
reserved for issuance upon the conversion of EVI's 5% Convertible Subordinated
Preferred Equivalent Debentures due 2027, (ii) 3,900,000 shares of EVI Common
Stock reserved for issuance pursuant to EVI's proposed acquisition of Christiana
and (iii) 2,483,840 shares of EVI Common Stock reserved for issuance pursuant to
various employee benefit plans of EVI and its subsidiaries, of which 1,355,020
shares of EVI Common Stock were reserved for issuance upon the exercise of
outstanding options and awards. At March 31, 1998, there were no shares of EVI
Preferred Stock issued or outstanding. The holders of shares of EVI Common Stock
are not liable to further calls or assessments by EVI. The description below is
a summary of and is qualified in its entirety by the provisions of EVI's
Certificate of Incorporation that will be filed at the Effective Time. A copy of
EVI's Certificate of Incorporation following the Merger is attached as Exhibit A
to the Merger Agreement, which is attached as Appendix A hereto.
Subject to the rights of the holders of any outstanding shares of EVI
Preferred Stock and those rights provided by law, (i) dividends may be declared
and paid or set apart for payment upon the EVI Common Stock out of any assets or
funds of EVI legally available for the payment of dividends and may be payable
in cash, stock or otherwise, (ii) the holders of EVI Common Stock have the
exclusive right to vote for the election of directors and, except as provided
below, on all other matters requiring stockholder action generally,
61
69
with each share being entitled to one vote, and (iii) upon the voluntary or
involuntary liquidation, dissolution or winding up of EVI, the net assets of EVI
will be distributed pro rata to the holders of the EVI Common Stock in
accordance with their respective rights and interests to the exclusion of the
holders of any outstanding shares of EVI Preferred Stock.
Although the holders of the EVI Common Stock are generally entitled to vote
for the approval of amendments to EVI's Certificate of Incorporation, the voting
rights of the holders of the EVI Common Stock are limited with respect to
certain amendments to EVI's Certificate of Incorporation that affect only the
holders of the EVI Preferred Stock. Specifically, subject to the rights of any
outstanding shares of any series of EVI Preferred Stock, EVI's Certificate of
Incorporation provides that it may be amended from time to time in any manner
that would solely modify or change the relative powers, preferences and rights
and the qualifications or restrictions of any issued shares of any series of EVI
Preferred Stock then outstanding with the only required vote or consent for
approval of such amendment being the affirmative vote or consent of the holders
of a majority of the outstanding shares of the series of EVI Preferred Stock so
affected, provided that the powers, preferences and rights and the
qualifications and limitations or restrictions of such series, after giving
effect to such amendment, are no greater than the powers, preferences and rights
and qualifications and limitations or restrictions permitted to be fixed and
determined by the Board of Directors with respect to the establishment of any
new series of shares of EVI Preferred Stock pursuant to the authority vested in
the Board of Directors as to such matters.
Holders of the EVI Common Stock do not have any cumulative voting,
redemptive or conversion rights and have no preemptive rights to subscribe for,
purchase or receive any class of shares or securities of EVI. Holders of the EVI
Common Stock have no fixed dividend rights. Dividends may be declared by the
Board of Directors at its discretion depending on various factors, although no
dividends are anticipated for the foreseeable future. EVI is currently subject
to certain prohibitions on the declaration and payment of cash dividends on the
EVI Common Stock under the terms of EVI's existing credit facilities. See
"Market Prices and Dividend Information".
The EVI Preferred Stock may be issued from time to time in one or more
series, with each such series having such powers, preferences and rights and
qualifications and limitations or restrictions as may be fixed by the EVI Board
pursuant to the resolution or resolutions providing for the issuance of such
series.
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except under certain
circumstances, including a breach of the director's duty of loyalty, acts or
omissions of the director not in good faith or which involve intentional
misconduct or a knowing violation of law, the approval of an improper payment of
a dividend or an improper purchase by EVI of stock or any transaction from which
the director derived an improper personal benefit. EVI's Certificate of
Incorporation provides that EVI's directors are not liable to EVI or its
stockholders for monetary damages for breach of their fiduciary duty, subject to
the above-described exceptions specified by Delaware law.
The Registrar and Transfer Agent for the EVI Common Stock is American Stock
Transfer and Trust Company, New York, New York.
62
70
MARKET PRICES AND DIVIDEND INFORMATION
EVI Common Stock is traded on the NYSE under the symbol "EVI", and
Weatherford Common Stock is traded on the NYSE under the symbol "WII". The
following table sets forth the range of high and low sale prices for EVI Common
Stock and Weatherford Common Stock for the periods indicated, as reported on the
NYSE. The prices for EVI Common Stock have been adjusted to reflect a
two-for-one stock split effected in May 1997.
EVI WEATHERFORD
---------------------- ----------------------
HIGH LOW HIGH LOW
---- --- ---- ---
TWELVE MONTHS ENDED DECEMBER 31, 1996
Quarter ended March 31, 1996.............. $ 14 7/16 $ 11 1/8 $ 35 7/8 $ 26
Quarter ended June 30, 1996............... 17 1/2 12 7/8 37 3/4 28 1/2
Quarter ended September 30, 1996.......... 20 1/4 14 32 3/4 23 1/8
Quarter ended December 31, 1996........... 25 3/4 19 1/2 32 3/8 26 7/8
TWELVE MONTHS ENDED DECEMBER 31, 1997
Quarter ended March 31, 1997.............. $ 31 7/8 $ 23 7/8 $ 38 1/8 $ 28 1/2
Quarter ended June 30, 1997............... 45 1/2 28 38 3/4 26 1/4
Quarter ended September 30, 1997.......... 64 42 1/16 55 11/16 38 1/4
Quarter ended December 31, 1997........... 73 40 1/4 56 5/16 39 3/16
TWELVE MONTHS ENDING DECEMBER 31, 1998
Quarter ended March 31, 1998.............. $ 53 7/8 $ 37 1/2 $ 47 1/2 $ 29 7/8
Quarter ending June 30, 1998 (through
April , 1998).........................
On March 3, 1998, the last trading day prior to the announcement by EVI and
Weatherford that they had reached an agreement concerning the Merger, the
closing sale prices of EVI Common Stock and Weatherford Common Stock as reported
by the NYSE were $52 13/16 and $44 per share, respectively.
On , 1998, the closing sale prices of EVI Common Stock and
Weatherford Common Stock as reported by the NYSE were $ and $
per share, respectively.
Following the Merger, EVI Common Stock will continue to be traded on the
NYSE under the symbol "EVI" and Weatherford Common Stock will cease to be traded
and there will be no further market for such stock.
EVI has not paid any dividends on the EVI Common Stock since 1984 and
currently anticipates that, for the foreseeable future, any earnings will be
retained for the development of EVI's business. The declaration of all dividends
is at the discretion of the EVI Board. EVI's dividend policy will be reviewed by
the EVI Board at such future time as may be appropriate in light of relevant
factors at the time; however, EVI is subject to restrictions under its principal
working capital facility in the amount of dividends, distributions and other
restricted payments that it may make to stockholders.
Weatherford has not declared or paid any dividends on Weatherford Common
Stock during the past five years.
63
71
EVI SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain summary historical condensed
consolidated financial data of EVI. This information should be read in
conjunction with the Unaudited Pro Forma Condensed Consolidated Financial
Statements and related notes thereto included herein, and EVI's Management's
Discussion and Analysis of Financial Condition and Results of Operations and
Consolidated Financial Statements and notes thereto contained in its Annual
Report on Form 10-K for the year ended December 31, 1997, incorporated by
reference in this Joint Proxy Statement/Prospectus.
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Revenues.......................... $892,264 $478,020 $271,675 $185,285 $171,638
Cost of sales..................... 639,758 373,509 205,230 139,901 126,541
Selling, general and
administrative expenses........ 110,502 58,224 48,480 41,746 38,339
-------- -------- -------- -------- --------
Operating income.................. 142,004 46,287 17,965 3,638 6,758
Interest expense.................. (23,134) (16,454) (16,287) (13,537) (7,574)
Other, net........................ 9,784 1,713 684 412 1,482
Income tax (provision) benefit.... (44,959) (7,041) 240 3,795 (589)
-------- -------- -------- -------- --------
Income (loss) from continuing
operations..................... $ 83,695 $ 24,505 $ 2,602 $ (5,692) $ 77
======== ======== ======== ======== ========
Earnings (loss) per share from
continuing operations:
Basic.......................... $ 1.81 $ 0.60 $ 0.09 $ (0.23) $ --
Diluted........................ 1.77 0.59 0.09 (0.23) --
Weighted average shares
outstanding:
Basic.......................... 46,243 40,706 29,448 25,258 24,134
Diluted........................ 47,367 41,489 29,727 25,258 24,217
DECEMBER 31,
----------------------------------------------------------
1997 1996 1995 1994 1993
---------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA:
Total assets..................... $1,366,066 $852,843 $453,125 $311,497.. $251,377
Long-term debt................... 43,198 126,710 124,183 125,108 38,982
5% Convertible Subordinated
Preferred Equivalent
Debentures.................... 402,500 -- -- -- --
Stockholders' equity............. 527,233 454,084 228,066 110,913 107,736
Cash dividends per share......... -- -- -- -- --
64
72
WEATHERFORD SELECTED CONDENSED CONSOLIDATED FINANCIAL DATA
The following selected financial data has been derived from the audited
consolidated financial statements of Weatherford. This information should be
read in conjunction with Weatherford's Management's Discussion and Analysis of
Financial Condition and Results of Operations and Consolidated Financial
Statements and the notes thereto contained in Weatherford's Annual Report on
Form 10-K for the year ended December 31, 1997, which is incorporated by
reference in this Joint Proxy Statement/Prospectus.
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1997 1996 1995(1) 1994(2) 1993(3)
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Revenues................... $1,083,965 $ 994,468 $ 858,907 $ 676,749 $ 500,491
Acquisition-related costs
and other unusual
charges................. -- -- 88,182 2,500 4,000
Operating income........... 193,082 125,756 182 65,704 49,671
Net income (loss).......... 112,900 70,073 (10,558) 41,977 35,175
Earnings (loss) per share:
Basic................... $ 2.15 $ 1.35 $ (0.21) $ 0.94 $ 0.89
Diluted................. 2.14 1.35 (0.21) 0.94 0.88
Weighted average shares
outstanding:
Basic................... 52,430 51,722 50,681 44,646 38,415
Diluted................. 52,837 52,097 50,681 44,845 38,607
DECEMBER 31,
------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BALANCE SHEET DATA:
Total assets............... $1,377,995 $1,397,723 $1,258,860 $1,153,970 $ 635,602
Long-term debt............. 209,124 291,266 292,290 178,746 17,598
Stockholders' equity....... 934,126 841,608 730,843 734,634 474,472
Cash dividends per share... -- -- -- -- --
- ---------------
(1) Includes acquisition-related costs and other unusual charges of $88.2
million, or $1.17 per common share.
(2) Includes acquisition-related costs of $2.5 million, or $0.06 per common
share.
(3) Includes acquisition-related costs of $4.0 million, or $0.10 per common
share.
65
73
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Unaudited Pro Forma Condensed Consolidated Financial Statements of EVI
have been prepared assuming the Merger is accounted for as a pooling of
interests. The Unaudited Pro Forma Condensed Consolidated Statements of Income
give effect to the proposed Merger between EVI and Weatherford by combining
their results of operations for each of the three years ended December 31, 1997
on a pooling-of-interests basis as if EVI and Weatherford had been combined
since inception. The Unaudited Adjusted Pro Forma Condensed Consolidated
Statement of Income further gives effect to (i) the acquisition by EVI on May 1,
1997, of GulfMark International, Inc. and its assets ("the GulfMark Retained
Assets"), (ii) the issuance and sale of the Debentures on November 10, 1997,
(iii) the acceptance and payment by EVI on December 15, 1997, for $119,980,000
principal amount of EVI's outstanding Notes validly tendered by the holders of
the Notes pursuant to the Tender Offer, (iv) EVI's acquisition of Trico on
December 2, 1997, (v) EVI's acquisition of BMW on December 3, 1997 and (vi)
EVI's proposed merger with Christiana as if these transactions had occurred on
January 1, 1997. The Unaudited Adjusted Pro Forma Condensed Consolidated Balance
Sheet presents the combined financial position of EVI and Weatherford and gives
effect to EVI's proposed merger with Christiana as if these transactions had
occurred on December 31, 1997. The pro forma amounts presented do not include
transaction costs related to the Merger which are estimated to be approximately
$25 million and other costs directly attributable to the Merger which, in the
aggregate, are expected to be between $ million and $ million.
The pro forma information set forth below is not necessarily indicative of
the results that actually would have been achieved had such transactions been
consummated as of the aforementioned dates, or that may be achieved in the
future. All other 1997 and 1998 acquisitions by EVI are not material
individually or in the aggregate with same-year acquisitions; therefore, pro
forma information is not reflected. This information should be read in
conjunction with EVI's Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in its Annual Report on Form 10-K
for the year ended December 31, 1997, EVI's Selected Consolidated Financial
Data, and EVI's, GulfMark Retained Assets', Trico's, BMW's, Christiana's and
Weatherford's financial statements and related notes thereto, all of which are
contained or incorporated herein by reference in this Joint Proxy
Statement/Prospectus.
66
74
EVI AND WEATHERFORD COMBINED
UNAUDITED ADJUSTED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(IN THOUSANDS)
EVI AND PRO FORMA EVI AND
WEATHERFORD ADJUSTMENTS WEATHERFORD
COMBINED -------------------------- COMBINED
PRO CHRISTIANA SALE OF PRO FORMA
FORMA(A) HISTORICAL LOGISTIC(B) CHRISTIANA ADJUSTED
----------- ---------- ----------- ---------- ------------
ASSETS
Current assets:
Cash and cash equivalents......................... $ 74,211 $ 6,855 $ 33,280(c) $(20,858)(d)(e) $ 93,488
Accounts receivable, net.......................... 526,756 9,258 (9,258) -- 526,756
Inventories....................................... 455,811 -- -- -- 455,811
Prepaid expenses and other........................ 79,125 1,459 (1,459) -- 79,125
---------- -------- -------- -------- ----------
Total current assets........................ 1,135,903 17,572 22,563 (20,858) 1,155,180
---------- -------- -------- -------- ----------
Property, plant and equipment, net................ 870,163 73,881 (73,881) -- 870,163
Goodwill, net..................................... 669,449 5,514 (5,514) -- 669,449
Investment in EVI................................. -- 44,703 -- (44,703)(f) --
Investment in Logistic............................ -- -- 7,620(g) (3,919)(h) 3,701
Other assets...................................... 68,546 1,891 (1,891) -- 68,546
---------- -------- -------- -------- ----------
$2,744,061 $143,561 $(51,103) $(69,480) $2,767,039
========== ======== ======== ======== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current portion of
long-term debt.................................. $ 37,421 $ 1,245 $ (1,245) $ -- $ 37,421
Accounts payable.................................. 220,637 4,729 (4,729) -- 220,637
Other accrued liabilities......................... 248,452 5,579 2,173(i) 1,288(e)(j) 257,492
---------- -------- -------- -------- ----------
Total current liabilities................... 506,510 11,553 (3,801) 1,288 515,550
---------- -------- -------- -------- ----------
Long-term debt.................................... 252,322 33,617 (33,617) -- 252,322
Deferred income taxes and other................... 121,370 23,626 (10,731)(i) 1,043(f)(k) 135,308
5% Convertible Subordinated Preferred Equivalent
Debentures...................................... 402,500 -- -- -- 402,500
Stockholders' equity:
Common stock...................................... 101,651(l) 5,209 -- (1,312)(e)(m)(n) 105,548
Capital in excess of par.......................... 1,005,387(l) 12,346 -- 144,527(e)(m)(n) 1,162,260
Retained earnings................................. 545,159 58,446 (2,954) (55,492)(d)(e)(m) 545,159
Foreign currency translation adjustment........... (38,494) -- -- -- (38,494)
Treasury stock, at cost........................... (152,344)(l) (1,236) -- (159,534)(m)(n) (313,114)
---------- -------- -------- -------- ----------
Total stockholders' equity.................. 1,461,359 74,765 (2,954) (71,811) 1,461,359
---------- -------- -------- -------- ----------
$2,744,061 $143,561 $(51,103) $(69,480) $2,767,039
========== ======== ======== ======== ==========
67
75
EVI AND WEATHERFORD COMBINED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1997(O) 1996(O) 1995(O)
---------- ---------- ----------
Revenues:
Products............................................ $1,147,692 $ 721,090 $ 513,206
Services and rentals................................ 821,397 746,180 612,597
---------- ---------- ----------
1,969,089 1,467,270 1,125,803
---------- ---------- ----------
Costs and expenses:
Cost of sales
Products......................................... 817,013 553,501 388,329
Services and rentals............................. 551,375 537,313 442,902
Selling, general and administrative................. 264,553 209,433 195,747
Acquisition-related costs and other unusual
charges.......................................... -- -- 88,182
---------- ---------- ----------
1,632,941 1,300,247 1,115,160
---------- ---------- ----------
Operating income...................................... 336,148 167,023 10,643
---------- ---------- ----------
Other income (expense):
Interest expense.................................... (43,273) (39,368) (33,504)
Interest income..................................... 8,329 4,168 2,249
Equity in earnings of unconsolidated affiliates..... 2,582 2,078 1,477
Other income (expense), net......................... 1,175 (1,227) 6,160
---------- ---------- ----------
(31,187) (34,349) (23,618)
---------- ---------- ----------
Income (loss) before income taxes..................... 304,961 132,674 (12,975)
Provision (benefit) for income taxes.................. 108,188 40,513 (4,707)
---------- ---------- ----------
Income (loss) from continuing operations.............. $ 196,773 $ 92,161 $ (8,268)
========== ========== ==========
Earnings (loss) per share from continuing operations:
Basic(p)............................................ $ 2.05 $ 1.03 $ (0.11)
Diluted(p).......................................... 2.02 1.01 (0.11)
Weighted average shares outstanding:
Basic............................................... 96,052 89,842 77,595
Diluted............................................. 97,562 90,981 77,595
68
76
EVI AND WEATHERFORD COMBINED
UNAUDITED ADJUSTED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
EVI AND
WEATHERFORD BMW PUMP/
COMBINED GULFMARK BMW MONARCH
PRO RETAINED ASSETS TRICO COMBINED CHRISTIANA
FORMA(O) HISTORICAL(Q) HISTORICAL(R) HISTORICAL(R) HISTORICAL
----------- --------------- ------------- ------------- ----------
Revenues:
Products...................... $1,147,692 $ 818 $51,459 $103,847 $90,101
Services and rentals.......... 821,397 -- -- -- --
---------- ----- ------- -------- -------
1,969,089 818 51,459 103,847 90,101
---------- ----- ------- -------- -------
Costs and expenses:
Cost of sales
Products.................. 817,013 678 34,323 73,591 76,377
Services and rentals...... 551,375 -- -- -- --
Selling, general and
administrative.............. 264,553 688 15,346 15,450 9,103
---------- ----- ------- -------- -------
1,632,941 1,366 49,669 89,041 85,480
---------- ----- ------- -------- -------
Operating income................. 336,148 (548) 1,790 14,806 4,621
---------- ----- ------- -------- -------
Other income (expense):
Interest expense.............. (43,273) -- (493) (337) (2,991)
Interest income............... 8,329 -- -- -- 507
Equity in earnings of BMW
Monarch..................... -- -- 832 -- --
Equity in earnings of EVI..... -- -- -- -- 6,290
Equity in earnings of
Logistic.................... -- -- -- -- --
Equity in earnings of
unconsolidated affiliates... 2,582 -- -- -- --
Other income (expense), net... 1,175 -- (595) 65 (1,470)
---------- ----- ------- -------- -------
(31,187) -- (256) (272) 2,336
---------- ----- ------- -------- -------
Income (loss) before income
taxes........................... 304,961 (548) 1,534 14,534 6,957
Provision (benefit) for income
taxes........................... 108,188 100 797 5,748 2,763
---------- ----- ------- -------- -------
Income (loss) from continuing
operations...................... $ 196,773 $(648) $ 737 $ 8,786 $ 4,194
========== ===== ======= ======== =======
Earnings per share from
continuing operations:
Basic......................... $ 2.05(p)
Diluted....................... 2.02(p)
Weighted average shares
outstanding:
Basic......................... 96,052(dd)
Diluted....................... 97,562(dd)
PRO FORMA ADJUSTMENTS EVI AND
-------------------------------------------------------------------- WEATHERFORD
BMW PUMP/ COMBINED
DEBENTURE SENIOR NOTES BMW MONARCH PRO FORMA
OFFERING TENDER TRICO COMBINED CHRISTIANA(S) ADJUSTED
--------- ------------ ------- ----------- ------------- -----------
Revenues:
Products...................... $ -- $ -- $ -- $ -- $(90,101) $1,303,816
Services and rentals.......... -- -- -- -- -- 821,397
-------- ------- ------- ------- -------- ----------
-- -- -- -- (90,101) 2,125,213
-------- ------- ------- ------- -------- ----------
Costs and expenses:
Cost of sales
Products.................. -- -- 2,100(t) -- (76,377) 927,705
Services and rentals...... -- -- -- -- 551,375
Selling, general and
administrative.............. -- -- 1,364(u) (3,616)(u)(v) (9,103) 293,785
-------- ------- ------- ------- -------- ----------
-- -- 3,464 (3,616) (85,480) 1,772,865
-------- ------- ------- ------- -------- ----------
Operating income................. -- -- (3,464) 3,616 (4,621) 352,348
-------- ------- ------- ------- -------- ----------
Other income (expense):
Interest expense.............. (17,325)(w) 12,216(x) -- 373(y) 2,991 (48,839)
Interest income............... -- -- -- -- (507) 8,329
Equity in earnings of BMW
Monarch..................... -- -- (832)(z) -- -- --
Equity in earnings of EVI..... -- -- -- -- (6,290)(aa) --
Equity in earnings of
Logistic.................... -- -- -- -- 130 130
Equity in earnings of
unconsolidated affiliates... -- -- -- -- -- 2,582
Other income (expense), net... -- -- 538(bb) -- 1,470 1,183
-------- ------- ------- ------- -------- ----------
(17,325) 12,216 (294) 373 (2,206) (36,615)
-------- ------- ------- ------- -------- ----------
Income (loss) before income
taxes........................... (17,325) 12,216 (3,758) 3,989 (6,827) 315,733
Provision (benefit) for income
taxes........................... (6,064)(cc) 4,276(cc) (1,315)(cc) 1,396(cc) (2,676)(cc) 113,213
-------- ------- ------- ------- -------- ----------
Income (loss) from continuing
operations...................... $(11,261) $ 7,940 $(2,443) $ 2,593 $ (4,151) $ 202,520
======== ======= ======= ======= ======== ==========
Earnings per share from
continuing operations:
Basic......................... $ 2.11(p)
Diluted....................... 2.08(p)
Weighted average shares
outstanding:
Basic......................... 96,052(dd)
Diluted....................... 97,562(dd)
69
77
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
GENERAL
The following notes set forth the assumptions used in preparing the
unaudited pro forma financial statements. The pro forma adjustments are based on
estimates made by EVI's management using information currently available.
PRO FORMA ADJUSTMENTS
The adjustments to the accompanying Unaudited Adjusted Pro Forma Condensed
Consolidated Balance Sheets are described below:
(a) The EVI and Weatherford Combined Pro Forma Balance Sheet has been
prepared assuming the Merger is accounted for as a pooling of interests.
The EVI and Weatherford Combined Pro Forma Balance Sheet is based on the
consolidated financial statements of EVI and Weatherford.
(b) To reflect the sale of a two-thirds interest in Logistic by
Christiana to C2 for cash of $10.67 million and to reflect a $3.0 million
loss, net of taxes, due to the purchase price being less than the $15.5
million carrying value of the interest in Logistic. Such sale is in
accordance with the Christiana Merger Agreement as (i) Logistic is required
to distribute $23.0 million to Christiana, funded from borrowings of
Logistic (of which such borrowings are being effected to permit Christiana
to have sufficient cash to allow EVI to pay the cash consideration
contemplated by the Christiana Acquisition, (ii) Christiana is to sell its
two-thirds interest in Logistic to C2 for $10.67 million and (iii) EVI is
required to pay to the Christiana shareholders an amount of cash equal to
the cash of Christiana at the closing of the Christiana Acquisition less
$10.0 million and the amount of certain liabilities and tax benefits to be
maintained by Christiana for the benefit of EVI.
(c) To reflect an increase in Christiana's cash of $23.0 million from
a dividend from Logistic funded through Logistic's borrowings to meet the
required minimum cash levels per the Christiana Merger Agreement, and to
reflect the cash to Christiana of $10.67 million from its sale of the
two-thirds interest in Logistic less $0.4 million of cash held by Logistic.
(d) To reflect the cash payment by EVI of $19.8 million or $3.81 per
share to the holders of common stock of Christiana pursuant to the
Christiana Merger Agreement. The pro forma cash payment by EVI of $3.81 per
share is based on pro forma data presented herein; however, based on future
expected cash flows of Christiana, the payment to the Christiana
shareholders in the Christiana Acquisition is believed to be approximately
$3.60 per share. The difference of $0.21 per share relates to expected cash
flow timing differences between December 31, 1997 and the actual date
contemplated for the Christiana Acquisition.
(e) To reflect the exercise of the Christiana employee stock options
of 53,334 shares of common stock Christiana for $1.4 million in cash and
the cancellation of Christiana employee stock options for $2.5 million in
cash. The exercise and cancellation of Christiana employee stock options
generates a tax benefit of $1.2 million. Cash in this amount is required to
be retained by Christiana for the benefit of EVI.
(f) To eliminate Christiana's investment in EVI and related deferred
taxes.
(g) To reflect the remaining one-third interest in Logistic held by
Christiana. The investment represents a one-third interest of the net book
value of Logistic.
(h) Prior to Christiana's sale of its two-thirds interest in Logistic,
the pro forma net book value of Logistic was $23.1 million. After the sale
of Christiana's two-thirds interest in Logistic, the remaining net book
value of Logistic is $7.6 million. EVI reflects a reduction of $3.9 million
in the carrying value of Christiana's remaining one-third interest in
Logistic reflecting the excess fair value of the net tangible post merger
assets of Christiana over the cash and stock consideration being paid to
the Christiana shareholders.
70
78
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(i) To reclassify certain deferred tax liabilities of $8.8 million to
current federal taxes payable as a result of the sale by Christiana of its
two-thirds interest in Logistic.
(j) To record a $2.5 million liability for transaction costs related
to the Christiana Acquisition.
(k) To record a $10.0 million EVI liability to the Christiana
shareholders payable in five years pursuant to the Christiana Merger
Agreement.
(l) Reflects the issuance of 49,760,332 shares of EVI Common Stock in
exchange for all 52,379,297 shares of Weatherford Common Stock outstanding
at December 31, 1997, based upon the conversion rate of .95 of a share of
EVI Common Stock for each share of Weatherford Common Stock. The difference
between the par value of Weatherford Common Stock exchanged and the par
value of the EVI Common Stock issued upon consummation of the Merger is
reflected as a decrease in paid-in capital. Weatherford treasury stock as
of December 31, 1997 is reflected as a decrease in paid-in capital.
(m) To reflect the issuance of 3,897,462 shares of EVI Common Stock in
the Christiana Acquisition at a price of $41.25 per share, the market price
of the EVI Common Stock on December 15, 1997, and the acquisition of
3,897,462 shares of EVI Common Stock held by Christiana as a result of the
Christiana Acquisition. The shares of EVI Common Stock held by Christiana
have been classified as treasury shares.
(n) To eliminate the remaining common stock of Christiana of $5.3
million, capital in excess of par of $15.0 million, retained earnings of
$31.7 million and treasury stock of $1.2 million.
The adjustments to the accompanying Unaudited Adjusted Pro Forma Condensed
Consolidated Statements of Income are described below:
(o) The Unaudited Pro Forma Condensed Consolidated Statements of
Income of EVI and Weatherford Combined are based on the consolidated
financial statements of EVI and Weatherford. Pro forma adjustments include
the elimination of intercompany revenues of $7.1 million, $5.2 million and
$4.8 million, respectively, and cost of sales of $5.7 million, $4.2 million
and $4.3 million, respectively, for the years ended December 31, 1997,
1996, and 1995. Pro forma adjustments for the years ended December 31, 1997
and 1996 also include the elimination of expenses of $1.7 million and a
gain of $2.7 million, respectively, recorded by Weatherford on the sale of
Arrow Completion Systems, Inc. to EVI in December 1996. Certain amounts
have been reclassified to conform presentation.
(p) The pro forma earnings per share from continuing operations is
computed on the basis of the combined weighted average number of common
shares of EVI and Weatherford for each period presented based upon the
conversion rate of .95 of a share of EVI Common Stock for each share of
Weatherford Common Stock.
(q) Reflects the results of the GulfMark Retained Assets, which were
acquired by EVI on May 1, 1997, from January 1, 1997, through March 31,
1997. Actual results of the GulfMark Retained Assets are included in EVI's
historical results from May 1, 1997.
(r) Reflects the results of Trico and BMW, which were acquired by EVI
on December 2, 1997 and December 3, 1997, respectively, from January 1,
1997 through September 30, 1997. Actual results of Trico and BMW are
included in EVI's historical results from their respective dates of
acquisitions.
(s) To eliminate Logistic's historical operating results, to reflect a
one-third equity interest in Logistic and to record the income tax
provision related to the one-third equity interest at the statutory rate.
71
79
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(t) To eliminate the provision for environmental remediation, the
liability related to property retained by the prior shareholder of Trico.
(u) To record amortization expense relating to the estimated excess of
cost over fair value of tangible assets acquired in connection with the
Trico and BMW acquisitions. Such excess of cost over fair value of net
tangible assets acquired is being amortized over 40 years.
(v) To eliminate bonuses paid to the shareholders of BMW and
management fees paid to Trico by BMW Monarch that would not have been paid
by EVI.
(w) To adjust interest expense for the Debentures at the rate of 5%
per annum and to record amortization expense of related debt issuance costs
over the life of the Debentures.
(x) To reduce interest expense and amortization of debt issuance costs
to reflect the repayment of the Notes. EVI funded such repayment with a
portion of the proceeds from the Debentures.
(y) To reduce interest expense to reflect EVI's retirement of BMW's
indebtedness. EVI funded such retirement with a portion of the proceeds
from the Debentures.
(z) To eliminate Trico's equity in earnings of BMW Monarch.
(aa) To eliminate Christiana's equity in earnings of EVI.
(bb) To eliminate Trico's provision for estimated losses on property
held for sale as the property was retained by the prior shareholder of
Trico.
(cc) To record the income tax provision (benefit) related to the
effect of the pro forma adjustments at the statutory rate.
(dd) EVI's historical shares outstanding, pro forma post-merger shares
outstanding and basic weighted average pro forma post-merger shares
outstanding as of December 31, 1997, were 47,100,290, 96,860,622 and
96,050,625, respectively. Weatherford's historical shares outstanding at
December 31, 1997 was 52,379,297.
72
80
MANAGEMENT
DIRECTORS OF EVI FOLLOWING THE MERGER
At the Effective Time, the number of directors of EVI will be ten, of which
six members have been named by EVI and four have been named by Weatherford. The
six members named by EVI are Bernard J. Duroc-Danner, who shall serve as
Chairman, David J. Butters, Sheldon S. Gordon, Sheldon B. Lubar, Robert B.
Millard and Robert A. Rayne. The four members named by Weatherford are Thomas R.
Bates, Jr., Philip Burguieres, William E. Macaulay and Robert K. Moses, Jr.
Set forth below is the name and age of the persons named to serve as
directors of EVI following the Merger and the term during which each of such
persons has served as a director of EVI or Weatherford, as appropriate:
NAME OF DIRECTOR AGE DIRECTOR SINCE
---------------- --- --------------
Bernard J. Duroc-Danner..................................... 44 1988
Thomas R. Bates, Jr......................................... 48 1997
Philip Burguieres........................................... 53 1991
David J. Butters............................................ 57 1984
Sheldon S. Gordon........................................... 62 1995
Sheldon B. Lubar............................................ 68 1995
William E. Macaulay......................................... 52 1995
Robert B. Millard........................................... 47 1989
Robert K. Moses, Jr......................................... 57 1978
Robert A. Rayne............................................. 49 1987
Bernard J. Duroc-Danner joined EVI in May 1987 to initiate the start-up of
EVI's oilfield service and equipment business. He was elected President of EVI
in January 1990 and Chief Executive Officer in May 1990. Following the Merger,
Mr. Duroc-Danner shall serve as Chairman of the Board and as Chief Executive
Officer of EVI. Mr. Duroc-Danner holds a Ph.D. in economics from Wharton
(University of Pennsylvania). Mr. Duroc-Danner is a director of Parker Drilling
Company and Dailey International, Inc.
Thomas R. Bates, Jr. joined Weatherford on June 1, 1997 as a director and
President and Chief Executive Officer. From 1982 until May 31, 1997, he held
various management positions at Schlumberger Limited in its Anadrill and Sedco
Forex divisions, serving as President of Anadrill from 1992 until May 1997.
Philip Burguieres has been a director of Weatherford since April 1991 and
has served as Chairman of the Board of Weatherford since December 1992. From
April 1991 to October 1996, he also served as President and Chief Executive
Officer of Weatherford. Mr. Burguieres serves as a director of Denali
Incorporated, a Houston, Texas-based provider of products and services for
handling critical fluids; McDermott International, Inc., a New Orleans,
Louisiana-based company engaged in the fabrication of oilfield equipment; Chase
Bank of Texas, N.A., a national banking organization; and TransAmerican Waste
Industries, Inc., a Houston, Texas-based company engaged in the processing and
disposal of nonhazardous industrial and municipal waste ("TransAmerican Waste").
David J. Butters is a Managing Director of Lehman Brothers, where he has
been employed for more than the past five years. Mr. Butters is currently
Chairman of the Board of Directors of GulfMark Offshore, Inc., a director of
Anangel-American Shipholdings, Ltd. and a member of the Board of Advisors of
Energy International, N.V.
Sheldon S. Gordon has served as Chairman of Union Bancaire Privee
International, Inc., a merchant bank, since May 1996. From May 1995 to May 1996,
Mr. Gordon was a Limited Partner of The Blackstone Group, L.P., an investment
banking firm. He was also a General Partner of The Blackstone Group, L.P. from
April 1991 until May 1995. Mr. Gordon is a director of AMETEK, Inc. and
Anangel-American Shipholdings, Ltd.
73
81
Sheldon B. Lubar has been Chairman and Chief Executive Officer of
Christiana, a diversified holding company with interests in refrigerated and dry
warehousing, transportation and logistic services, and Chairman of Lubar & Co.
Incorporated for more than the past five years. Mr. Lubar is a director of
Ameritech Corporation, Massachusetts Mutual Life Insurance Company, Firstar
Corporation and MGIC Investment Corporation. Under the terms of the agreements
relating to EVI's acquisition of Prideco, Inc. in June 1995, EVI agreed to
nominate Mr. Lubar or another acceptable nominee of Christiana for election to
the EVI Board as long as Christiana beneficially owns 8% or more of the
outstanding shares of Common Stock of EVI.
William E. Macaulay is and has been for more than the past five years
President and Chief Executive Officer of First Reserve Corporation, a
Connecticut-based corporation that manages various funds. He is a director of
Maverick Tube Corporation, a Missouri corporation engaged in the manufacture of
oilfield tubulars, line pipe and structural steel; TransMontaigne Oil Company, a
Colorado-based company engaged in natural gas and oil products pipelines,
distribution and marketing; Patina Oil & Gas Corporation, a Colorado-based
company engaged in oil and gas exploration and production; National-Oilwell,
Inc., a Houston, Texas-based company engaged in the design, manufacture and sale
of machinery and equipment and the distribution of products used in oil and gas
drilling production; Cal-Dive International, a Houston, Texas-based corporation
engaged in subsea services in the Gulf of Mexico; and Hugoton Energy
Corporation, a Kansas corporation engaged in oil and gas exploration and
production.
Robert B. Millard is a Managing Director of Lehman Brothers, where he has
been employed for more than the past five years. Mr. Millard is also a director
of GulfMark Offshore, Inc.
Robert K. Moses, Jr. is and has been for more than the past five years a
private investor, principally in the oil and gas exploration and oilfield
services business in Houston, Texas. He served as Chairman of the Weatherford
Board from May 1989 to December 1992. Mr. Moses serves as a director of
TransAmerican Waste.
Robert A. Rayne has been an Executive Director of London Merchant
Securities plc (property investment and development with major investments in
leisure enterprises), a United Kingdom-listed public limited company, for more
than the past five years.
Additionally, subject to the fiduciary duties of the EVI Board and the
willingness of such persons to serve as directors of EVI, following the
Effective Time, the EVI Board will be required to submit each of the above
persons as nominees for re-election to the EVI Board at the Annual Meeting of
Stockholders of EVI to be held in 1999 and 2000.
74
82
EXECUTIVE OFFICERS OF EVI FOLLOWING THE MERGER
Set forth below is certain information with respect to the executive
officers of EVI following the Merger.
NAME OF OFFICER AGE POSITION
--------------- --- --------
Bernard J. Duroc-Danner........... 44 Chairman of the Board and Chief Executive Officer
Thomas R. Bates, Jr............... 48 President and Chief Operating Officer
James G. Kiley.................... 41 Chief Financial Officer, Senior Vice President and
Treasurer
John C. Coble..................... 55 Senior Vice President and President of Grant Prideco
Robert F. Stiles.................. 40 Senior Vice President and President of EVI Oil Tools
Randall D. Stilley................ 44 Senior Vice President and President-Services
James R. Burke.................... 60 Senior Vice President and President-
Products/Compression
Curtis W. Huff.................... 40 Senior Vice President, General Counsel and Secretary
Frances R. Powell................. 43 Vice President, Accounting and Controller
James G. Kiley was elected Vice President and Chief Financial Officer of
EVI in May 1996 and Vice President, Finance, Treasurer and Secretary in May 1994
when he joined EVI. From April 1991 to April 1994, Mr. Kiley served as Treasurer
of Baroid Corporation, a provider of oilfield services. Prior to his position at
Baroid, Mr. Kiley held various positions, including Assistant Treasurer, at NL
Industries, Inc., a manufacturer of titanium dioxide pigments and specialty
chemicals. Following the Merger, Mr. Kiley will serve as Chief Financial
Officer, Senior Vice President and Treasurer of EVI.
John C. Coble joined EVI in July 1981 and was elected Executive Vice
President of EVI in March 1997. Mr. Coble has served as President of EVI's Grant
Prideco drilling products segment ("Grant Prideco") since October 1995. From
December 1991 to October 1995, he served as Chief Operating Officer of EVI.
Following the Merger, Mr. Coble will serve as Senior Vice President of EVI and
as President of Grant Prideco.
Robert F. Stiles joined EVI in October 1992 and was elected a Vice
President of EVI in March 1997. Mr. Stiles has been President of EVI's EVI Oil
Tools production equipment segment since January 1996. Prior to that time, Mr.
Stiles served as President of Production Oil Tools, Inc., a wholly owned
subsidiary of EVI included in the EVI Oil Tools division, from November 1993 to
December 1995 and as Vice President, Manufacturing of Grant Prideco from October
1992 to November 1993. Following the Merger, Mr. Stiles will serve as Senior
Vice President of EVI and President of EVI Oil Tools.
Randall D. Stilley is currently and has served as Senior Vice President and
President-Services of Weatherford since January 5, 1998. Prior to joining
Weatherford, Mr. Stilley held various management positions with Halliburton
Energy Services from 1976 until 1998, serving as Vice President-Asia
Pacific/China from 1995 until December 31, 1997.
James R. Burke is currently Senior Vice President and
President-Products/Compression of Weatherford. Mr. Burke, who joined Weatherford
in December 1991 as Senior Vice President, Corporate Development and Marketing,
became President-Products/Compression in October 1995.
Curtis W. Huff was elected Senior Vice President, General Counsel and
Secretary of EVI, effective June 15, 1998. Mr. Huff is currently a partner at
the law firm of Fulbright & Jaworski, counsel to EVI, and has held that position
for more than the past five years.
75
83
Frances R. Powell was elected Vice President, Accounting of EVI in May
1994, Controller in November 1991 and has been employed by EVI since 1990.
Following the Merger, Ms. Powell will continue to serve as Vice President,
Accounting and Controller of EVI.
76
84
STOCK OWNERSHIP
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OF EVI
Principal Stockholders. The following table sets forth, as of the Record
Date, the beneficial ownership of each person who is known by EVI to be the
beneficial owner of more than five percent of the outstanding EVI Common Stock.
Such information is based solely upon data provided to EVI by such persons.
BEFORE THE MERGER AFTER THE MERGER
------------------------ ------------------------
NUMBER OF NUMBER OF
SHARES PERCENT SHARES PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME AND ADDRESS OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---------------- ------------ -------- ------------ --------
Christiana Companies, Inc.(2).................... 3,897,462 8.1 3,897,462 4.0
700 North Water Street, #1200
Milwaukee, Wisconsin 53202
Lehman Brothers Holdings Inc..................... 3,598,832 7.5 3,598,832 3.7
3 World Financial Center
New York, New York 10285
FMR Corp.(3)..................................... 3,154,024 6.6 9,701,901(4) 10.0
82 Devonshire Street
Boston, Massachusetts 02109
AMVESCAP PLC(5).................................. 3,090,152 6.5 3,090,152 3.2
11 Devonshire Square
London EC2M 4YR
England
- ---------------
(1) Unless otherwise indicated below, the persons or groups listed have sole
voting and dispositive power with respect to their shares of EVI Common
Stock, and none of such shares are deemed to be owned because the holder has
the right to acquire the shares within 60 days.
(2) Includes 3,897,462 shares of EVI Common Stock owned of record by Christiana.
Sheldon Lubar, a Director of EVI, is the Chairman and Chief Executive
Officer of Christiana and is the beneficial owner of 18.8% of the common
stock of Christiana.
(3) Fidelity Management & Research Company ("Fidelity"), a wholly owned
subsidiary of FMR Corp. ("FMR") and a registered investment adviser, is the
beneficial owner of 2,754,124 shares as a result of acting as investment
adviser to various registered investment companies (the "Funds"). Fidelity
Management Trust Company ("FMTC"), a wholly owned subsidiary of FMR, is the
beneficial owner of 399,900 shares as a result of serving as investment
manager of various institutional accounts. Edward C. Johnson 3d, FMR's
Chairman and principal stockholder, FMR, through its control of Fidelity,
and the Funds each has sole power to dispose of the 2,754,124 shares owned
by the Funds and Mr. Johnson and FMR, through its control of FMTC, each has
sole power to vote and dispose of the 399,900 shares owned by the
institutional accounts; however, sole power to vote the shares owned by the
Funds resides with the Funds' Boards of Trustees. Fidelity carries out the
voting of the Funds' shares under written guidelines established by the
Funds' Board of Trustees. Additionally, Mr. Johnson, FMR and the Funds may
be deemed to be the beneficial owner of an additional 18,750 shares
resulting from the assumed conversion of 30,000 of EVI's Debentures. Members
of Mr. Johnson's family and trusts for their benefit are the predominant
owners of Class B shares of common stock of FMR. Mr. Johnson owns 12.0% and
Abigail P. Johnson, Mr. Johnson's wife and a Director of FMR, owns 24.5% of
the voting stock of FMR. The Johnson family and all other Class B
shareholders have entered into a shareholders' voting agreement under which
all Class B shares will be voted in accordance with the majority vote of
Class B shares. Accordingly, through their ownership of voting common stock
and the execution of the shareholders'
77
85
voting agreement, members of the Johnson family may be deemed, under the
Investment Company Act of 1940, to form a controlling group with respect to FMR.
(4) Includes 6,547,877 shares of EVI Common Stock issuable upon the consummation
of the Merger as a result of FMR's ownership of 6,892,502 shares of
Weatherford Common Stock. See "-- Principal Stockholders and Management of
Weatherford".
(5) AMVESCAP PLC has beneficial ownership of the 3,090,152 shares of EVI Common
Stock with the following subsidiaries: AVZ, Inc., AIM Management Group Inc.,
AMVESCAP Group Services, Inc., INVESCO, Inc., INVESCO North American
Holdings, Inc. and INVESCO Funds Group, Inc.
Management. The following table sets forth as of the Record Date the
beneficial ownership of the outstanding EVI Common Stock by each current
director and each current executive officer of EVI and all directors and
executive officers of EVI as a group.
BEFORE THE MERGER AFTER THE MERGER
------------------------ ------------------------
NUMBER OF NUMBER OF
SHARES PERCENT SHARES PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---- ------------ -------- ------------ --------
Bernard J. Duroc-Danner.......................... 572,500 1.2% 830,000 *
James G. Kiley................................... 47,500 * 155,000 *
Frances R. Powell................................ 17,668 * 41,668 *
Ghazi J. Hashem.................................. -- * -- *
John C. Coble.................................... 16,800 * 80,400 *
Robert F. Stiles................................. 15,200 * 60,200 *
David J. Butters................................. 56,712 * 56,712 *
Uriel E. Dutton.................................. 70,000 * 70,000 *
Sheldon S. Gordon................................ 40,000 * 40,000 *
Sheldon B. Lubar(2).............................. 30,000 * 30,000 *
Robert B. Millard................................ 118,960 * 118,960 *
Robert A. Rayne(3)............................... 20,000 * 20,000 *
All Directors and Executive Officers as a Group
(12 persons)................................... 1,005,340 2.1% 1,502,940 1.5%
- ---------------
* Less than 1%.
(1) Beneficial ownership by a person includes both outstanding shares of EVI
Common Stock owned and shares of EVI Common Stock which such person has a
right to acquire within 60 days upon the exercise of outstanding options.
Directors and executive officers have sole voting and investment power with
respect to the shares they own. Includes 22,500, 10,000 and 92,500 shares of
EVI Common Stock beneficially owned by Messrs. Duroc-Danner and Kiley and
all directors and executive officers of EVI as a group, respectively,
pursuant to outstanding options that are exercisable within 60 days.
(2) Does not include 3,897,462 shares of EVI Common Stock owned directly by
Christiana. Mr. Lubar currently beneficially owns approximately 18.8% of the
outstanding shares of common stock of Christiana. Pursuant to the Christiana
Acquisition, Mr. Lubar will be entitled to receive 725,618 shares of EVI
Common Stock or approximately 1.5% and 0.8% of the outstanding shares of EVI
Common Stock before and after the Merger, respectively.
78
86
(3) Excludes 400,000 shares beneficially owned by London Merchant Securities Plc
which Mr. Rayne disclaims beneficial ownership of.
PRINCIPAL STOCKHOLDERS AND MANAGEMENT OF WEATHERFORD
Principal Stockholders. The following table sets forth certain information
with respect to (i) the Weatherford Common Stock beneficially owned by persons
who are known to Weatherford to be the beneficial owners of more than five
percent of the Weatherford Common Stock as of the Record Date and (ii) the
approximate number of shares of EVI Common Stock each of such persons will be
entitled to receive upon the consummation of the Merger. For purposes of this
Report, beneficial ownership is defined in accordance with the rules of the
Commission to mean generally the power to vote or dispose of shares, regardless
of any economic interest therein. The persons listed have sole voting power and
sole dispositive power over all shares set forth in the table, unless otherwise
specified in the footnotes to the table.
BEFORE THE MERGER AFTER THE MERGER
------------------------ ------------------------
SHARES OF SHARES OF
WEATHERFORD EVI
COMMON COMMON
STOCK PERCENT STOCK PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME AND ADDRESS OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---------------- ------------ -------- ------------ --------
First Reserve Corporation(2)............ 6,569,306 12.8 6,240,840 6.8
475 Steamboat Road
Greenwich, CT 06830
FMR Corp.(3)............................ 6,892,502 13.4 9,701,901(4) 10.0
82 Devonshire Street
Boston, MA 02109
- ---------------
(1) Information with respect to beneficial ownership is based upon information
furnished by each stockholder or contained in filings made with the
Commission. To Weatherford's knowledge, none of such shares are deemed to be
beneficially owned because the holder has the right to acquire such shares
within 60 days.
(2) Based upon information contained in Amendment No. 4 to Schedule 13D/A dated
March 4, 1998, filed with the Commission by First Reserve Corporation
("First Reserve"). Represents shares owned by the following funds (the
"First Reserve Funds"), for each of which First Reserve is the general
partner: American Gas & Oil Investors, Limited Partnership -- 1,360,000
shares; AmGO II, Limited Partnership -- 850,000 shares; First Reserve
Secured Energy Assets Fund, Limited Partnership -- 650,000 shares; First
Reserve Fund V, Limited Partnership -- 2,300,000 shares; First Reserve Fund
V-2, Limited Partnership -- 640,000 shares; and First Reserve Fund VI,
Limited Partnership -- 735,371 shares. First Reserve, in its role as
managing general partner of the First Reserve Funds and acting on behalf of
the First Reserve Funds, has the power to cause each First Reserve Fund to
dispose of or vote shares of Common Stock held by such First Reserve Fund.
Also includes 33,935 shares owned directly by First Reserve. The principal
beneficial owners of the common stock of First Reserve are its executive
officers, including Mr. Hill, Chairman of the Board of First Reserve, and
Mr. Macaulay, President and Chief Executive Officer of First Reserve, each
of whom is also a director of Weatherford. First Reserve, the First Reserve
Funds and Messrs. Macaulay and Hill are parties to the First Reserve
Agreement under which First Reserve and the First Reserve Funds are entitled
to collectively elect up to two directors depending on their percentage of
ownership of the Weatherford Common Stock. Upon the consummation of the
Merger, the First Reserve Agreement will terminate and the parties thereto
will have no further rights under such agreement. See "The Merger -- Voting
Agreements". Does not include shares of Weatherford Common Stock owned
directly by each of Messrs. Hill and Macaulay.
(3) Based upon information contained in a joint Schedule 13G/A dated February
14, 1998, filed with the Commission by Edward C. Johnson 3d, Abigail P.
Johnson and by FMR Corp., on behalf of itself and its subsidiaries, Fidelity
Management & Research Company (beneficial owner of 6,327,547 shares of
Weatherford Common Stock), Fidelity Management Trust Company (beneficial
owner of 437,655 shares of Weatherford Common Stock) and Fidelity
International Limited ("FIL") (beneficial owner of 127,300 shares of
Weatherford Common Stock). FMR Corp. and Mr. Johnson each has sole
79
87
dispositive power over 6,327,547 shares of Weatherford Common Stock and no
voting power over these shares. FMR Corp. and Mr. Johnson each has sole
dispositive power over 437,655 shares of Weatherford Common Stock, of which
each has sole voting power over 420,655 shares and no voting power over
17,000 shares. FIL has the sole power to vote and dispose of 127,300 shares.
FMR Corp. and FIL are of the view that they are not acting as a "group" for
purposes of Section 13(d) of the Exchange Act and that they are not
otherwise required to attribute to each other the "beneficial ownership" of
securities "beneficially owned" by the other corporation within the meaning
of Rule 13d-3 promulgated under the Exchange Act.
(4) Includes 3,154,024 shares of EVI Common Stock held by FMR Corp. prior to the
Merger.
Management. The following table sets forth certain information with respect
to (i) the Weatherford Common Stock beneficially owned by each of Weatherford's
directors and each of its executive officers and by all of its directors and
executive officers as a group, as of the Record Date and (ii) the approximate
number of shares of EVI Common Stock each of such persons will be entitled to
receive upon the consummation of the Merger. Such persons have sole voting power
and sole dispositive power over all shares set forth in the table unless
otherwise specified in the footnotes to the table.
BEFORE THE MERGER AFTER THE MERGER
----------------------- -----------------------
SHARES OF SHARES OF
WEATHERFORD EVI
COMMON COMMON
STOCK PERCENT STOCK PERCENT
BENEFICIALLY OF BENEFICIALLY OF
NAME OWNED(1) CLASS(%) OWNED(1) CLASS(%)
---- ------------ -------- ------------ --------
Directors:
Thomas N. Amonett(2)(3)(4)............... 27,297 * 25,932 *
Thomas R. Bates, Jr.(5).................. 117,041 * 111,188 *
Philip Burguieres(6)..................... 236,024 * 224,222 *
Thomas J. Edelman(2)(4).................. 7,864 * 7,470 *
William E. Greehey(2)(4)................. 17,452 * 16,579 *
John A. Hill(2)(4)(7).................... 6,579,637 12.8 6,250,655 6.5
John W. Johnson(2)(4)(8)................. 61,984 * 58,884 *
William E. Macaulay(2)(4)(7)(9).......... 6,579,637 12.8 6,250,655 6.5
Robert K. Moses, Jr.(2)(4)(10)........... 448,235 * 425,823 *
Roger A. Widmann(2)(4)................... 6,364 * 6,045 *
Executive Officers:
James R. Burke(11)....................... 51,216 * 48,655 *
Jon Nicholson (12)....................... 18,292 * 17,377 *
Norman W. Nolen(13)...................... 48,702 * 47,216 *
Randall D. Stilley(14)................... 5,000 * 4,750 *
H. Suzanne Thomas(15).................... 74,136 * 70,429 *
All Directors and Executive Officers as a
Group (15 persons)(16)................ 7,709,575 14.9 7,324,096 7.6
- ---------------
* Denotes ownership of less than one percent.
(1) Information with respect to beneficial ownership is based upon information
furnished by each director or executive officer of Weatherford or contained
in filings made with the Commission.
(2) Includes 3,500 shares subject to acquisition within 60 days pursuant to a
Weatherford stock option plan for Mr. Amonett; 5,500 shares for each of
Messrs. Greehey, Johnson and Moses; 4,500 shares for Mr. Edelman; 2,000
shares for each of Messrs. Hill and Macaulay; and 5,000 shares for Mr.
Widmann.
(3) Includes 12,000 shares subject to acquisition within 60 days pursuant to a
Weatherford stock option plan.
80
88
(4) Includes 1,290 shares granted to Mr. Amonett and 1,364 shares granted to
each of the other named individuals pursuant to the Weatherford Restricted
Stock Plan, with respect to which he has sole voting and no dispositive
power.
(5) Includes 85,041 shares granted to Mr. Bates pursuant to the Weatherford
Restricted Stock Plan, with respect to which he has sole voting power and
no dispositive power. Also includes 30,000 shares subject to acquisition by
Mr. Bates within 60 days pursuant to a Weatherford option plan.
(6) Includes (a) 1,000 shares held by Mr. Burguieres' wife, with respect to
which he has no voting or dispositive power, and (b) 500 shares held by Mr.
Burguieres' adult son supported by him, with respect to which he has sole
voting and dispositive power; Mr. Burguieres disclaims beneficial ownership
of all such shares. Also includes (a) 8,750 shares granted to Mr.
Burguieres pursuant to the Weatherford Restricted Stock Plan, with respect
to which he has sole voting and no dispositive power, and (b) 102,500
shares subject to acquisition by Mr. Burguieres within 60 days pursuant to
a Weatherford stock option plan. Also includes 431 shares held under
Weatherford's Employee Stock Purchase Plan (the "ESPP") in the account of
Mr. Burguieres, as to which he has sole voting and no dispositive power
prior to withdrawal of such shares from the ESPP. Shares may be withdrawn
from the ESPP by a participant on March 31 of each year upon written notice
by such participant. Also includes 184 shares held under Weatherford's
401(k) Savings Plan (the "401(k) Plan") in Mr. Burguieres' account, as to
which shares Mr. Burguieres has sole voting and no dispositive power.
(7) Includes 6,569,306 shares owned beneficially by First Reserve and the First
Reserve Funds; Messrs. Hill and Macaulay disclaim beneficial ownership of
such shares.
(8) Does not include 1,050,000 shares owned by Permian Mud Service, Inc.
("Permian"). Mr. Johnson is a director, officer and substantial beneficial
shareholder of Permian and therefore may be deemed to be a beneficial owner
of the shares of the Weatherford Common Stock held by Permian; Mr. Johnson
disclaims beneficial ownership of all such shares. Includes (a) 6,000
shares held by Mr. Johnson as a trustee of various trusts for his children,
with respect to which he has sole voting and dispositive power, and (b) 120
shares held as custodian for Mr. Johnson's children, with respect to which
he has sole voting and dispositive power; Mr. Johnson disclaims beneficial
ownership of all such shares.
(9) Includes 6,967 shares held by Mr. Macaulay's wife, with respect to which he
has no voting or dispositive power; Mr. Macaulay disclaims beneficial
ownership of such shares.
(10) Includes (a) 625 shares held by Mr. Moses' adult son supported by him, with
respect to which Mr. Moses has no voting or dispositive power, and (b) an
aggregate of 45,000 shares held in various trusts for Mr. Moses' children,
his brother and his sister, of which Mr. Moses is the trustee, with respect
to which Mr. Moses has sole voting and dispositive power; Mr. Moses
disclaims beneficial ownership of all such shares. Does not include (a) an
aggregate of 52,500 shares held in various trusts for Mr. Moses' children,
with respect to which Mr. Moses has no voting or dispositive power, or (b)
1,851 shares held in a trust for Mr. Moses' son, with respect to which he
has no voting or dispositive power; since Mr. Moses is not a trustee of
such trusts and has no voting or dispositive power, he disclaims beneficial
ownership of all such shares.
(11) Includes (a) 8,125 shares granted to Mr. Burke pursuant to the Weatherford
Restricted Stock Plan, with respect to which he has sole voting and no
dispositive power, and (b) 31,166 shares subject to acquisition by Mr.
Burke within 60 days pursuant to options held by him. Also includes 2,076
shares held under the 401(k) Plan in Mr. Burke's account, with respect to
which shares Mr. Burke has sole voting and no dispositive power.
(12) Includes (a) 4,125 shares granted to Mr. Nicholson pursuant to the
Weatherford Restricted Stock Plan, with respect to which he has sole voting
and no dispositive power, and (b) 11,833 shares subject to acquisition by
Mr. Nicholson within 60 days pursuant to the options held by him. Also
includes 771 shares held under the Weatherford 401(k) plan in Mr.
Nicholson's account, with respect to which shares Mr. Nicholson has sole
voting and no dispositive power.
(13) Includes (a) 2,625 shares granted to Mr. Nolen pursuant to the Weatherford
Restricted Stock Plan, with respect to which he has sole voting and no
dispositive power, and (b) 26,916 shares subject to
81
89
acquisition by Mr. Nolen within 60 days pursuant to options held by him.
Also includes 259 shares held under the 401(k) Plan in Mr. Nolen's account,
with respect to which shares Mr. Nolen has sole voting and no dispositive
power.
(14) All of these shares were granted to Mr. Stilley pursuant to the Weatherford
Restricted Stock Plan, and he has sole voting and no dispositive power with
respect to such shares.
(15) Includes (a) 6,625 shares granted to Ms. Thomas pursuant to the Weatherford
Restricted Stock Plan, with respect to which she has sole voting and no
dispositive power, and (b) 34,666 shares subject to acquisition by Ms.
Thomas within 60 days pursuant to the options held by her. Also includes
890 shares held under the Weatherford 401(k) Plan in Ms. Thomas' account,
with respect to which shares Ms. Thomas has sole voting and no dispositive
power.
(16) See footnotes (2) through (15).
INDEPENDENT PUBLIC ACCOUNTANTS
It is expected that representatives of Arthur Andersen LLP will be present
at the EVI Special Meeting and at the Weatherford Special Meeting to respond to
appropriate questions of stockholders and to make a statement if they so desire.
LEGAL MATTERS
The validity of the shares of EVI Common Stock to be issued in connection
with the Merger will be passed upon by Fulbright & Jaworski L.L.P., 1301
McKinney, Suite 5100, Houston, Texas 77010. Certain tax consequences of the
Merger will be passed upon for EVI by Fulbright & Jaworski L.L.P. and for
Weatherford by Baker & Botts, L.L.P., 910 Louisiana, Houston, Texas 77002. Uriel
E. Dutton, a director of EVI, is a partner at Fulbright & Jaworski L.L.P. and
currently holds options to purchase 70,000 shares of EVI Common Stock, which
options were granted to him pursuant to EVI's Non-Employee Director Stock Option
Plan. In addition, Curtis W. Huff, a partner at Fulbright & Jaworski L.L.P., has
agreed to be retained as Senior Vice President, General Counsel and Secretary of
EVI, effective June 15, 1998, and pursuant to an agreement with EVI would
receive 75,000 restricted shares of EVI Common Stock and options to purchase
100,000 shares of EVI Common Stock.
EXPERTS
EVI's consolidated financial statements as of December 31, 1997 and 1996
and for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Joint Proxy Statement/Prospectus and the
Registration Statement, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
Weatherford's consolidated financial statements as of December 31, 1997 and
1996 and for each of the three years in the period ended December 31, 1997,
incorporated by reference in this Joint Proxy Statement/ Prospectus and the
Registration Statement, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
Christiana's consolidated financial statements as of June 30, 1997 and 1996
and for each of the three years in the period ended June 30, 1997, included in
this Joint Proxy Statement/Prospectus and the Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are included in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
GulfMark Retained Assets' financial statements as of December 31, 1996 and
1995 and for each of the three years in the period ended December 31, 1996,
incorporated by reference in this Joint Proxy Statement/
82
90
Prospectus and the Registration Statement, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said report.
The consolidated financial statements of Trico as of and for the years
ended December 31, 1996 and 1995 appearing in EVI's Amendment No. 1 to Form 8-K
dated December 2, 1997 on Form 8-K/A, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
The combined financial statements for BMW Monarch and BMW Pump as of March
31, 1997 and 1996, and for each of the two years in the period ended March 31,
1997, incorporated by reference in this Joint Proxy Statement/Prospectus and the
Registration Statement have been audited by Arthur Andersen & Co., independent
chartered accountants, as indicated in their reports with respect thereto, and
are incorporated by reference herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said report.
STOCKHOLDERS' PROPOSALS
Any proposals of holders of EVI Common Stock intended to be presented at
the Annual Meeting of Stockholders of EVI to be held in 1998 were required to
have been received by EVI, addressed to the Secretary at 5 Post Oak Park, Suite
1760, Houston, Texas 77027, no later than December 8, 1997, to be considered for
inclusion in the proxy statement and form of proxy relating to that meeting.
If the Merger is approved by the stockholders of Weatherford and
consummated, Weatherford will not hold an Annual Meeting of Stockholders in
1998. If the Merger is not approved by the stockholders of Weatherford or
otherwise not consummated, Weatherford intends to hold an Annual Meeting of
Stockholders in September 1998. Any proposals of stockholders of Weatherford
intended to be presented at the Annual Meeting of Stockholders of Weatherford
must be submitted by the close of business after the tenth day on which notice
of the meeting is made or public disclosure (as defined in Weatherford's
By-laws) of the date of the annual meeting. Such proposals are required to be
addressed to the Secretary at 1360 Post Oak Blvd., Suite 1000, Houston, Texas
77056.
83
91
APPENDIX A
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
EVI, INC.
AND
WEATHERFORD ENTERRA, INC.
MARCH 4, 1998
- --------------------------------------------------------------------------------
92
TABLE OF CONTENTS
ARTICLE I
THE MERGER................................................................... A-1
SECTION 1.1. The Merger.................................................. A-1
SECTION 1.2. Effective Time.............................................. A-1
SECTION 1.3. Effects of the Merger....................................... A-1
SECTION 1.4. Certificate of Incorporation and By-laws.................... A-2
SECTION 1.5. Directors................................................... A-2
SECTION 1.6. Officers.................................................... A-2
SECTION 1.7. Vacancies................................................... A-3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES................................................... A-3
SECTION 2.1. Effect on Capital Stock..................................... A-3
(a) Cancellation of Company and EVI Owned Stock................. A-3
(b) Conversion of Company Shares................................ A-3
(c) No Fractional EVI Shares.................................... A-3
SECTION 2.2. Exchange of Certificates.................................... A-3
(a) Exchange Agent.............................................. A-3
(b) Payment of Merger Consideration............................. A-3
(c) Exchange Procedure.......................................... A-3
(d) Distributions with Respect to Unexchanged Company Shares.... A-4
(e) No Further Ownership Rights in Company Shares............... A-4
ARTICLE III
REPRESENTATIONS AND WARRANTIES............................................... A-5
SECTION 3.1. Representations and Warranties of the Company............... A-5
(a) Organization; Standing and Power............................ A-5
(b) Subsidiaries................................................ A-5
(c) Capital Structure........................................... A-5
(d) Authority; Non-contravention................................ A-6
(e) SEC Documents............................................... A-7
(f) Information Supplied........................................ A-7
(g) Absence of Certain Changes or Events........................ A-7
(h) State Takeover Statutes; Absence of Supermajority
Provision................................................... A-8
(i) Brokers..................................................... A-8
(j) Litigation.................................................. A-8
(k) Accounting Matters.......................................... A-8
(l) Employee Benefit Matters.................................... A-8
(m) Taxes....................................................... A-9
(n) No Excess Parachute Payments................................ A-10
(o) Environmental Matters....................................... A-10
(p) Compliance with Laws........................................ A-10
(q) Material Contracts and Agreements........................... A-10
(r) Title to Properties......................................... A-10
A-i
93
(s) Intellectual Property....................................... A-11
(t) Labor Matters............................................... A-11
(u) Undisclosed Liabilities..................................... A-11
(v) Opinion of Financial Advisor................................ A-11
(w) Board Recommendation........................................ A-11
SECTION 3.2. Representations and Warranties of EVI....................... A-11
(a) Organization; Standing and Power............................ A-11
(b) Subsidiaries................................................ A-12
(c) Capital Structure........................................... A-12
(d) Authority; Non-contravention................................ A-13
(e) SEC Documents............................................... A-13
(f) Information Supplied........................................ A-14
(g) Absence of Certain Changes or Events........................ A-14
(h) State Takeover Statutes; Absence of Supermajority
Provision................................................... A-14
(i) Brokers..................................................... A-14
(j) Litigation.................................................. A-14
(k) Accounting Matters.......................................... A-15
(l) Employee Benefit Matters.................................... A-15
(m) Taxes....................................................... A-15
(n) No Excess Parachute Payments................................ A-16
(o) Environmental Matters....................................... A-16
(p) Compliance with Laws........................................ A-16
(q) Material Contracts and Agreements........................... A-16
(r) Title to Properties......................................... A-16
(s) Intellectual Property....................................... A-17
(t) Labor Matters............................................... A-17
(u) Undisclosed Liabilities..................................... A-17
(v) Opinion of Financial Advisor................................ A-17
(w) Board Recommendation........................................ A-17
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS.................................... A-18
SECTION 4.1. Conduct of Business of the Company.......................... A-18
(a) Ordinary Course............................................. A-18
(b) Changes in Employment Arrangements.......................... A-19
(c) Severance................................................... A-19
(d) Other Actions............................................... A-19
SECTION 4.2. Conduct of Business of EVI.................................. A-19
(a) Ordinary Course............................................. A-19
(b) Other Actions............................................... A-20
ARTICLE V
ADDITIONAL AGREEMENTS........................................................ A-20
SECTION 5.1. Stockholder Approval; Preparation of Proxy Statement;
Preparation of Registration Statement....................... A-20
SECTION 5.2. Letter of the Company's Accountants......................... A-21
SECTION 5.3. Letter of EVI's Accountants................................. A-21
SECTION 5.4. Access to Information....................................... A-21
SECTION 5.5. Reasonable Efforts; Notification............................ A-22
A-ii
94
SECTION 5.6. Stock Option Agreements and Benefit Matters................. A-23
SECTION 5.7. Indemnification............................................. A-23
SECTION 5.8. Fees and Expenses........................................... A-24
SECTION 5.9. Public Announcements........................................ A-24
SECTION 5.10. Accounting Matters.......................................... A-24
SECTION 5.11. Voting Agreement............................................ A-25
SECTION 5.12. Purchases of Common Stock of the Other Party................ A-25
SECTION 5.13. Third Party Standstill Agreements........................... A-25
ARTICLE VI
CONDITIONS PRECEDENT......................................................... A-25
SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger...................................................... A-25
(a) Stockholder Approval........................................ A-25
(b) NYSE Listing................................................ A-25
(c) HSR Act..................................................... A-25
(d) No Injunctions or Restraints................................ A-25
(e) Registration Statement Effectiveness........................ A-25
(f) Blue Sky Filings............................................ A-25
SECTION 6.2. Conditions of EVI........................................... A-26
(a) Compliance.................................................. A-26
(b) Certifications and Opinion.................................. A-26
(c) Representations and Warranties True......................... A-26
(d) Affiliate Letters........................................... A-26
(e) Tax Opinion................................................. A-27
(f) Pooling Accounting.......................................... A-27
(g) Consents, etc............................................... A-27
(h) No Litigation............................................... A-27
(i) Fairness Opinion............................................ A-27
(j) No Material Adverse Change.................................. A-27
SECTION 6.3. Conditions of the Company................................... A-27
(a) Compliance.................................................. A-27
(b) Certifications and Opinion.................................. A-28
(c) Representations and Warranties True......................... A-28
(d) Tax Opinion................................................. A-28
(e) Pooling Accounting.......................................... A-29
(f) Consents, etc............................................... A-29
(g) No Litigation............................................... A-29
(h) Fairness Opinion............................................ A-29
(i) No Material Adverse Change.................................. A-29
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER............................................ A-29
SECTION 7.1. Termination................................................. A-29
SECTION 7.2. Effect of Termination....................................... A-30
SECTION 7.3. Amendment................................................... A-30
SECTION 7.4. Extension; Waiver........................................... A-30
SECTION 7.5. Procedure for Termination, Amendment, Extension or Waiver... A-30
A-iii
95
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS..................................... A-30
SECTION 8.1. Takeover Defenses........................................... A-30
SECTION 8.2. No Solicitation............................................. A-30
SECTION 8.3. Fee and Expense Reimbursements.............................. A-32
ARTICLE IX
GENERAL PROVISIONS........................................................... A-33
SECTION 9.1. Nonsurvival of Representations and Warranties............... A-33
SECTION 9.2. Notices..................................................... A-33
SECTION 9.3. Definitions................................................. A-34
SECTION 9.4. Interpretation.............................................. A-35
SECTION 9.5. Counterparts................................................ A-35
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries.............. A-35
SECTION 9.7. Governing Law............................................... A-35
SECTION 9.8. Assignment.................................................. A-35
SECTION 9.9. Enforcement of the Agreement................................ A-35
SECTION 9.10. Severability................................................ A-35
List of Exhibits
Exhibit A Amended and Restated Certificate of Incorporation of EVI
Exhibit B Amended and Restated By-laws of EVI
Exhibit C Form of Voting Agreement
A-iv
96
AGREEMENT AND PLAN OF MERGER dated as of March 4, 1998, by and between EVI,
INC., a Delaware corporation ("EVI"), and WEATHERFORD ENTERRA, INC., a Delaware
corporation (the "Company").
WHEREAS, the respective Boards of Directors of EVI and the Company have
approved the merger of the Company with and into EVI (the "Merger"), upon the
terms and subject to the conditions of this Agreement and Plan of Merger (this
"Agreement"), whereby each issued and outstanding share of the Company's common
stock, $0.10 par value (a "Company Share"), not owned by the Company, EVI or any
wholly owned subsidiary of the Company or EVI will be converted into .95 of a
share of EVI's common stock, $1.00 par value ("EVI Common Stock");
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, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests; and
WHEREAS, EVI and the Company desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the conditions
hereof and in accordance with the Delaware General Corporation Law (the "DGCL"),
the Company shall be merged with and into EVI at the Effective Time of the
Merger (as hereinafter defined). Following the Merger, the separate corporate
existence of the Company shall cease and EVI shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of the Company in accordance with the DGCL.
SECTION 1.2. Effective Time. As soon as practicable following the
satisfaction or, to the extent permitted hereunder, waiver of the conditions set
forth in Article VI, the Surviving Corporation shall file the certificate of
merger required by the DGCL with respect to the Merger and other appropriate
documents (the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such other time as EVI and the Company shall agree should be specified in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time of the Merger"). The closing of the Merger (the "Closing") shall
take place at the offices of Fulbright & Jaworski L.L.P., in Houston, Texas, on
the date of the meetings of the Company's stockholders to approve the Merger
(the "Company Stockholders Meeting"), and of EVI's stockholders (the "EVI
Stockholders Meeting"), to approve the Merger, or, if any of the conditions set
forth in Article VI have not been satisfied, then as soon as practicable
thereafter, or at such other time and place or such other date as EVI and the
Company shall agree (the "Closing Date"). If such meetings are not held or
concluded on the same date, then the Closing Date shall be on the date of the
latter of such meetings.
SECTION 1.3. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL. If at any time after the Effective Time of the
Merger, the Surviving Corporation shall consider or be advised that any further
assignments or assurances in law or otherwise are necessary or desirable to
vest, perfect or confirm, of record or otherwise, in the Surviving Corporation,
all rights, title and interests in all real estate and other property and all
privileges, powers and franchises of EVI and the Company, the Surviving
Corporation and its proper officers and directors, in the name and on behalf of
EVI and the Company, shall
A-1
97
execute and deliver all such proper deeds, assignments and assurances in law and
do all things necessary and proper to vest, perfect or confirm title to such
property or rights in the Surviving Corporation and otherwise to carry out the
purpose of this Agreement, and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of the Company or
otherwise to take any and all such action.
SECTION 1.4. Certificate of Incorporation and By-laws.
(a) The Restated Certificate of Incorporation of EVI, as in effect
immediately prior to the Effective Time of the Merger, shall be amended and
restated as of the Effective Time of the Merger to read as set forth in Exhibit
A hereto, and, as so amended, such Restated Certificate of Incorporation shall
be the Certificate of Incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
(b) The By-laws of EVI, as in effect immediately prior to the Effective
Time of the Merger, shall be amended and restated as of the Effective Time of
the Merger to read as set forth in Exhibit B hereto, and, as so amended, shall
be the By-laws of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
SECTION 1.5. Directors.
(a) The number of directors of the Surviving Corporation shall be ten, of
which six shall be named by EVI and four shall be named by the Company.
(b) The directors to be named by the Company shall be determined within 21
days of the date hereof by the Board of Directors of the Company from the
current Board of Directors of the Company. One of such directors shall be Thomas
R. Bates, Jr. If the Company does not notify EVI of its designees within such 21
day period, EVI may select from the Board of Directors of the Company such
designees. If, prior to the Effective Time of the Merger, any of the Company's
designees to the Board of Directors of the Surviving Corporation as so selected
shall decline or be unable to serve as a director of the Surviving Corporation,
the other Company's designees shall designate another person to serve in such
person's stead, subject to the approval of a majority of EVI's Board of
Directors at that time, which approval shall not be unreasonably withheld.
(c) The directors to be named by EVI shall be determined within 21 days of
the date hereof by the Board of Directors of EVI from the current Board of
Directors of EVI. One of such directors shall be Bernard J. Duroc-Danner. If,
prior to the Effective Time of the Merger, any of EVI's designees to the Board
of Directors of the Surviving Corporation as so selected shall decline or be
unable to serve as a director of the Surviving Corporation, the Board of
Directors of EVI shall designate another person to serve in such person's stead.
(d) The directors to be named by the Company shall be from the existing
directors of the Company and shall be required to be approved by EVI. The
directors of the Surviving Corporation shall hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation from the
Effective Time of the Merger until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be.
(e) Subject to the fiduciary duties of the Board of Directors of the
Surviving Corporation, and the willingness of such persons to serve as directors
of the Surviving Corporation, the Board of Directors of the Surviving
Corporation shall submit as nominees for election to the Board of Directors of
the Surviving Corporation at the Annual Meeting of Stockholders of the Surviving
Corporation to be held in 1999 and 2000 the initial directors of the Surviving
Corporation as provided for herein.
SECTION 1.6. Officers. Bernard J. Duroc-Danner shall be the Chairman and
Chief Executive Officer of the Surviving Corporation and Thomas R. Bates, Jr.
shall be a director and the President and Chief Operating Officer of the
Surviving Corporation. The other officers of the Surviving Corporation shall be
the officers of EVI as of the Effective Time of the Merger, together with such
other persons as may be selected by EVI to serve as officers of the Surviving
Corporation. All such officers shall hold office in accordance with the
Certificate of Incorporation and By-laws of the Surviving Corporation from the
Effective Time of the Merger
A-2
98
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
SECTION 1.7. Vacancies. If at the Effective Time of the Merger a vacancy
shall exist in the Board of Directors or in any of the offices of the Surviving
Corporation, such vacancy may thereafter be filled in the manner provided by the
DGCL and the Certificate of Incorporation and By-laws of the Surviving
Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. Effect on Capital Stock. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of any Company Shares:
(a) Cancellation of Company and EVI Owned Stock. All Company Shares that
are owned by the Company, any wholly owned subsidiary of the Company and any
Company Shares owned by EVI or any wholly owned subsidiary of EVI shall be
canceled and no consideration shall be delivered in exchange therefor.
(b) Conversion of Company Shares. Subject to Sections 2.1(a) and 2.1(c),
each issued and outstanding Company Share shall be converted into the right to
receive, upon the surrender of the certificate formerly representing such
Company Shares pursuant to Section 2.2, .95 of a share of EVI Common Stock (the
"Merger Consideration"). The ratio of a fraction of a share of EVI Common Stock
for each Company Share is herein referred to as the "Exchange Ratio".
(c) No Fractional EVI Shares. No fractional shares of EVI Common Stock
shall be issued in the Merger. All fractional shares of EVI Common Stock that a
holder of Company Shares would otherwise be entitled to receive as a result of
the Merger shall be aggregated and if a fractional share of EVI Common Stock
results from such aggregation, such holder shall be entitled to receive, in lieu
thereof, an amount in cash determined by multiplying the closing sale price per
share of a share of EVI Common Stock on the New York Stock Exchange ("NYSE") on
the first trading day immediately preceding the Effective Time of the Merger by
the fraction of a share of EVI Common Stock to which such holder would otherwise
have been entitled. No such cash in lieu of fractional shares of EVI Common
Stock shall be paid to any holder of fractional EVI Common Stock until that
holder's Certificates (as defined in Section 2.2(c)) are surrendered and
exchanged in accordance with Section 2.2(c).
SECTION 2.2. Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time of the Merger, EVI shall
engage American Stock Transfer & Trust Company or such other bank or trust
company reasonably acceptable to the Company, to act as exchange agent (the
"Exchange Agent") for the issuance of the Merger Consideration upon surrender of
Certificates.
(b) Payment of Merger Consideration. EVI shall cause there to be provided
to the Exchange Agent on a timely basis, as and when needed after the Effective
Time of the Merger, certificates for the EVI Common Stock to be issued upon the
conversion of the Company Shares pursuant to Section 2.1. The Surviving
Corporation shall timely make available to the Exchange Agent any cash necessary
to make payments in lieu of fractional shares.
(c) Exchange Procedure. As soon as practicable after the Effective Time of
the Merger, the Exchange Agent shall mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time of the
Merger represented outstanding Company Shares (the "Certificates"), other than
the Company, EVI and any wholly owned subsidiary of the Company or EVI, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in a form and have such other
provisions as EVI may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for
A-3
99
the certificates representing the EVI Common Stock and any cash in lieu of a
fractional share of EVI Common Stock. Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by the Surviving Corporation, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate or certificates representing the
number of whole shares of EVI Common Stock into which the Company Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.1 and any cash payable in lieu of a fractional share of EVI Common
Stock, and the Certificate so surrendered shall forthwith be canceled. If the
shares of EVI Common Stock are to be issued to a Person other than the Person in
whose name the Certificate so surrendered is registered, it shall be a condition
of exchange that such Certificate shall be properly endorsed or otherwise in
proper form for transfer and that the Person requesting such exchange shall pay
any transfer or other taxes required by reason of the exchange to a Person other
than the registered holder of such Certificate or establish to the reasonable
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time of the Merger
to represent only the right to receive, upon surrender of such Certificate, the
number of shares of EVI Common Stock and cash, if any, in lieu of a fractional
share of EVI Common Stock into which the Company Shares theretofore represented
by such Certificate shall have been converted pursuant to Section 2.1. The
Exchange Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the EVI Common Stock held by it from time to time hereunder,
except that it shall receive and hold all dividends or other distributions paid
or distributed with respect thereto for the account of Persons entitled thereto.
(d) Distributions with Respect to Unexchanged Company Shares. No dividends
or other distributions declared or made after the Effective Time of the Merger
with respect to the EVI Common Stock with a record date after the Effective Time
of the Merger shall be paid to the holder of any unsurrendered Certificate with
respect to the EVI Common Stock represented thereby and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to Section 2.1(c)
until the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the Certificates
representing the EVI Common Stock issued in exchange therefor, without interest,
(i) at the time of such surrender, the amount of any cash payable in lieu of a
fractional share of EVI Common Stock to which such holder is entitled pursuant
to Section 2.1(c) and the amount of dividends or other distributions with a
record date after the Effective Time of the Merger theretofore paid with respect
to such whole share of EVI Common Stock, as the case may be, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time of the Merger but prior to surrender and a
payment date subsequent to surrender payable with respect to such whole share of
EVI Common Stock.
(e) No Further Ownership Rights in Company Shares. All shares of EVI Common
Stock issued upon the surrender of Certificates in accordance with the terms of
this Article II, together with any dividends payable thereon to the extent
contemplated by this Section 2.2, shall be deemed to have been exchanged and
paid in full satisfaction of all rights pertaining to the Company Shares
theretofore represented by such Certificates and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Company Shares that were outstanding immediately prior to the
Effective Time of the Merger. If, after the Effective Time of the Merger,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article II.
A-4
100
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, EVI as follows, subject to any
exceptions specified in the Disclosure Letter of the Company provided to EVI on
the date hereof (the "Company Disclosure Letter") and except as expressly
contemplated by this Agreement:
(a) Organization; Standing and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to carry on its
business as now being conducted. The Company is duly qualified to do business
and is in good standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, other than in such jurisdictions where the failure to be so qualified
to do business or in good standing (individually, or in the aggregate) would not
have a Material Adverse Effect on the Company and its subsidiaries, taken as a
whole.
(b) Subsidiaries. Except as set forth in the exhibits to the Company SEC
Documents (as defined in Section 3.1(e)), the Company does not own, directly or
indirectly, any capital stock or other ownership interest in any subsidiary
which would be required to be listed as a subsidiary of the Company under the
rules of the Securities and Exchange Commission (the "SEC") with the filing by
the Company of an Annual Report on Form 10-K. The Company's subsidiaries that
are corporations are corporations duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation and
have the requisite corporate power and authority to carry on their respective
businesses as they are now being conducted and to own, operate and lease the
assets they now own, operate or hold under lease, except where the failure to be
so organized, existing or in good standing would not have a Material Adverse
Effect on the Company and its subsidiaries, taken as a whole. The Company's
subsidiaries are duly qualified to do business and are in good standing in each
jurisdiction in which the nature of their respective businesses or the ownership
or leasing of their respective properties makes such qualification necessary,
other than in such jurisdictions where the failure to be so qualified or in good
standing would not have a Material Adverse Effect on the Company and its
subsidiaries, taken as a whole. All the outstanding shares of capital stock of
the Company's subsidiaries that are corporations and that are owned by the
Company or its subsidiaries have been duly authorized and validly issued and are
fully paid and non-assessable and were not issued in violation of any preemptive
rights or other preferential rights of subscription or purchase of any Person
other than those that have been waived or otherwise cured or satisfied. All such
stock and ownership interests are owned of record and beneficially by the
Company or by a direct or indirect wholly owned subsidiary of the Company, free
and clear of all liens, pledges, security interests, charges, claims, rights of
third parties and other encumbrances of any kind or nature ("Liens").
(c) Capital Structure. The authorized capital stock of the Company consists
of 80,000,000 shares of common stock, $0.10 par value ("Company Common Stock"),
and 1,000,000 shares of preferred stock, $1.00 par value ("Company Preferred
Stock"). At the close of business on January 31, 1998, 51,705,615 Company Shares
(including 100,951 shares of Company Common Stock reserved for issuance in
connection with various prior acquisitions by the Company, which such shares
have not yet been issued, and excluding 997,667 Company Shares held in treasury)
were issued and outstanding and no shares of Company Preferred Stock were issued
and outstanding. In addition, at the close of business on January 31, 1998, (i)
658,258 and 12,000 shares of Company Common Stock were reserved for issuance
pursuant to awards not yet granted under the Company's 1991 Stock Option Plan
and Non-Employee Director Stock Option Plan, respectively, (ii) 42,532,
1,010,064, 33,500 and 50,700 shares of Company Common Stock were reserved for
issuance pursuant to outstanding options granted under the Company's 1987 Stock
Option Plan, 1991 Stock Option Plan, Non-Employee Director Stock Option Plan and
D. Dale Wood Stock Option Agreement, respectively, and (iii) 558,584 shares of
Company Common Stock were reserved for issuance under various other employee and
director plans and agreements of the Company. Except as set forth above, no
shares of capital stock or other equity or voting securities of the Company are
reserved for issuance or outstanding. All outstanding shares of capital stock of
the Company are, and all such shares issuable upon the exercise of stock options
will
A-5
101
be, validly issued, fully paid and nonassessable and not subject to preemptive
rights. No capital stock has been issued by the Company since September 30,
1997, to the date hereof, other than shares of Company Common Stock issued
pursuant to options outstanding on or prior to such date in accordance with
their terms at such date. Except for options outstanding under the Company's
1987 Stock Option Plan, 1991 Stock Option Plan, Non-Employee Director Stock
Option Plan and D. Dale Wood Stock Option Agreement (collectively, the "Company
Stock Plans"), as set forth above, as of January 31, 1998, there were no
outstanding or authorized securities, options, warrants, calls, rights,
commitments, preemptive rights, agreements, arrangements or undertakings of any
kind to which the Company or any of its subsidiaries is a party, or by which any
of them is bound, obligating the Company or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, any shares of capital
stock or other equity or voting securities of, or other ownership interests in,
the Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
(d) Authority; Non-contravention. The Company has the requisite corporate
power and authority to enter into this Agreement and, subject to approval of the
Merger and this Agreement by the holders of a majority of the outstanding
Company Shares as of the record date for the Company Stockholders Meeting
("Company Stockholder Approval"), to consummate the transactions contemplated
hereby and to take such actions, if any, as shall have been taken with respect
to the matters referred to in Section 3.1(h). The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, subject to Company Stockholder Approval. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws or judicial decisions now or hereafter in effect relating to
creditors' rights generally, (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought and (iii) the
enforceability of any indemnification provision contained herein may be limited
by applicable federal or state securities laws. The execution and delivery of
this Agreement by the Company do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to loss of a
material benefit under, or result in the creation of any Lien, upon any of the
properties or assets of the Company or any of its subsidiaries under, any
provision of (i) the Corrected Restated Certificate of Incorporation or Amended
and Restated By-laws of the Company or any provision of the comparable
organizational documents of its subsidiaries, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease, or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation or
arbitration award applicable to the Company or any of its subsidiaries or their
respective properties or assets, other than, in the case of clause (ii), any
such conflicts, violations, defaults, rights or Liens that individually or in
the aggregate would not have a Material Adverse Effect on the Company and its
subsidiaries taken as a whole and would not materially impair the ability of the
Company to perform its obligations hereunder or prevent the consummation of any
of the transactions contemplated hereby. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign, including local authorities (a "Governmental Entity"), is
required by or with respect to the Company or any of its subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the transactions contemplated hereby, except
for (i) the filing by the Company of a pre-merger notification and report form
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) the filing with the SEC of (A) a joint proxy statement relating
to the Company Stockholder Approval and the EVI Stockholder Approval (as defined
in Section 3.2(d)) (such proxy statement as amended or supplemented from time to
time, the "Proxy Statement")
A-6
102
and (B) the Registration Statement (as defined in Section 5.1(b)) and (C) such
reports under Section 13(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as may be required in connection with this Agreement and
the transactions contemplated hereby, and (iii) the filing of the Certificate of
Merger with the Delaware Secretary of State with respect to the Merger as
provided in the DGCL and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business and such other
consents, approvals, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not have a Material
Adverse Effect on the Company and its subsidiaries, taken as a whole.
(e) SEC Documents. The Company has filed all required reports, schedules,
forms, statements and other documents with the SEC since December 31, 1995 (such
documents, together with all exhibits and schedules thereto and documents
incorporated by reference therein, collectively referred to herein as the
"Company SEC Documents"). As of their respective dates, the Company SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents, and none of the Company SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company included in
the Company SEC Documents complied in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles (except, in the case of unaudited statements, as permitted
by Form 10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC)
and fairly present the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments and other
adjustments described therein).
(f) Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement is filed
with the SEC, and at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement will, at the date the Proxy Statement is first mailed to the Company's
stockholders and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The Proxy
Statement, as it relates to the Company Stockholders Meeting, will comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations thereunder, except that no representation or warranty is
made by the Company with respect to statements made or incorporated by reference
therein based on information supplied by EVI for inclusion or incorporation by
reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in the
Company SEC Documents, since December 31, 1996, the Company has conducted its
business only in the ordinary course consistent with past practice, and there
has not been (i) any material adverse change with respect to the Company, (ii)
any declaration, setting aside or payment of any dividend (whether in cash,
stock or property) with respect to any of the Company's capital stock, (iii) (A)
any granting by the Company or any of its subsidiaries to any executive officer
of the Company or any of its subsidiaries of any increase in compensation,
except in the ordinary course of business consistent with prior practice or as
was required under employment agreements in effect as of December 31, 1996, (B)
any granting by the Company or any of its subsidiaries to any such executive
officer of any increase in severance or termination pay, except as was required
under employment, severance or termination agreements in effect as of December
31, 1996, or (C) any entry by the Company or any of its subsidiaries into any
employment, severance or termination agreement with any such executive
A-7
103
officer, (iv) any damage, destruction or loss, whether or not covered by
insurance, that has or reasonably could be expected to have a Material Adverse
Effect on the Company and its subsidiaries, taken as a whole or (v) any change
in accounting methods, principles or practices by the Company materially
affecting its assets, liabilities or business, except insofar as may have been
required by a change in generally accepted accounting principles.
(h) State Takeover Statutes; Absence of Supermajority Provision. The
Company has taken all action to assure that no state takeover statute or similar
statute or regulation, including, without limitation sec.203 of the DGCL, shall
apply to the Merger or any of the other transactions contemplated hereby. Except
for Company Stockholder Approval, no other stockholder action on the part of the
Company is required for approval of the Merger, this Agreement and the
transactions contemplated hereby. The Company has also taken such other action
with respect to any other anti-takeover provisions in its by-laws or Corrected
Restated Certificate of Incorporation to the extent necessary to consummate the
Merger on the terms set forth in this Agreement.
(i) Brokers. Except for Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and Simmons & Company International, Inc. ("Simmons"), whose
fees are to be paid by the Company, no broker, investment banker or other Person
is entitled to receive from the Company or any of its subsidiaries any
investment banking, broker's, finder's or similar fee or commission in
connection with this Agreement or the transactions contemplated hereby,
including any fee for any opinion rendered by any investment banker. The
engagement letter dated August 15, 1996, between the Company and Merrill Lynch,
as amended by the letter agreements between the Company and Merrill Lynch dated
September 7, 1996, and January 16, 1997, and the letter agreement dated October
22, 1997, among the Company, Merrill Lynch and Simmons, provided to EVI prior to
the date of this Agreement constitutes the entire understanding of the Company
and Merrill Lynch with respect to the matters referred to therein, and has not
been amended or modified, nor will it be amended or modified prior to the
Effective Time of the Merger. The engagement letter dated August 15, 1996,
between the Company and Simmons, as amended by the letter agreements between the
Company and Simmons dated September 7, 1996, and January 16, 1997, and the
letter agreement dated October 22, 1997, among the Company, Merrill Lynch and
Simmons provided to EVI prior to the date of this Agreement constitutes the
entire understanding of the Company and Simmons with respect to the matters
referred to therein, and has not been amended or modified, nor will it be
amended or modified prior to the Effective Time of the Merger.
(j) Litigation. Except as disclosed in the Company SEC Documents, there is
no claim, suit, action, proceeding or investigation pending or, to the best of
the Company's knowledge, threatened against or affecting the Company or any of
its subsidiaries that could reasonably be expected to have a Material Adverse
Effect on the Company and its subsidiaries, taken as a whole, or prevent, hinder
or materially delay the ability of the Company to consummate the transactions
contemplated by this Agreement, nor is there any judgment, decree, injunction,
rule or order of any Governmental Entity or arbitrator outstanding against the
Company or any of its subsidiaries having, or which, insofar as reasonably can
be foreseen, in the future could have, any such effect.
(k) Accounting Matters. Neither the Company nor, to the best of its
knowledge, any of its affiliates, has through the date of this Agreement taken
or agreed to take any action that (without giving effect to any action taken or
agreed to be taken by EVI or any of its affiliates) would prevent EVI from
accounting for the business combination to be effected by the Merger as a
pooling of interests.
(l) Employee Benefit Matters. As used in this Section 3.1(l), "the Company"
shall include the Company as defined in the preamble of this Agreement and any
member of a controlled group or affiliated service group, as defined in Section
414(b), (c), (m) and (o) of the Code, of which the Company is a member. The
Company Disclosure Letter contains a true and complete list of each material
employee benefit plan or arrangement (the "Company Plans") which are sponsored
by, participated in or contributed to by or required to be contributed to by the
Company. Except for matters that would not in the aggregate have a Material
Adverse Effect on the Company and its subsidiaries, taken as a whole:
(i) The Company Plans are in substantial compliance with the Code and
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), as
they may be applicable;
A-8
104
(ii) With respect to any Company Plan subject to ERISA or the Code,
there has been no transaction described in Sections 406 or 407 of ERISA or
Section 4975 of the Code unless exempt under Section 408 of ERISA and
Section 4975 of the Code;
(iii) All contributions or other amounts payable by the Company with
respect to the Company Plans have either been paid or accrued in the
Company's most recent financial statements included in the Company SEC
Documents;
(iv) To the Company's knowledge, there are no pending or threatened or
anticipated claims (other than routine claims for benefits) by or on behalf
of or against any Company Plan or related trust;
(v) The Company has not maintained a pension plan that is or was
subject to the provisions of Title IV of ERISA or Section 412 of the Code
and has not maintained, had an obligation to contribute to, or incurred any
liability with respect to a multiemployer pension plan as defined in
Section 3(37) of ERISA;
(vi) All Company Plans which are intended to qualify under Section
401(a) of the Code have been submitted to and approved as qualifying under
Section 401(a) of the Code by the Internal Revenue Service ("IRS") or the
applicable remedial amendment period will not have ended prior to the
Effective Time of the Merger;
(vii) The transactions contemplated by this Agreement will not
accelerate the time of payment or vesting, increase the amount of
compensation due or result in a severance payment for any director, officer
or employee or former director, officer or employee (including any
beneficiary) of the Company; and
(viii) With respect to any entity (whether or not incorporated) that
is both treated as a single employer together with the Company under
Section 414 of the Code and located outside the United States, any benefit
plans maintained by it for the benefit of its directors, officers,
employees or former employees (or any of their beneficiaries) are in
compliance with applicable laws pertaining to such plans in the
jurisdiction of such entity.
(m) Taxes. Each of the Company and each of its subsidiaries, and any
consolidated, combined, unitary or aggregate group for Tax (as defined below)
purposes of which the Company or any of its subsidiaries is or has been a
member, has timely filed all Tax Returns (as defined below) required to be filed
by it and has timely paid or deposited (or the Company has paid or deposited on
its behalf) all Taxes which are required to be paid or deposited except where
the failure to do so would not have a Material Adverse Effect on the Company and
its subsidiaries, taken as a whole. Each of the Tax Returns filed by the Company
or any of its subsidiaries is accurate and complete in all material respects.
The most recent consolidated financial statements of the Company contained in
the filed Company SEC Documents reflect an adequate reserve for all Taxes
payable by the Company and its subsidiaries for all taxable periods and portions
thereof through the date of such financial statements whether or not shown as
being due on any Tax Returns. No deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or any of its subsidiaries; no requests
for waivers of the time to assess any such Taxes have been granted or are
pending; and there are no tax liens upon any assets of the Company or any of its
subsidiaries. The Federal income Tax Returns of the Company and its subsidiaries
consolidated in such Tax Returns have been examined by the IRS through the year
ended December 31, 1986. There are no current examinations of any Tax Return of
the Company or any of its subsidiaries being conducted and there are no
settlements or any prior examinations which could reasonably be expected to
adversely affect any taxable period for which the statute of limitations has not
run. As used herein, "Tax" or "Taxes" shall mean all taxes of any kind,
including, without limitation, those on or measured by or referred to as income,
gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, estimated, excise, severance, stamp,
occupation, premium, value added, property or windfall profits taxes, customs,
duties or similar fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional amounts
imposed by any Governmental Entity, domestic or foreign. As used herein, "Tax
Return" shall mean any return, report, statement or information required to be
filed with any Governmental Entity with respect to Taxes.
A-9
105
(n) No Excess Parachute Payments. Any amount that could be received
(whether in cash or property or the vesting of property) as a result of any of
the transactions contemplated by this Agreement by any employee, officer or
director of the Company or any of its affiliates who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment, severance or termination agreement, other
compensation arrangement or Company Plan currently in effect would not be
characterized as an "excess parachute payment" (as such term is defined in
Section 280G(b)(1) of the Code).
(o) Environmental Matters. Except as would not have a Material Adverse
Effect on the Company and its subsidiaries, taken as a whole, (i) the business
and operations of the Company and its subsidiaries are being conducted in
compliance with all limitations, restrictions, standards and requirements
established under all environmental laws, (ii) no facts or circumstances exist
that impose on the Company or any of its subsidiaries an obligation under
environmental laws to conduct any removal, remediation or similar response
action, (iii) there is no obligation, undertaking or liability arising out of or
relating to environmental laws that the Company or any of its subsidiaries has
agreed to, assumed or retained, by contract or otherwise, or that has been
imposed on the Company or any of its subsidiaries by any writ, injunction,
decree, order or judgment, and (iv) there are no actions, suits, claims,
investigations, inquiries or proceedings pending or, to the Company's knowledge,
threatened against the Company or any of its subsidiaries that arise out of or
relate to environmental laws.
(p) Compliance with Laws. The Company and its subsidiaries hold all
required, necessary or applicable permits, licenses, variances, exemptions,
orders, franchises and approvals of all Governmental Entities, except where the
failure to so hold would not have a Material Adverse Effect on the Company and
its subsidiaries, taken as a whole (the "Company Permits"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits except
where the failure to so comply would not have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole. Neither the Company nor any of
its subsidiaries has violated or failed to comply with any statute, law,
ordinance, regulation, rule, permit or order of any Federal, state or local
government, domestic or foreign, or any Governmental Entity, any arbitration
award or any judgment, decree or order of any court or other Governmental
Entity, applicable to the Company or any of its subsidiaries or their respective
businesses, assets or operations, except for violations and failures to comply
that could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect on the Company and its subsidiaries, taken as a whole.
(q) Material Contracts and Agreements.
(i) All material contracts of the Company or its subsidiaries have
been included in the Company SEC Documents, except for those contracts not
required to be filed pursuant to the rules and regulations of the SEC.
(ii) Section 3.1(q) of the Company Disclosure Letter sets forth (x) a
list of all written or oral contracts, agreements or arrangements to which
the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of their respective assets is bound which
would be required to be filed as exhibits to the Company's Annual Report on
Form 10-K for the year ended December 31, 1997, or, based on information
currently available to the Company, are expected to be required to be filed
as exhibits to the Company's Annual Report on Form 10-K for the year ending
December 31, 1998.
(r) Title to Properties.
(i) Each of the Company and its subsidiaries has good and defensible
title to, or valid leasehold interests in, all its properties and assets
purported to be owned by it in the Company SEC Documents, except for such
as are no longer used or useful in the conduct of its businesses or as have
been disposed of in the ordinary course of business and except for minor
defects in title, easements, restrictive covenants and similar encumbrances
or impediments that, in the aggregate, do not and will not materially
interfere with its ability to conduct its business as currently conducted
or as reasonably expected to be conducted. All such assets and properties,
other than assets and properties in which the Company or any of the
A-10
106
subsidiaries has leasehold interests, are free and clear of all Liens,
other than those set forth in the Company SEC Documents and except for
minor Liens, that, in the aggregate, do not and will not materially
interfere with the ability of the Company or any of its subsidiaries to
conduct business as currently conducted or as reasonably expected to be
conducted.
(ii) Except as would not have a Material Adverse Effect on the Company
and its subsidiaries, taken as a whole, each of the Company and each of its
subsidiaries has complied in all material respects with the terms of all
leases to which it is a party and under which it is in occupancy, and all
such leases are in full force and effect. Each of the Company and each of
its subsidiaries enjoys peaceful and undisturbed possession under all such
leases.
(s) Intellectual Property. The Company and its subsidiaries own, or are
licensed or otherwise have the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service mark rights, copyrights, technology, know-how, processes and other
proprietary intellectual property rights and computer programs which are
material to the condition (financial or otherwise) or conduct of the business
and operations of the Company and its subsidiaries taken as a whole. To the
Company's knowledge, the use of such patents, patent rights, trademarks,
trademark rights, service marks, service mark rights, trade names, copyrights,
technology, know-how, processes and other proprietary intellectual property
rights and computer programs by the Company and its subsidiaries does not
infringe on the rights of any Person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liability on the part of the
Company and its subsidiaries which could have a Material Adverse Effect with
respect to the Company and its subsidiaries, taken as a whole.
(t) Labor Matters. There are no collective bargaining agreements or other
labor union agreements or understandings to which the Company or any of its
subsidiaries is a party or by which any of them is bound, nor is the Company or
any of its subsidiaries the subject of any proceeding asserting that it or any
subsidiary has committed an unfair labor practice or seeking to compel it to
bargain with any labor organization as to wages or conditions.
(u) Undisclosed Liabilities. Except as set forth in the Company SEC
Documents, at the date of the most recent audited financial statements of the
Company included in the Company SEC Documents, neither the Company nor any of
its subsidiaries had, and since such date neither the Company nor any of such
subsidiaries has incurred (except in the ordinary course of business), any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise), required by generally accepted accounting principles to be set
forth on a financial statement or in the notes thereto or which, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect
on the Company and its subsidiaries, taken as a whole.
(v) Opinion of Financial Advisor. The Company has received an oral opinion
from each of Merrill Lynch and Simmons, to the effect that, as of the date of
this Agreement, the Exchange Ratio is fair to the holders of the Company Shares
from a financial point of view.
(w) Board Recommendation. The Board of Directors of the Company, at a
meeting duly called and held, has by vote of those directors present (i)
determined that this Agreement and the transactions contemplated hereby,
including the Merger and the transactions contemplated thereby, are fair to and
in the best interests of the stockholders of the Company and (ii) resolved to
recommend that the holders of the Company Shares approve the Merger and the
transactions contemplated hereby and thereby.
SECTION 3.2. Representations and Warranties of EVI. EVI represents and
warrants to, and agrees with, the Company as follows, subject to any exceptions
specified in the Disclosure Letter of EVI previously provided to the Company on
the date hereof (the "EVI Disclosure Letter") and except as expressly
contemplated by this Agreement:
(a) Organization; Standing and Power. EVI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to carry on its business as
now being conducted. EVI is duly qualified to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such
A-11
107
qualification necessary, other than in such jurisdictions where the failure to
be so qualified to do business (individually or in the aggregate) would not have
a Material Adverse Effect on EVI and its subsidiaries, taken as a whole.
(b) Subsidiaries. Except as set forth in the exhibits to the EVI SEC
Documents (as defined in Section 3.2(e)), EVI does not own, directly or
indirectly, any capital stock or other ownership interest in any subsidiary
which would be required to be listed as a subsidiary of EVI under the rules of
the SEC with the filing by EVI of an Annual Report on Form 10-K. EVI's
subsidiaries that are corporations are corporations duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation and have the requisite corporate power and authority to carry
on their respective businesses as they are now being conducted and to own,
operate and lease the assets they now own, operate or hold under lease, except
where the failure to be so organized, existing or in good standing would not
have a Material Adverse Effect on EVI and its subsidiaries, taken as a whole.
EVI's subsidiaries are duly qualified to do business and are in good standing in
each jurisdiction in which the nature of their respective businesses or the
ownership or leasing of their respective properties makes such qualification
necessary, other than in jurisdictions where the failure to be so qualified or
in good standing would not have a Material Adverse Effect on EVI and its
subsidiaries, taken as a whole. All the outstanding shares of capital stock of
EVI's subsidiaries that are corporations and that are owned by EVI or its
subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable and were not issued in violation of any preemptive rights or
other preferential rights of subscription or purchase of any Person other than
those than have been waived or otherwise cured or satisfied. All such stock and
ownership interests are owned of record and beneficially by EVI or by a wholly
owned subsidiary of EVI, free and clear of all Liens.
(c) Capital Structure. The authorized capital stock of EVI consists of
80,000,000 shares of EVI Common Stock and 3,000,000 shares of preferred stock,
$1.00 par value ("EVI Preferred Stock"). At the close of business on February
27, 1998, 47,847,188 shares of EVI Common Stock (excluding 4,792,975 shares of
EVI Common Stock held in treasury), were issued and outstanding, including (i)
51,798 shares of EVI Common Stock remaining to be exchanged for shares of common
stock of GulfMark International, Inc. ("GulfMark") in connection with EVI's
prior acquisition of GulfMark and (ii) 14,164 shares of EVI Common Stock
remaining to be exchanged for common shares of Taro Industries Limited ("Taro")
in connection with EVI's prior acquisition of Taro, and no shares of EVI
Preferred Stock were issued and outstanding. In addition, at the close of
business on February 27, 1998, (i) 5,031,250 shares of EVI Common Stock were
reserved for issuance pursuant to the conversion provisions of EVI's 5%
Convertible Subordinated Preferred Equivalent Debentures due 2027, (ii)
3,900,000 shares of EVI Common Stock were reserved for issuance pursuant to
EVI's proposed acquisition of Christiana Companies, Inc. and (iii) 2,514,398
shares of EVI Common Stock were reserved for issuance pursuant to EVI's employee
and director benefit plans and arrangements, of which 1,385,578 shares of EVI
Common Stock were reserved for issuance upon the exercise of outstanding
options. Except as set forth above, no shares of capital stock or other equity
or voting securities of EVI are reserved for issuance or outstanding. All
outstanding shares of capital stock of EVI are, and all such shares issuable
upon the exercise of options will be, validly issued, fully paid and
nonassessable and not subject to preemptive rights. Except as set forth in
Section 3.2(c) of the EVI Disclosure Schedule, no capital stock has been issued
by EVI since September 30, 1997 to the date hereof, other than EVI Common Stock
issued pursuant to options outstanding on or prior to such date in accordance
with their terms at such date. Except as described above, as of March 4, 1998,
there were no outstanding or authorized securities, options, warrants, calls,
rights, commitments, preemptive rights, agreements, arrangements or undertakings
of any kind to which EVI or any of its subsidiaries is a party, or by which any
of them is bound, obligating EVI or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, any shares of capital stock or
other equity or voting securities of, or other ownership interests in, EVI or
any of its subsidiaries or obligating EVI or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. The shares of EVI Common
Stock to be issued pursuant to the terms of this Agreement will, when issued, be
validly issued, fully paid and non-assessable and not subject to preemptive
rights. Such shares of EVI Common Stock will, when issued, be registered under
the Securities Act and the Exchange Act and will, when issued, be listed on the
NYSE, subject to notice of official issuance.
A-12
108
(d) Authority; Non-contravention. EVI has the requisite corporate power and
authority to enter into this Agreement and, subject to approval of the Merger by
the holders of a majority of the outstanding shares of EVI Common Stock ("EVI
Stockholder Approval"), to consummate the transactions contemplated hereby and
to take such actions, if any, as shall have been taken with respect to the
matters referred to in Section 3.2(h). The execution and delivery of this
Agreement by EVI and the consummation by EVI of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of EVI, subject to EVI Stockholder Approval. This Agreement has been duly
executed and delivered by EVI and constitutes a valid and binding obligation of
EVI, enforceable against EVI in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws or judicial decisions now or hereafter in effect relating
to creditors' rights generally, (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought and (iii) the
enforceability of any indemnification provision contained herein may be limited
by applicable federal and state securities laws. The execution and delivery of
this Agreement by EVI do not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not, conflict
with, or result in any violation of, or default (with or without notice or lapse
of time, or both) under, or give rise to a right of termination, cancellation or
acceleration of or "put" right with respect to any obligation or to loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of EVI or any of its subsidiaries, under any provision of
(i) the Restated Certificate of Incorporation or By-laws of EVI or any provision
of any comparable organizational documents of its subsidiaries, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to EVI or any of
its subsidiaries or its respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule or regulation or
arbitration award applicable to EVI or any of its subsidiaries or their
respective properties or assets, other than, in the case of clause (ii), any
such conflicts, violations, defaults, rights or Liens that individually or in
the aggregate would not have a Material Adverse Effect on EVI and its
subsidiaries, taken as a whole, and would not materially impair the ability of
EVI to perform its obligations hereunder or prevent the consummation of any of
the transactions contemplated hereby. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to EVI or any of its subsidiaries in
connection with the execution and delivery of this Agreement by EVI or the
consummation by EVI of the transactions contemplated hereby, except for (i) the
filing by EVI of a pre-merger notification and report form under the HSR Act,
(ii) the filing with the SEC of (A) the Proxy Statement with respect to EVI
Stockholder Approval and (B) such reports under Section 13(a) of the Exchange
Act as may be required in connection with this Agreement and the transactions
contemplated hereby, (iii) the filing and effectiveness of the Registration
Statement under the Securities Act, and (iv) the filing of the Certificate of
Merger with the Delaware Secretary of State with respect to the Merger as
provided in the DGCL and appropriate documents with the relevant authorities of
other states in which EVI is qualified to do business and such other consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under the "takeover" or "blue sky" laws of various states and
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not
have a Material Adverse Effect on EVI and its subsidiaries, taken as a whole.
(e) SEC Documents. EVI has filed all required reports, schedules, forms,
statements and other documents with the SEC since December 31, 1995 (such
documents, together with all exhibits and schedules thereto and documents
incorporated by reference therein, collectively referred to herein as the "EVI
SEC Documents"). As of their respective dates, the EVI SEC Documents complied in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and the rules and regulations of the SEC
promulgated thereunder applicable to such EVI SEC Documents, and none of the EVI
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The consolidated financial statements of EVI included in
the EVI SEC Documents complied in all material respects with applicable
accounting requirements and the published rules
A-13
109
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of unaudited statements, as permitted by Rule
10-01 of Regulation S-X of the SEC) and fairly present the consolidated
financial position of EVI and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and other adjustments described therein).
(f) Information Supplied. None of the information supplied or to be
supplied by EVI for inclusion or incorporation by reference in (i) the
Registration Statement will, at the time the Registration Statement is filed
with the SEC, and at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement will, at the date the Proxy Statement is first mailed to EVI's
stockholders and at the time of the EVI Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Proxy
Statement, as it relates to the EVI Stockholder Meeting, will comply as to form
in all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder, except that no representation or warranty is made by
EVI with respect to statements made or incorporated by reference therein based
on information supplied by the Company for inclusion or incorporation by
reference therein.
(g) Absence of Certain Changes or Events. Except as disclosed in the EVI
SEC Documents, since December 31, 1996, EVI has conducted its business only in
the ordinary course consistent with past practice, and there has not been (i)
any material adverse change with respect to EVI, (ii) any declaration, setting
aside or payment of any dividend (whether in cash, stock or property) with
respect to any of EVI's capital stock, (iii) any damage, destruction or loss,
whether or not covered by insurance, that has or reasonably could be expected to
have a Material Adverse Effect on EVI and its subsidiaries, taken as a whole, or
(iv) any change in accounting methods, principles or practices by EVI materially
affecting its assets, liabilities or business, except insofar as may have been
required by a change in generally accepted accounting principles.
(h) State Takeover Statutes; Absence of Supermajority Provision. EVI has
taken all action to assure that no state takeover statute or similar statute or
regulation, including, without limitation Section 203 of the DGCL, shall apply
to the Merger or any of the other transactions contemplated hereby. Except for
the EVI Stockholder Approval, no other stockholder action on the part of EVI is
required for approval of the Merger, this Agreement and the transactions
contemplated hereby. EVI has also taken such other action with respect to any
anti-takeover provisions in its By-laws or Restated Certificate of Incorporation
to the extent necessary to consummate the Merger on the terms set forth in this
Agreement.
(i) Brokers. Except for Morgan Stanley & Co. Incorporated ("Morgan
Stanley"), Credit Suisse First Boston Corporation ("First Boston"), Lehman
Brothers, Inc. ("Lehman") and Jefferies & Company, Inc. ("Jefferies"), whose
fees in aggregate do not exceed $11.5 million, are to be paid by EVI, no broker,
investment banker or other Person, is entitled to receive from EVI or any of its
subsidiaries any investment banking, broker's, finder's or other similar fee or
commission in connection with this Agreement or the transactions contemplated by
this Agreement, including any fee for any opinion rendered by any investment
banker.
(j) Litigation. Except as disclosed in the EVI SEC Documents, there is no
claim, suit, action, proceeding or investigation pending or, to the best of
EVI's knowledge, threatened against or affecting EVI or any of its subsidiaries
that could reasonably be expected to have a Material Adverse Effect on EVI and
its subsidiaries, taken as a whole, or prevent, hinder or materially delay the
ability of EVI and its subsidiaries, taken as a whole, to consummate the
transactions contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator outstanding
against EVI or any of its subsidiaries having, or which, insofar as reasonably
can be foreseen, in the future could have, any such effect.
A-14
110
(k) Accounting Matters. Neither EVI nor, to the best of its knowledge, any
of its affiliates, has through the date of this Agreement taken or agreed to
take any action that (without giving effect to any action taken or agreed to be
taken by the Company or any of its affiliates) would prevent EVI from accounting
for the business combination to be effected by the Merger as a pooling of
interests.
(l) Employee Benefit Matters. As used in this Section 3.2(l), "EVI" shall
include EVI as defined in the preamble of this Agreement and any member of a
controlled group or affiliated service group, as defined in Section 414(b), (c),
(m) and (o) of the Code, of which EVI is a member. The EVI Disclosure Letter
contains a true and complete list of each material employee benefit plan or
arrangement (the "EVI Plans") which are sponsored by, participated in or
contributed to by or required to be contributed to by EVI. Except for matters
that would not in the aggregate have a Material Adverse Effect on EVI and its
subsidiaries, taken as a whole:
(i) The EVI Plans are in substantial compliance with the Code and
ERISA, as they may be applicable;
(ii) With respect to any EVI Plan subject to ERISA or the Code, there
has been no transaction described in Section 406 or 407 of ERISA or Section
4975 of the Code unless exempt under Section 408 of ERISA and Section 4975
of the Code;
(iii) All contributions or other amounts payable by EVI with respect
to the EVI Plans have either been paid or accrued in EVI's most recent
financial statements included in the EVI SEC Documents;
(iv) To EVI's knowledge, there are no pending or threatened or
anticipated claims (other than routine claims for benefits) by or on behalf
of or against any EVI Plan or related trust;
(v) EVI has not maintained a pension plan that is or was subject to
the provisions of Title IV of ERISA or Section 412 of the Code and EVI has
not maintained, had an obligation to contribute to, or incurred any
liability with respect to, a multiemployer pension plan as defined in
Section 3(37) of ERISA;
(vi) All EVI Plans which are intended to qualify under Section 401(a)
of the Code have been submitted to and approved as qualifying under Section
401(a) of the Code by the IRS or the applicable remedial amendment period
will not have ended prior to the Effective Time of the Merger;
(vii) Except as expressly provided in this Agreement, the transactions
contemplated by this Agreement will not accelerate the time of payment or
vesting, increase the amount of compensation due or result in a severance
payment for any director, officer or employee or former director, officer
or employee (including any beneficiary) of EVI; and
(viii) With respect to any entity (whether or not incorporated) that
is both treated as a single employer together with EVI under Section 414 of
the Code and located outside the United States, any benefit plans
maintained by it for the benefit of its directors, officers, employees or
former employees (or any of their beneficiaries) are in compliance with
applicable laws pertaining to such plans in the jurisdiction of such
entity.
(m) Taxes. Each of EVI and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which EVI or any of its
subsidiaries is or has been a member, has timely filed all Tax Returns required
to be filed by it and has timely paid or deposited (or EVI has paid or deposited
on its behalf) all Taxes which are required to be paid or deposited except where
the failure to do so would not have a Material Adverse Effect on the Company and
its subsidiaries, taken as a whole. Each of the Tax Returns filed by EVI or any
of its subsidiaries is accurate and complete in all material respects. The most
recent consolidated financial statements of EVI contained in the filed EVI SEC
Documents reflect an adequate reserve for all Taxes payable by EVI and its
subsidiaries for all taxable periods and portions thereof through the date of
such financial statements whether or not shown as being due on any Tax Returns.
No deficiencies for any Taxes have been proposed, asserted or assessed against
EVI or any of its subsidiaries; no requests for waivers of the time to assess
any such Taxes have been granted or are pending; and there are no
A-15
111
tax liens upon any assets of EVI or any of its subsidiaries. The Federal income
Tax Returns of EVI and its subsidiaries consolidated in such Tax Returns have
been examined by the IRS through the year ended December 31, 1991. There are no
current examinations of any Tax Return of EVI or any of its subsidiaries being
conducted and there are no settlements or any prior examinations which could
reasonably be expected to adversely affect any taxable period for which the
statute of limitations has not run.
(n) No Excess Parachute Payments. Any amount that could be received
(whether in cash or property or the vesting of property) as a result of the
transactions contemplated by this Agreement by any employee, officer or director
of EVI or any of its affiliates who is a "disqualified individual" (as such term
is defined in proposed Treasury Regulation Section 1-280G-1) under any
employment, severance or termination agreement, other compensation arrangement
or EVI Plan currently in effect would not be characterized as an "excess
parachute payment" (as such term is defined in Section 280G(b)(1) of the Code).
(o) Environmental Matters. Except as would not have a Material Adverse
Effect on EVI and its subsidiaries, taken as a whole, (i) the business and
operations of EVI and its subsidiaries are being conducted in compliance with
all limitations, restrictions, standards and requirements established under all
environmental laws, (ii) no facts or circumstances exist that impose on EVI or
any of its subsidiaries an obligation under environmental laws to conduct any
removal, remediation or similar response action, (iii) there is no obligation,
undertaking or liability arising out of or relating to environmental laws that
EVI or any of its subsidiaries has agreed to, assumed or retained, by contract
or otherwise, or that has been imposed on EVI or any of its subsidiaries by any
writ, injunction, decree, order or judgment, and (iv) there are no actions,
suits, claims, investigations, inquiries or proceedings pending, or to EVI's
knowledge, threatened against EVI or any of its subsidiaries that arise out of
or relate to environmental laws.
(p) Compliance with Laws. EVI and its subsidiaries hold all required,
necessary or applicable permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities, except where the failure
to so hold would not have a Material Adverse Effect on EVI and its subsidiaries,
taken as a whole (the "EVI Permits"). EVI and its subsidiaries are in compliance
with the terms of the EVI Permits except where the failure to so comply would
not have a Material Adverse Effect on EVI and its subsidiaries, taken a whole.
Neither EVI nor any of its subsidiaries has violated or failed to comply with
any statute, law, ordinance, regulation, rule, permit or order of any Federal,
state or local government, domestic or foreign, or any Governmental Entity, any
arbitration award or any judgment, decree or order of any court or other
Governmental Entity, applicable to EVI or any of its subsidiaries or their
respective businesses, assets or operations, except for violations and failures
to comply that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on EVI and its subsidiaries, taken as
a whole.
(q) Material Contracts and Agreements.
(i) All material contracts of EVI or its subsidiaries have been
included in the EVI SEC Documents, except for those contracts not required
to be filed pursuant to the rules and regulations of the SEC.
(ii) Section 3.2(q) of the EVI Disclosure Letter sets forth a list of
all written or oral contracts, agreements or arrangements to which EVI or
any of its subsidiaries is a party or by which EVI or any of its
subsidiaries or any of their respective assets is bound which would be
required to be filed as exhibits to EVI's Annual Report on Form 10-K for
the year ended December 31, 1997, or, based on information currently
available to the Company, are expected to be required to be filed as
exhibits to the Company's Annual Report on Form 10-K for the year ending
December 31, 1998.
(r) Title to Properties.
(i) Each of EVI and each of its subsidiaries has good and defensible
title to, or valid leasehold interests in, all its properties and assets
purported to be owned by it in the EVI SEC Documents, except for such as
are no longer used or useful in the conduct of its businesses or as have
been disposed of in the ordinary course of business and except for minor
defects in title, easements, restrictive covenants and similar encumbrances
or impediments that, in the aggregate, do not and will not materially
interfere with
A-16
112
its ability to conduct its business as currently conducted or as reasonably
expected to be conducted. All such assets and properties, other than assets
and properties in which EVI or any of the subsidiaries has leasehold
interests, are free and clear of all Liens, other than those set forth in
the EVI SEC Documents and except for minor Liens, that, in the aggregate,
do not and will not materially interfere with the ability of EVI or any of
its subsidiaries to conduct business as currently conducted or as
reasonably expected to be conducted.
(ii) Except as would not have a Material Adverse Effect on EVI and its
subsidiaries, taken as a whole, each of EVI and each of its subsidiaries
has complied in all material respects with the terms of all leases to which
it is a party and under which it is in occupancy, and all such leases are
in full force and effect. Each of EVI and each of its subsidiaries enjoys
peaceful and undisturbed possession under all such leases.
(s) Intellectual Property. EVI and its subsidiaries own, or are licensed or
otherwise have the right to use, all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, service marks, service mark
rights, copyrights, technology, know-how, processes and other proprietary
intellectual property rights and computer programs which are material to the
condition (financial or otherwise) or conduct of the business and operations of
EVI and its subsidiaries, taken as a whole. To EVI's knowledge, the use of such
patents, patent rights, trademarks, trademark rights, service marks, service
mark rights, trade names, copyrights, technology, know-how, processes and other
proprietary intellectual property rights and computer programs by EVI and its
subsidiaries does not infringe on the rights of any Person, subject to such
claims and infringements as do not, in the aggregate, give rise to any liability
on the part of EVI and its subsidiaries which could have a Material Adverse
Effect with respect to EVI and its subsidiaries, taken as a whole.
(t) Labor Matters. There are no collective bargaining agreements or other
labor union agreements or understandings to which EVI or any of its subsidiaries
is a party or by which any of them is bound, nor is EVI or any of its
subsidiaries the subject of any proceeding asserting that it or any subsidiary
has committed an unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages or conditions.
(u) Undisclosed Liabilities. Except as set forth in the EVI SEC Documents,
at the date of the most recent audited financial statements of EVI included in
the EVI SEC Documents, neither EVI nor any of its subsidiaries had, and since
such date neither EVI nor any of such subsidiaries has incurred (except in the
ordinary course of business), any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise), required by generally
accepted accounting principles to be set forth on a financial statement or in
the notes thereto or which, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect on EVI and its subsidiaries, taken
as a whole.
(v) Opinion of Financial Advisor. The Board of Directors of EVI has
received the opinion of Morgan Stanley, dated the date of this Agreement, to the
effect that, as of the date of this Agreement, the Exchange Ratio is fair to EVI
from a financial point of view, a signed copy of which opinion has been
delivered to the Company.
(w) Board Recommendation. The Board of Directors of EVI, at a meeting duly
called and held, has by vote of those directors present (i) determined that this
Agreement and the transactions contemplated hereby, including the Merger and the
transactions contemplated thereby, are fair to and in the best interests of the
stockholders of EVI, and (ii) resolved to recommend that the holders of the EVI
Common Stock approve the Merger and the transactions contemplated thereby.
A-17
113
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.1. Conduct of Business of the Company.
(a) Ordinary Course. During the period from the date of this Agreement to
the Effective Time of the Merger (except as otherwise specifically contemplated
by the terms of this Agreement), the Company shall and shall cause its
"significant subsidiaries" (as that term is defined in the regulations
promulgated under the Exchange Act) to carry on their respective businesses in
the usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent therewith, use all reasonable
efforts to preserve intact their current business organizations, keep available
the services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them, in each case consistent with past
practice, to the end that their goodwill and ongoing businesses shall be
unimpaired to the fullest extent possible at the Effective Time of the Merger.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement, the Company shall not, and shall not
permit any of its subsidiaries of which it owns directly or indirectly more than
50% of the voting or equity interests in to:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by any direct or indirect wholly owned subsidiary of the
Company to the Company or a wholly owned subsidiary of the Company and
immaterial dividends, distributions and other similar transactions
involving the existing subsidiaries, (B) split, combine or reclassify any
of its capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or (C) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities other
than in connection with the exercise of outstanding stock options and
satisfaction of withholding obligations under outstanding stock options or
Company Shares issued pursuant to the Company's Restricted Stock Incentive
Plan;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than, in the
case of the Company, the issuance of shares of Company Common Stock upon
the exercise of stock options outstanding on the date of this Agreement in
accordance with their current terms) and those stock option and restricted
stock grants set forth in Section 4.1(a)(ii) of the Company Disclosure
Schedule that may be made pursuant to a form of stock option agreement
previously approved by EVI;
(iii) amend the Company's Corrected Restated Certificate of
Incorporation or Amended and Restated By-laws;
(iv) except for those contemplated transactions described in the
Company Disclosure Letter, acquire or agree to acquire any business,
corporation, partnership, association, joint venture, limited liability
company or other entity or division thereof involving the payment of
consideration in excess of $100 million individually or in the aggregate
without the written consent of EVI, which consent shall not be unreasonably
withheld;
(v) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except for such borrowings that would not result in the
total outstanding indebtedness of the Company and its subsidiaries on a
consolidated basis being in excess of $300 million at any one time;
(vi) sell, lease, mortgage, pledge or grant a Lien on or otherwise
encumber or dispose of any of its properties or assets, except (A) sales or
leases in the ordinary course of business consistent with past practice,
(B) as may be required under the Company's credit and debt facilities, (C)
with respect to purchase money security interests, (D) not relating to the
borrowing of money and (E) other immaterial transactions not in excess of
$100 million in the aggregate;
A-18
114
(vii) make any material election relating to Taxes or settle or
compromise any material Tax liability;
(viii) except for those contemplated corporate transactions described
in the Company Disclosure Letter, adopt a plan of complete or partial
liquidation of the Company or any of its significant subsidiaries or
resolutions providing for or authorizing such a liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization;
(ix) change any material accounting principle used by it, except as
required by regulations promulgated by the SEC; or
(x) authorize any of, or commit or agree to take any of, the foregoing
actions.
(b) Changes in Employment Arrangements. Neither the Company nor any of its
subsidiaries shall (except as may be required in order to give effect to the
requirements of Section 5.6) adopt or amend (except as may be required by law)
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund or other arrangement (including any Company Plan) for the benefit or
welfare of any employee, director or former director or employee, increase the
compensation or fringe benefits of any officer of the Company or any of its
subsidiaries, or, except as provided in an existing Company Plan or in the
ordinary course of business consistent with past practice, increase the
compensation or fringe benefits of any employee or former employee or pay any
benefit not required by any existing plan, arrangement or agreement.
(c) Severance. Neither the Company nor any of its subsidiaries shall grant
any new or modified severance or termination arrangement or increase or
accelerate any benefits payable under its severance or termination pay policies
in effect on the date hereof.
(d) Other Actions. The Company shall not, and shall not permit any of its
subsidiaries to, take any action that would, or that could reasonably be
expected to, result in any of the representations and warranties of the Company
set forth in this Agreement becoming untrue.
SECTION 4.2. Conduct of Business of EVI.
(a) Ordinary Course. During the period from the date of this Agreement to
the Effective Time of the Merger (except as otherwise specifically contemplated
by the terms of this Agreement), EVI shall and shall cause each of its
significant subsidiaries to carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted and, to the extent consistent therewith, use all reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them, in each case consistent with past
practice, to the end that their goodwill and ongoing businesses shall be
unimpaired to the fullest extent possible at the Effective Time of the Merger.
Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement, EVI shall not, and shall not permit
any of its subsidiaries of which it owns, directly or indirectly, more than 50%
of the voting or equity interests in to:
(i) (A) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends
and distributions by any direct or indirect wholly owned subsidiary of EVI
to EVI or a wholly owned subsidiary of EVI and immaterial dividends,
distributions and other similar transactions involving existing
subsidiaries, (B) split, combine or reclassify any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock or (C) purchase,
redeem or otherwise acquire any shares of capital stock of EVI or any of
its subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities other than in
connection with exercise of outstanding stock options and satisfaction of
withholding obligations under outstanding stock options;
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares,
A-19
115
voting securities or convertible securities other than, in the case of EVI,
(A) the issuance of EVI Common Stock upon the exercise of stock options
outstanding on the date of this Agreement in accordance with their current
terms, (B) those acquisitions described in Section 4.2 of the EVI
Disclosure Schedule, or (C) the issuance of a number of shares of EVI
Common Stock, not to exceed 10% of the number of shares of EVI Common Stock
currently outstanding, in connection with the acquisition of assets or
equity securities of other entities or businesses;
(iii) amend EVI's Restated Certificate of Incorporation or By-laws;
(iv) except for those contemplated transactions described in the EVI
Disclosure Letter, acquire or agree to acquire any business, corporation,
partnership, association, joint venture, limited liability company or other
entity or division thereof involving the payment of consideration, in
aggregate for all such acquisitions, in excess of $250 million without the
written consent of the Company, which consent shall not be unreasonably
withheld;
(v) incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or
similar instrument, except for such borrowings that would not result in the
total outstanding indebtedness of EVI and its subsidiaries on a
consolidated basis being in excess of $1 billion at any one time;
(vi) sell, lease, mortgage, pledge or grant a Lien on or otherwise
encumber or dispose of any of its properties or assets, except (A) sales or
leases in the ordinary course of business consistent with past practice,
(B) as may be required under EVI's credit or debt facilities, (C) with
respect to purchase money security interests, (D) not relating to the
borrowing of money and (E) other transactions not in excess of $100 million
in the aggregate;
(vii) except for those contemplated corporate transactions described
in the EVI Disclosure Letter, adopt a plan of complete or partial
liquidation of EVI or any of its significant subsidiaries or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(viii) change any material accounting principle used by it, except as
required by regulations promulgated by the SEC; or
(ix) authorize any of, or commit or agree to take any of, the
foregoing actions.
(b) Other Actions. EVI shall not, and shall not permit any of its
subsidiaries to, take any action that would, or that could reasonably be
expected to, result in any of the representations and warranties of EVI set
forth in this Agreement becoming untrue.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1. Stockholder Approval; Preparation of Proxy Statement;
Preparation of Registration Statement.
(a) Each of the Company and EVI shall, as soon as practicable following the
execution and delivery of this Agreement on dates to be agreed upon between EVI
and the Company, which dates shall be set taking into account the status of
pending regulatory matters pertaining to the transactions contemplated hereby,
duly call, give notice of, convene and hold the Company Stockholders Meeting and
the EVI Stockholders Meeting, respectively, for the purpose of approving the
Merger, this Agreement and the transactions contemplated hereby. Subject to the
provisions of Sections 8.2(b) and 8.3(b), each of the Company and EVI will,
through its Board of Directors, recommend to its stockholders the approval and
adoption of the Merger. The Company and EVI shall coordinate and cooperate with
respect to the timing of the Company Stockholders Meeting and the EVI
Stockholders Meeting and shall endeavor to hold such meetings on the same day
and as soon as practical after the date hereof.
A-20
116
(b) Promptly following the date of this Agreement, the Company and EVI
shall prepare and file with the SEC the Proxy Statement, and EVI shall prepare
and file with the SEC a registration statement on Form S-4 (the "Registration
Statement"), in which the Proxy Statement will be included as a prospectus. Each
of the Company and EVI shall use its reasonable efforts as promptly as
practicable, subject to the setting of the date for the Company Stockholders
Meeting and the EVI Stockholders Meeting as provided in Section 5.1(a), to have
the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. Each of the Company and EVI will use
its reasonable efforts to cause the Proxy Statement to be mailed to the
Company's stockholders and EVI's stockholders, respectively, as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. EVI shall also take such reasonable actions (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified) as may be required to be taken under any applicable state securities
laws in connection with the issuance of EVI Common Stock in the Merger, and the
Company shall furnish all information concerning the Company and the holders of
the Company Shares and rights to acquire Company Shares pursuant to the Company
Stock Plans as may be reasonably requested in connection with any such action.
The Company and EVI will notify each other promptly of the receipt of any
written or oral comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply each other with copies of all
correspondence between the Company or EVI, respectively, or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger.
(c) EVI agrees to use its best efforts to effect the listing on the NYSE
prior to the Effective Time of the Merger, upon official notice of issuance, of
the shares of EVI Common Stock to be issued pursuant to the Merger.
(d) The Company will cause its transfer agent to make stock transfer
records relating to the Company available to the extent reasonably necessary to
effectuate the intent of this Agreement.
SECTION 5.2. Letter of the Company's Accountants. The Company shall use its
best efforts to cause to be delivered to EVI a letter of Arthur Andersen LLP,
the Company's independent public accountants, dated a date within two business
days before the date on which the Registration Statement shall become effective
and addressed to EVI and customary in scope and substance for letters delivered
by independent public accountants in connection with registration statements
similar to the Registration Statement. In connection with the Company's efforts
to obtain such letter, if requested by Arthur Andersen LLP, EVI shall provide a
representation letter to Arthur Andersen LLP complying with Statement of
Auditing Standards No. 72 ("SAS 72"), if then required.
SECTION 5.3. Letter of EVI's Accountants. EVI shall use its best efforts to
cause to be delivered to the Company a letter of Arthur Andersen LLP, EVI's
independent public accountants, dated a date within two business days before the
date on which the Registration Statement shall become effective and addressed to
the Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement. In connection with EVI's efforts to
obtain such letter, if requested by Arthur Andersen LLP, the Company shall
provide a representation letter to Arthur Andersen LLP complying with SAS 72, if
then required.
SECTION 5.4. Access to Information. Upon reasonable notice, the Company and
EVI shall each (and shall cause each of their respective subsidiaries to) afford
to the officers, employees, accountants, counsel and other representatives of
the other, access during normal business hours during the period from the date
hereof to the Effective Time of the Merger, to all of its properties, books,
contracts, commitments and records, and during such period, each of the Company
and EVI shall (and shall cause each of their respective subsidiaries to) furnish
promptly to the other (i) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of the Exchange Act or the Securities Act and (ii) all other
information concerning its business, properties and personnel as such other
party may reasonably request; provided, however,that notwithstanding the
foregoing provisions of this Section 5.4 or any other provision of this
Agreement, neither the Company nor EVI shall be required to provide to the other
party any information that is subject to a confidentiality agreement and that
relates
A-21
117
primarily to a party other than the Company, EVI or any subsidiary or former
subsidiary of the Company or EVI. Each of the Company and EVI agrees that it
will not, and it will cause its respective representatives not to, use any
information obtained pursuant to this Section 5.4 for any purpose unrelated to
the consummation of the transactions contemplated by this Agreement. The
Confidentiality Agreement dated February 23, 1998 (the "Confidentiality
Agreement"), by and between the Company and EVI, shall apply with respect to
information furnished by the Company, EVI and their respective subsidiaries and
representatives thereunder or hereunder and any other activities contemplated
thereby. The parties agree that this Agreement and the transactions contemplated
hereby shall not constitute a violation of the Confidentiality Agreement and
that the provisions hereof shall supersede all provisions of the Confidentiality
Agreement in the event of a conflict.
SECTION 5.5. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, except to the extent otherwise required by United States regulatory
considerations and otherwise provided in this Section 5.5, 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 parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Merger, and the other
transactions contemplated by this Agreement, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any Governmental Entity, (ii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (iv) the execution and delivery of any additional
instruments (including any required supplemental indentures) necessary to
consummate the transactions contemplated by this Agreement. Notwithstanding the
foregoing, neither party shall be required to agree to any consent, approval or
waiver that would require such party to take an action that would impair the
value that such party reasonably attributes to the Merger and the transactions
contemplated thereby. In connection with and without limiting the foregoing,
each of the Company and EVI and its respective Board of Directors shall (i) take
all action necessary to ensure that no state takeover statute or similar statute
or regulation is or becomes applicable to the Merger, (ii) if any state takeover
statute or similar statute or regulation becomes applicable to the Merger, take
all action necessary to ensure that the Merger may be consummated as promptly as
practicable on the terms contemplated by this Agreement and otherwise to
minimize the effect of such statute or regulation on the Merger and (iii)
cooperate with each other in the arrangements for refinancing any indebtedness
of, or obtaining any necessary new financing for, the Company and the Surviving
Corporation.
(b) The Company shall give prompt notice to EVI, and EVI shall give prompt
notice to the Company, of (i) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any respect or (ii)
the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that no such notification shall affect the
representations or warranties or covenants or agreements of the parties or the
conditions to the obligations of the parties hereunder.
(c)(i) Each of the parties hereto shall file a premerger notification
and report form under 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 reasonable efforts to promptly respond to
any request for additional information pursuant to Section (e)(1) of the
HSR Act.
(ii) Except as otherwise required by United States regulatory
considerations, the Company will furnish to EVI copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof (collectively, "Company HSR Documents")) between the
Company, or any of its respective representatives, on the one hand, and any
Governmental Entity, or members of the staff of such agency or authority,
on the other hand, with respect to this Agreement or the Merger; provided,
A-22
118
however, that (x) with respect to documents and other materials filed by or
on behalf of the Company with the Antitrust Division of the Department of
Justice, the Federal Trade Commission, or any state attorneys general that
are available for review by EVI, copies will not be required to be provided
to EVI and (y) with respect to any Company HSR Documents (1) that contain
any information which, in the reasonable judgment of Collier, Shannon, Rill
& Scott, should not be furnished to EVI because of antitrust considerations
or (2) relating to a request for additional information pursuant to Section
(e)(1) of the HSR Act, the obligation of the Company to furnish any such
Company HSR Documents to EVI shall be satisfied by the delivery of such
Company HSR Documents on a confidential basis to Fulbright & Jaworski
L.L.P. pursuant to a confidentiality agreement in form and substance
reasonably satisfactory to EVI. Except as otherwise required by United
States regulatory considerations, EVI will furnish to the Company copies of
all correspondence, filings or communications (or memoranda setting forth
the substance thereof (collectively, "EVI HSR Documents")) between EVI or
any of its representatives, on the one hand, and any Governmental Entity,
or member of the staff of such agency or authority, on the other hand, with
respect to this Agreement or the Merger; provided, however, that (x) with
respect to documents and other materials filed by or on behalf of EVI with
the Antitrust Division of the Department of Justice, the Federal Trade
Commission, or any state attorneys general that are available for review by
the Company, copies will not be required to be provided to the Company, and
(y) with respect to any EVI HSR Documents (1) that contain information
which, in the reasonable judgment of Fulbright & Jaworski L.L.P., should
not be furnished to the Company because of antitrust considerations or (2)
relating to a request for additional information pursuant to Section (e)(1)
of the HSR Act, the obligation of EVI to furnish any such EVI HSR Documents
to the Company shall be satisfied by the delivery of such EVI HSR Documents
on a confidential basis to Collier, Shannon, Rill & Scott pursuant to a
confidentiality agreement in form and substance reasonably satisfactory to
the Company.
(iii) Nothing contained in this Agreement shall be construed so as to
require EVI or the Company, or any of their respective subsidiaries or
affiliates, to sell, license, dispose of, or hold separate, or to operate
in any specified manner, any material assets or businesses of EVI, the
Company or the Surviving Corporation (or to require EVI, the Company or any
of their respective subsidiaries or affiliates to agree to any of the
foregoing). The obligations of each party under Section 5.5(a) to use
reasonable efforts with respect to antitrust matters shall be limited to
compliance with the reporting provisions of the HSR Act and with its
obligations under this Section 5.5(c).
SECTION 5.6. Stock Option Agreements and Benefit Matters. On or prior to
the Closing Date, the Company shall take such action under the Company Stock
Plans to assure that options outstanding under the Company Stock Plans at the
Effective Time of the Merger shall no longer permit the holder thereof to
purchase Company Common Stock and, in lieu thereof, provide the holder thereof
the right to purchase, for the exercise price per share of Company Common Stock,
.95 of a share of EVI Common Stock, subject to adjustment as provided in the
Company Stock Plans, and further provided that such substitute option complies
with the applicable IRS regulations to preserve the tax favored status of any
incentive stock options. EVI agrees to assume the obligations of the Company to
issue such shares of EVI Common Stock upon exercise of such options and to take
all corporate action necessary to reserve for issuance a sufficient number of
shares of EVI Common Stock for delivery upon exercise of such options. As soon
as practicable after the Effective Time of the Merger, EVI shall file with the
SEC a registration statement on Form S-8 (or any successor form) with respect to
the shares of EVI Common Stock subject to such options. The number of shares of
EVI Common Stock that may be purchased upon exercise of such options shall not
include any fractional share and, upon exercise of such option, EVI shall pay
the holder thereof the amount of such fraction multiplied by the closing price
of EVI Common Stock on the NYSE on the last trading day immediately preceding
the date of exercise.
SECTION 5.7. Indemnification.
(a) EVI agrees that all rights to indemnification for acts or omissions
occurring prior to the Effective Time of the Merger now existing in favor of the
current or former directors or officers of the Company and its subsidiaries (the
"Indemnified Parties") as provided in their respective certificates of
incorporation or by-laws
A-23
119
and indemnity agreements shall survive the Merger, and the Surviving Corporation
shall continue such indemnification rights in full force and effect in
accordance with their terms and be financially responsible therefor.
(b) If the Surviving Corporation or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then and in each such case, proper provisions shall be made so that the
successors and assigns of the Surviving Corporation, which shall be financially
responsible Persons or entities, assume the obligations set forth in this
Section 5.7.
(c) The Surviving Corporation shall use reasonable best efforts to purchase
and maintain for the benefit of the Indemnified Parties for a period of six
years after the Effective Time of the Merger directors and officers liability
insurance with respect to acts, omissions and other matters occurring prior to
the Effective Time of the Merger; provided, however, that the Surviving
Corporation may substitute therefor a "runoff" policy of insurance ("Runoff
Policy") having a term of six years following the Effective Time of the Merger
with comparable coverage, provided that, in either case, the coverage, terms and
conditions thereof will be no less advantageous in any material respect than
that carried by the Company as of the date of this Agreement. Notwithstanding
the foregoing, the Surviving Corporation shall not be required to expend more
than $1,000,000 in premiums for the aggregate six year-period to obtain such
coverage. Prior to the Effective Time of the Merger, the Company shall, to the
extent required to obtain the insurance referred to in this Section 5.7(c),
cause each person eligible for indemnification pursuant to Section 5.7(a) to
execute and deliver to EVI and any insurance company providing the insurance
referred to in this Section 5.7(c), a writing confirming, among other matters,
that such person is not aware of any matter that could reasonably give rise to
Indemnified Liabilities, in such form as may be reasonably satisfactory to EVI
and any such insurance company.
(d) Pursuant to the terms of Section 5.9 of the Agreement and Plan of
Merger between the Company and Enterra Corporation dated June 23, 1995, EVI
hereby agrees that effective as of the Effective Time of the Merger, the
indemnification obligations of the Company as the surviving corporation in the
merger contemplated by such agreement will be deemed expressly assumed by the
Surviving Corporation.
(e) All rights and obligations under this Section 5.7 shall be in addition
to any rights that an Indemnified Party may have under the Restated Certificate
of Incorporation or By-Laws of the Company as in effect on the date hereof, or
pursuant to any other agreement, arrangement or document in effect prior to the
date hereof. The provisions of this Section 5.7 are intended to be for the
benefit of, and shall be enforceable by, the parties hereto and each Indemnified
Party, his heirs and his representatives. This Section 5.7 shall be binding upon
all successors and assigns of the Company, EVI and the Surviving Corporation.
SECTION 5.8. Fees and Expenses. Except as provided in Article VIII, all
fees and expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such fees
or expenses, whether or not the Merger is consummated.
SECTION 5.9. Public Announcements. EVI and the Company will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except that each party may respond to questions from
stockholders and may respond to inquiries from financial analysts and media
representatives in a manner consistent with its past practice and each party may
make such disclosure as may be required by applicable law or by obligations
pursuant to any listing agreement with any national securities exchange without
prior consultation to the extent such consultation is not reasonably
practicable. The parties agree that the initial press release or releases to be
issued in connection with the execution of this Agreement shall be mutually
agreed upon prior to the issuance thereof.
SECTION 5.10. Accounting Matters. Neither the Company nor EVI shall take or
agree to take, nor shall they permit any of their respective affiliates to take
or agree to take, any action that would prevent EVI from accounting for the
business combination to be effected by the Merger as a pooling of interests.
A-24
120
SECTION 5.11. Voting Agreement. On the date hereof, First Reserve
Corporation and the other entities named therein, which hold in the aggregate
6,579,673 Company Shares, shall execute and deliver to EVI a voting agreement in
the form attached hereto as Exhibit C. Additionally, on the date hereof,
Christiana Companies, Inc. and Lehman Brothers Holdings Inc. shall execute and
deliver voting agreements to the Company.
SECTION 5.12. Purchases of Common Stock of the Other Party. During the
period from the date hereof through the Effective Time of the Merger, except
pursuant to the terms of existing employee benefit plans, neither EVI nor any of
its subsidiaries or other affiliates will purchase any shares of Company Common
Stock, and neither the Company nor any of its subsidiaries or other affiliates
will purchase any shares of EVI Common Stock.
SECTION 5.13. Third Party Standstill Agreements. During the period from the
date of this Agreement through the Effective Time of the Merger, neither the
Company, EVI nor any subsidiaries of the Company or EVI to the extent the same
involves a significant transaction involving the Company or EVI shall terminate,
amend, modify or waive any provision of any standstill or similar agreement to
which it is a party. During such period, the Company, EVI and any subsidiaries
of the Company or EVI shall enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreement, including, but not limited
to, by obtaining injunctions to prevent any breaches of such agreement and to
enforce specifically the terms and provisions thereof in any court having
jurisdiction.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Company Stockholder Approval and the EVI
Stockholder Approval shall have been obtained.
(b) NYSE Listing. The shares of EVI Common Stock issuable to the Company's
stockholders pursuant to the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(c) HSR Act. The waiting period (and any extension thereof) applicable to
the Merger under the HSR Act shall have been terminated or shall have expired.
(d) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that the
parties hereto shall, subject to Section 5.5, use reasonable efforts to have any
such injunction, order, restraint or prohibition vacated.
(e) Registration Statement Effectiveness. The Registration Statement shall
be effective under the Securities Act 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 SEC.
(f) Blue Sky Filings. There shall have been obtained any and all material
permits, approvals and consents of securities or "blue sky" authorities of any
jurisdiction that are 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 EVI and
its subsidiaries, taken as a whole.
A-25
121
SECTION 6.2. Conditions of EVI. The obligation of EVI to consummate the
Merger is further subject to the satisfaction at the Effective Time of the
Merger, of the following conditions:
(a) Compliance. The agreements and covenants of the Company to be complied
with or performed on or before the Closing Date pursuant to the terms hereof
shall have been duly complied with or performed in all material respects and EVI
shall have received a certificate dated the Closing Date and executed on behalf
of the Company by the chief executive officer and the chief financial officer of
the Company to such effect.
(b) Certifications and Opinion. The Company shall have furnished EVI with:
(i) a certified copy of a resolution or resolutions duly adopted by
the Board of Directors of the Company approving this Agreement and
consummation of the Merger and the transactions contemplated hereby and
directing the submission of the Merger to a vote of the stockholders of the
Company;
(ii) a certified copy of a resolution or resolutions duly adopted by
the holders of a majority of the outstanding Company Shares approving the
Merger and the transactions contemplated hereby;
(iii) a favorable opinion, dated the Closing Date, in customary form
and substance, of Ms. Suzanne Thomas, general counsel for the Company,
dated the Closing Date to the effect that:
(A) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware
and has corporate power to own its properties and assets and to carry on
its business as presently conducted and as described in the Registration
Statement;
(B) The Company has the requisite corporate power to effect the
Merger as contemplated by this Agreement; the execution and delivery of
this Agreement did not, and the consummation of the Merger will not,
violate any provision of the Company's Corrected Restated Certificate of
Incorporation or Amended and Restated By-Laws; and upon the filing by
the Surviving Corporation of the Certificate of Merger, the Merger shall
become effective;
(C) Each of the Company's U.S. significant subsidiaries is a
corporation duly incorporated, validly existing and in good standing
under the laws of its jurisdiction of incorporation, and has corporate
power to own its properties and assets and to carry on its business as
presently conducted; and
(D) The Board of Directors of the Company has taken all action
required by the DGCL and its Corrected Restated Certificate of
Incorporation or its By-Laws to approve the Merger and to authorize the
execution and delivery of this Agreement and the transactions
contemplated hereby; the Board of Directors and the stockholders of the
Company have taken all action required by the DGCL and the Company's
Certificate of Incorporation and Amended and Restated By-Laws to
authorize the Merger in accordance with the terms of this Agreement; and
this Agreement is a valid and binding agreement of the Company
enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws or judicial decisions now or hereafter in effect
relating to creditor's rights generally or governing the availability of
equitable relief.
(c) Representations and Warranties True. The representations and warranties
of the Company contained in this Agreement (other than any representations and
warranties made as of a specific date) shall be true in all material respects
(except to the extent the representation or warranty is already qualified by
materiality, in which case it shall be true in all respects) on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date, except as contemplated or permitted by
this Agreement, and EVI shall have received a certificate to that effect dated
the Closing Date and executed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company.
(d) Affiliate Letters. EVI shall have received from the Company a list of
such Persons, if any, that EVI, after discussions with counsel for the Company,
believes may be "affiliates" of the Company, within the meaning of Rule 145 of
the SEC pursuant to the Securities Act ("Affiliates"). The Company shall deliver
or
A-26
122
cause to be delivered to EVI an undertaking by each Affiliate in form
satisfactory to EVI that (i) such Affiliate has no current plan or intention to
sell, exchange or otherwise dispose of the shares of EVI Common Stock to be
received by such Affiliate pursuant to the Merger, (ii) no disposition will be
made by such Affiliate of any shares of EVI Common Stock received or to be
received pursuant to the Merger until such time as final results of operations
of the Surviving Corporation covering at least 30 days of combined operations of
EVI and the Company have been published and (iii) no shares of EVI Common Stock
received or to be received by such Affiliate pursuant to the Merger will be sold
or disposed of except pursuant to an effective registration statement under the
Securities Act or in accordance with the provisions of paragraph (d) of Rule 145
under the Securities Act or another exemption from registration under the
Securities Act.
(e) Tax Opinion. EVI shall have received an opinion of Fulbright & Jaworski
L.L.P., in form and substance satisfactory to EVI, to the effect that for
Federal income tax purposes and conditioned upon certain representations of the
Company and EVI as to certain customary facts and circumstances regarding the
Merger: (i) the Merger will qualify as a "reorganization" within the meaning of
Section 368(a) of the Code, (ii) each of the Company and EVI are parties to the
reorganization within the meaning of Section 368(b) of the Code and (iii) no
gain or loss will be recognized by the Company or EVI as a result of the Merger.
(f) Pooling Accounting. EVI and the Company shall have received a letter
from Arthur Andersen LLP, in form and substance satisfactory to EVI and Company,
to the effect that, in accordance with generally accepted accounting principles
and the applicable rules and regulations of the SEC, EVI and the Company are
each eligible to be a party to a merger accounted for as a "pooling of
interests" and that Arthur Andersen LLP is not aware of any matters or
conditions that prohibit EVI's accounting for the Merger with the Company as a
"pooling of interests".
(g) Consents, etc. EVI shall have received evidence, in form and substance
reasonably satisfactory to it, that such licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and other
third parties as are necessary in connection with the transactions contemplated
hereby have been obtained, except such licenses, permits, consents, approvals,
authorizations, qualifications and orders which are not, individually or in the
aggregate, material to the Surviving Corporation and its subsidiaries, taken as
a whole, or the failure of which to have received would not (as compared to the
situation in which such license, permit, consent, approval, authorization,
qualification or order had been obtained) have a Material Adverse Effect on the
Surviving Corporation and its subsidiaries, taken as a whole, after giving
effect to the Merger.
(h) No Litigation. There shall not be pending or threatened by any
Governmental Entity any suit, action or proceeding (or by any other Person any
pending suit, action or proceeding which has a reasonable likelihood of
success), (i) 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 EVI or any of its subsidiaries any damages that are
material in relation to EVI and its subsidiaries taken as a whole, (ii) seeking
to prohibit or limit the ownership or operation by the Surviving Corporation or
any of its subsidiaries of any material portion of the business or assets of the
Company, EVI or any of their respective subsidiaries, to dispose of or hold
separate any material portion of the business or assets of the Company, EVI or
any of their respective subsidiaries, as a result of the Merger or any of the
other transactions contemplated by this Agreement or (iii) seeking to prohibit
the Surviving Corporation or any of its subsidiaries from effectively
controlling in any material respect the business or operations of EVI, the
Company or their respective subsidiaries.
(i) Fairness Opinion. Morgan Stanley will not have revoked or modified in a
materially adverse manner its opinion referred to in Section 3.2(v).
(j) No Material Adverse Change. There shall not have occurred any material
adverse change with respect to the Company since the date hereof.
SECTION 6.3. Conditions of the Company. The obligation of the Company to
consummate the Merger is further subject to the satisfaction at the Effective
Time of the Merger of the following conditions:
(a) Compliance. The agreements and covenants of EVI to be complied with or
performed on or before the Closing Date pursuant to the terms hereof shall have
been duly complied with or performed in all material
A-27
123
respects and the Company shall have received a certificate dated the Closing
Date on behalf of EVI by the chief executive officer and the chief financial
officer of EVI to such effect.
(b) Certifications and Opinion. EVI shall have furnished the Company with:
(i) a certified copy of a resolution or resolutions duly adopted by
the Board of Directors or a duly authorized committee thereof of EVI
approving this Agreement and consummation of the Merger and the
transactions contemplated hereby, including the issuance, listing and
delivery of the shares of EVI Common Stock pursuant hereto;
(ii) a certified copy of a resolution or resolutions duly adopted by
the holders of a majority of the outstanding shares of EVI Common Stock
approving the Merger and the transactions contemplated hereby;
(iii) a favorable opinion, dated the Closing Date, in customary form
and substance, of Fulbright & Jaworski L.L.P., counsel for EVI to the
effect that:
(A) EVI is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has corporate
power to own its properties and assets and to carry on its business as
presently conducted and as described in the Registration Statement; EVI
has the requisite corporate power to effect the Merger as contemplated
by this Agreement; the execution and delivery of this Agreement did not,
and the consummation of the Merger will not, violate any provision of
EVI's Restated Certificate of Incorporation or By-Laws; and upon the
filing by the Surviving Corporation of the Certificate of Merger, the
Merger shall become effective;
(B) The Board of Directors of EVI has taken all action required
under the DGCL, its Restated Certificate of Incorporation or its By-Laws
to authorize the execution and delivery of this Agreement and the
transactions contemplated hereby; the Board of Directors and the
stockholders of EVI have taken all action required by the DGCL and EVI's
Restated Certificate of Incorporation and By-Laws to authorize the
Merger in accordance with the terms of this Agreement; and this
Agreement is a valid and binding agreement of EVI enforceable in
accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar
laws or judicial decisions now or hereafter in effect relating to
creditor's rights generally or governing the availability of equitable
relief; and
(C) Each of EVI's U.S. significant subsidiaries is a corporation
duly incorporated, validly existing and in good standing under the laws
of its jurisdiction of incorporation, and has corporate power to own its
properties and assets and to carry on its business as presently
conducted; and
(D) The shares of EVI Common Stock to be issued pursuant to the
Merger have been duly authorized and, when issued and delivered as
contemplated hereby, will have been legally and validly issued and will
be fully paid and non-assessable and no stockholder of EVI will have any
preemptive right of subscription or purchase in respect thereof under
Delaware law or EVI's Certificate of Incorporation or By-laws.
(c) Representations and Warranties True. The representations and
warranties of EVI contained in this Agreement (other than any representations
and warranties made as of a specific date) shall be true in all material
respects (except to the extent the representation or warranty is already
qualified by materiality, in which case it shall be true in all respects) on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, except as contemplated or
permitted by this Agreement, and the Company shall have received a certificate
to that effect dated the Closing Date and executed on behalf of EVI by the chief
executive officer and the chief financial officer of EVI.
(d) Tax Opinion. The Company shall have received an opinion of Baker &
Botts, L.L.P., in form and substance satisfactory to the Company, to the effect
that for Federal income tax purposes and conditioned upon certain
representations of the Company and EVI as to certain customary facts and
circumstances regarding the Merger: (i) the Merger will qualify as a
"reorganization" within the meaning of Section 368(a)
A-28
124
of the Code; (ii) each of the Company and EVI are parties to the reorganization
within the meaning of Section 368(b) of the Code; and (iii) no gain or loss will
be recognized by the stockholders of the Company upon the receipt by them of
shares of EVI Common Stock in exchange for their Company Shares pursuant to the
Merger.
(e) Pooling Accounting. EVI and Company shall have received a letter from
Arthur Andersen LLP, in form and substance satisfactory to EVI and Company, to
the effect that, in accordance with generally accepted accounting principles and
the applicable rules and regulations of the SEC, EVI and the Company are each
eligible to be a party to a merger accounted for as a "pooling of interests" and
that Arthur Andersen LLP is not aware of any matters or conditions that prohibit
EVI's accounting for the Merger with the Company as a "pooling of interests".
(f) Consents, etc. The Company shall have received evidence, in form and
substance reasonably satisfactory to it, that such licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and other third parties as are necessary in connection with the transactions
contemplated hereby have been obtained, except such licenses, permits, consents,
approvals, authorizations, qualifications and orders which are not, individually
or in the aggregate, material to the Surviving Corporation and its subsidiaries,
taken as a whole, or the failure of which to have received would not (as
compared to the situation in which such license, permit, consent, approval,
authorization, qualification or order had been obtained) have a Material Adverse
Effect on the Surviving Corporation, after giving effect to the Merger.
(g) No Litigation. There shall not be pending or threatened by any
Governmental Entity any suit, action or proceeding 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 the
Company, the Surviving Corporation or any of their respective subsidiaries any
damages that are material in relation to the Company and its subsidiaries taken
as a whole, (ii) seeking to prohibit or limit the ownership or operation by the
Surviving Corporation or any of its subsidiaries of any material portion of the
business or assets of the Company, EVI or any of their respective subsidiaries,
to dispose of or hold separate any material portion of the business or assets of
the Company, EVI or any of their respective subsidiaries, as a result of the
Merger or any of the other transactions contemplated by this Agreement or (iii)
seeking to prohibit the Surviving Corporation or any of its subsidiaries from
effectively controlling in any material respect the business or operations of
the Company or its subsidiaries.
(h) Fairness Opinion. Neither Merrill Lynch nor Simmons shall have revoked,
modified or changed its opinion referred to in Section 3.1(v) in any manner
adverse to the holders of the Company Shares.
(i) No Material Adverse Change. There shall not have occurred any material
adverse change with respect to EVI since the date hereof.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
matters presented in connection with the Merger by the stockholders of the
Company or by the stockholders of EVI:
(a) by mutual written consent of EVI and the Company;
(b) by either EVI or the Company:
(i) if the stockholders of the Company fail to give any required
approval of the Merger and the transactions contemplated hereby upon a vote
at a duly held meeting of stockholders of the Company or at any adjournment
thereof;
(ii) if the stockholders of EVI fail to give any required approval of
the Merger and the transactions contemplated hereby upon a vote at a duly
held meeting of stockholders of EVI or at any adjournment thereof;
A-29
125
(iii) if any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the Merger; or
(iv) if the Merger shall not have been consummated on or before
September 30, 1998, unless the failure to consummate the Merger is the
result of a material breach of this Agreement by the party seeking to
terminate this Agreement.
(c) by EVI or the Company to the extent permitted under Section 8.2 or 8.3;
(d) by EVI, if the Company breaches any of its representations or
warranties herein or fails to perform in any material respect any of its
covenants, agreements or obligations under this Agreement; and
(e) by the Company, if EVI breaches any of its representations or
warranties herein or fails to perform in any material respect any of its
covenants, agreements or obligations under this Agreement.
SECTION 7.2. Effect of Termination. In the event of termination of this
Agreement by either the Company or EVI as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of EVI or the Company, other than (i) the
confidentiality provisions of Section 5.4 and the provisions of Sections 5.8,
8.2, 8.3 and Article IX and (ii) such termination shall not relieve any party
hereto for any intentional breach prior to such termination by a party hereto of
any of its representations or warranties or any of its covenants or agreements
set forth in this Agreement.
SECTION 7.3. Amendment. This Agreement may be amended by the parties at any
time before or after any required approval of matters presented in connection
with the Merger by the stockholders of the Company or the stockholders of EVI;
provided, however, that after any such approval, there shall be made no
amendment that by law requires further approval by such stockholders without the
further approval of such stockholders. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto.
SECTION 7.4. Extension; Waiver. At any time prior to the Effective Time of
the Merger, the parties may, to the extent legally allowed, (a) extend the time
for the performance of any of the obligations or the other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (c) subject to
the proviso of Section 7.3, waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 7.5. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 7.3 or an extension or waiver pursuant to Section
7.4 shall, in order to be effective, require in the case of EVI or the Company,
action by its respective Board of Directors or the duly authorized designee of
such Board of Directors.
ARTICLE VIII
SPECIAL PROVISIONS AS TO CERTAIN MATTERS
SECTION 8.1. Takeover Defenses. The Company and EVI shall each take such
action with respect to any anti-takeover provisions in its respective
Certificate of Incorporation or Bylaws, including, in the case of the Company,
Article XI of the Company's Bylaws, or afforded it by statute, including Section
203 of the DGCL, to the extent necessary to consummate the Merger on the terms
set forth in the Agreement.
SECTION 8.2. No Solicitation.
(a) The Company shall not, nor shall it permit any of its subsidiaries to,
nor shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor, agent or representative of the
Company or any of its subsidiaries to, directly or indirectly, (i) solicit,
initiate or encourage the
A-30
126
submission of any takeover proposal, (ii) enter into any agreement (other than
confidentiality and standstill agreements in accordance with the immediately
following proviso) with respect to any takeover proposal, or (iii) participate
in any discussions or negotiations regarding, or furnish to any Person any
information with respect to, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any takeover proposal; provided, however, in the case of
this clause (iii), that prior to the vote of stockholders of the Company for
approval of the Merger (and not thereafter if the Merger is approved thereby) to
the extent required by the fiduciary obligations of the Board of Directors of
the Company, determined in good faith by a majority of the disinterested members
thereof based on the advice of outside counsel, the Company may, in response to
an unsolicited request therefor, furnish information to any Person or "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) pursuant to a
confidentiality agreement on substantially the same terms as provided in Section
5.4 hereof, including the standstill provisions thereof. 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 the Company or
any of its subsidiaries or any investment banker, attorney or other advisor,
agent or representative of the Company, whether or not such Person is purporting
to act on behalf of the Company or otherwise, shall be deemed to be a material
breach of this Agreement by the Company. For purposes of this Agreement,
"takeover proposal" means (i) any proposal or offer, other than a proposal or
offer by EVI or any of its affiliates, for a merger, share exchange or other
business combination involving the Company (excluding an acquisition by the
Company otherwise permitted to be made by the Company under this Agreement and
which does not involve a direct merger with or into the Company), (ii) any
proposal or offer, other than a proposal or offer by EVI or any of its
affiliates, to acquire from the Company or any of its affiliates in any manner,
directly or indirectly, a greater than 15% voting or equity interest in the
Company or the acquisition of a material amount of the assets of the Company and
its subsidiaries, taken as a whole, including an investment in or acquisition of
securities of a subsidiary of the Company, to the extent so material, or (iii)
any proposal or offer, other than a proposal or offer by EVI or any of its
affiliates, to acquire from the stockholders of the Company by tender offer,
exchange offer or otherwise more than 15% of the Company Shares then
outstanding.
(b) Neither the Board of Directors of the Company nor any committee thereof
shall, except in connection with the termination of this Agreement pursuant to
Section 7.1 (a) or (b) or (e), (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to EVI the approval or recommendation by the Board
of Directors of the Company 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 takeover proposal. Notwithstanding the
foregoing, in the event the Board of Directors of the Company receives a
takeover proposal that, in the exercise of its fiduciary obligations (as
determined in good faith by a majority of the disinterested members thereof
based on the advice of outside counsel), it determines to be a superior
proposal, the Board of Directors 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 midnight on
the third business day following EVI's receipt of written notice (a "Notice of
Superior Proposal") advising EVI that the Board of Directors has received a
takeover proposal which it has determined to be a superior proposal, specifying
the material terms and conditions of such superior proposal (including the
proposed financing for such proposal and a copy of any documents conveying such
proposal) and identifying the Person making such superior proposal. The Company
may terminate this Agreement pursuant to the preceding sentence only if the
stockholders of the Company shall not yet have voted upon the Merger and the
Company shall have paid to EVI the Company Termination Fee (as defined below).
Any of the foregoing to the contrary notwithstanding, the Company may engage in
discussions with any Person or group that has made an unsolicited takeover
proposal for the limited purpose of determining whether such proposal (as
opposed to any further negotiated proposal) is a superior proposal. Nothing
contained herein shall prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) following EVI's receipt of
a Notice of Superior Proposal.
(c) EVI shall not, nor shall it permit any of its subsidiaries to, nor
shall it authorize or permit any officer, director or employee of or any
investment banker, attorney or other advisor, agent or representative of EVI or
any of its subsidiaries to, directly or indirectly, solicit, initiate or
encourage the submission of any Preclusive Transaction. Without limiting the
foregoing, it is understood that any violation of the restrictions set forth in
A-31
127
the preceding sentence by any officer, director or employee of EVI or any of its
subsidiaries or any investment banker, attorney or other advisor, agent or
representative of EVI, whether or not such Person is purporting to act on behalf
of EVI or otherwise, shall be deemed to be a material breach of this Agreement
by EVI. For purposes of this Agreement, a "Preclusive Transaction" means a
transaction that would be in lieu of the Merger or that would reasonably be
expected to result in an agreement that would prohibit or otherwise preclude the
consummation of the Merger.
(d) In the event that the Board of Directors of the Company or any
committee thereof shall (i) withdraw or modify in a manner adverse to EVI the
approval or recommendation by the Board of Directors of the Company 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 takeover
proposal, EVI may terminate this Agreement subject to Section 7.2 hereof.
(e) For purposes of this Agreement, a "superior proposal" means any bona
fide takeover proposal to acquire, directly or indirectly, more than 50% of the
Company Shares then outstanding or more than 50% of the assets of the Company
and its subsidiaries, and otherwise on terms which a majority of the
disinterested members of the Board of Directors of the Company determines in its
good faith reasonable judgment (based on the written advice of a financial
advisor of nationally recognized reputation, a copy of which shall be provided
to EVI) to be more favorable to the Company's stockholders than the Merger.
(f) In addition to the obligations of the Company set forth in paragraph
(b), the Company shall promptly advise EVI orally and in writing of any takeover
proposal or any inquiry with respect to or which could lead to any takeover
proposal, the material terms and conditions of such inquiry or takeover proposal
(including the financing for such proposal and a copy of such documents
conveying such proposal), and the identity of the Person making any such
takeover proposal or inquiry. The Company will keep EVI fully informed of the
status and details of any such takeover proposal or inquiry.
SECTION 8.3. Fee and Expense Reimbursements.
(a) The Company agrees to pay EVI a fee in immediately available funds of
$60,000,000 (the "Company Termination Fee") promptly upon the termination of the
Agreement in the event this Agreement is terminated by the Company pursuant to
Section 8.2(b) or by EVI pursuant to Section 8.2(d).
(b) In the event this Agreement is terminated for any reason other than a
material breach by EVI, the Company also agrees to pay to EVI the Company
Termination Fee if (i) after the date hereof and before the termination of this
Agreement, a takeover proposal shall have been made and publicly announced by
any Person or group of Persons (an "Acquiring Person"), (ii) the stockholders of
the Company shall not have approved the Merger and (iii) after the date hereof
and at or prior to 12 months after the date of termination of this Agreement,
the Acquiring Person or any affiliate of the Acquiring Person shall have
effected an Alternative Transaction (as defined below). An Alternative
Transaction shall mean (i) a merger, share exchange or other business
combination or other transaction in which more than 15% of the voting securities
of the Company or a material amount of the assets of the Company and its
subsidiaries, taken as a whole, is acquired, including an investment in or
acquisition of securities of a subsidiary of the Company to the extent so
material, or (ii) any acquisition from the stockholders of the Company by tender
offer, exchange offer or otherwise of more than 15% of the outstanding Company
Shares. The Company Termination Fee payable under this Section 8.3(b) shall be
payable as a condition to the consummation of the Alternative Transaction.
(c) Neither the Board of Directors of EVI nor any committee thereof shall,
except in connection with the termination of this Agreement pursuant to Section
7.1 (a), (b) or (d), (i) withdraw or modify in a manner adverse to the Company
the approval or recommendation by the Board of Directors of EVI or any such
committee of this Agreement or the Merger or take any action having such effect
or (ii) approve or recommend a Preclusive Transaction. Notwithstanding the
foregoing, if the Board of Directors of EVI receives a proposal for a Preclusive
Transaction or other takeover proposal involving EVI because of which, in the
exercise of its fiduciary obligations (as determined in good faith by a majority
of the disinterested members thereof based on advice of outside counsel), it
determines it is necessary to withdraw its recommendation or modify its approval
or recommendation of this Agreement or the Merger, the Board of
A-32
128
Directors may do so and EVI may terminate this Agreement subject to Section 7.2
hereof at any time after midnight on the third business day following giving
notice of such determination to the Company by advising the Company that the
Board of Directors has received a takeover proposal which it has determined
requires such action, specifying the material terms and conditions of such
proposal (including the proposed financing for such proposal and a copy of any
documents conveying such proposal) and identifying the Person making such
proposal. EVI may terminate this Agreement pursuant to the preceding sentence
only if the stockholders of EVI shall not yet have voted upon the Merger and EVI
shall have paid to the Company the EVI Termination Fee (as hereinafter defined).
EVI agrees to pay the Company a fee in immediately available funds of
$60,000,000 (the "EVI Termination Fee") promptly upon (i) the termination of
this Agreement pursuant to the second sentence of this Section 8.3(c) or (ii)
the stockholders of EVI not approving the Merger as a result of a hostile
takeover of EVI after the date of this Agreement. For purposes hereof, a
"takeover proposal involving EVI" shall mean (i) any proposal or offer for a
merger, share exchange or other business combination involving EVI (excluding an
acquisition otherwise permitted to be made by EVI under this Agreement and which
does not involve a direct merger with or into EVI), (ii) any proposal or offer
to acquire from EVI or any of its affiliates in any manner, directly or
indirectly, a greater than 15% voting or equity interest in EVI or the
acquisition of a material amount of the assets of EVI and its subsidiaries taken
as a whole, including an investment in or acquisition of securities of a
subsidiary of EVI to the extent so material, or (iii) any proposal or offer to
acquire from the stockholders of EVI by tender offer, exchange offer or
otherwise, more than 15% of the EVI Common Stock then outstanding.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Nonsurvival of Representations and Warranties. None of the
representations, warranties, covenants or agreements in this Agreement or in any
instrument delivered by the Company or EVI pursuant to this Agreement shall
survive the Effective Time of the Merger, except any covenant or agreement of
the parties which by its terms contemplates performance after the Effective Time
of the Merger.
SECTION 9.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by facsimile
or sent by overnight courier to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a)if to EVI, to
EVI, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Telephone: (713) 297-8400
Facsimile: (713) 297-8488
Attention:
Bernard J. Duroc-Danner
President and Chief Executive Officer
and
James G. Kiley
Vice President and Chief Financial Officer
A-33
129
with a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
Telephone: (713) 651-5151
Facsimile: (713) 651-5246
Confirm: (713) 651-5496
Attention: Curtis W. Huff, Esq.
(b)if to the Company, to
Weatherford Enterra, Inc.
1360 Post Oak Blvd., Suite 1000
Houston, Texas 77056-3098
Telephone: (713) 439-9400
Facsimile: (713) 622-0913
Attention:
Thomas R. Bates, Jr.
President and Chief Executive Officer
and
H. Suzanne Thomas, Esq.
General Counsel
with a copy to:
Baker & Botts, L.L.P.
910 Louisiana, Suite 3000
Houston, Texas 77002
Telephone: (713) 229-1234
Facsimile: (713) 229-1522
Confirm: (713) 229-1603
Attention: Charles Szalkowski, Esq.
SECTION 9.3. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person;
(b) "knowledge" means, with respect to any matter stated herein to be "to
the Company's knowledge," or similar language, the actual knowledge of the
Chairman of the Board, the Chief Executive Officer, President, any Vice
President, Chief Financial Officer or General Counsel of the Company, and with
respect to any matter stated herein to be "to EVI's knowledge," or similar
language, the actual knowledge of the Chairman of the Board, the Chief Executive
Officer, President, any Vice President or Chief Financial Officer of EVI.
(c) "Material Adverse Effect" or "material adverse change" means, when used
in connection with any Person, any change or effect (or any development that,
insofar as can reasonably be foreseen, is likely to result in any change or
effect) that is materially adverse to the business, properties, assets,
condition (financial or otherwise) or results of operations of that Person and
its subsidiaries, taken as a whole; provided, however, a Material Adverse Effect
or material adverse change with respect to the Company or EVI shall not include
(i) any effect or change relating to or affecting the oil and gas service
industry as a whole, (ii) changes in national or international economic
conditions or industry conditions generally, (iii) changes, or possible changes,
in foreign, Federal, state or local statutes and regulations applicable to the
Company and EVI, as the case may be, or (iv) the loss of employees, customers or
suppliers by such party as a direct or indirect consequence of any announcement
relating to the Merger.
A-34
130
(d) "Person" means an individual, corporation, partnership, joint venture,
limited liability company, association, trust, unincorporated organization or
other entity; and
(e) a "subsidiary" of a Person means any corporation, partnership or other
legal entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other Persons
performing similar functions are directly or indirectly owned by such first
mentioned Person.
SECTION 9.4. Interpretation. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the word "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 9.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.6. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and (b) except for the provisions of
Sections 1.5, 5.6 and 5.7, are not intended to confer upon any Person other than
the parties any rights or remedies hereunder.
SECTION 9.7. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties. This Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
SECTION 9.9. Enforcement of the Agreement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States located in the State of Texas or in any other Texas state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any Federal or state court sitting in the Southern
District of Texas in the event any dispute between the parties hereto arises out
of this Agreement solely in connection with such a suit between the parties, (b)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court and (c) agrees that it
will not bring any action relating to this Agreement in any court other than a
Federal or state court sitting in the State of Texas or in the Southern District
of Texas.
SECTION 9.10. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions, the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
A-35
131
IN WITNESS WHEREOF, EVI and the Company have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
EVI, INC.
By /s/ BERNARD J. DUROC-DANNER
-----------------------------------
Bernard J. Duroc-Danner
President and Chief Executive
Officer
WEATHERFORD ENTERRA, INC.
By /s/ THOMAS R. BATES. JR.
-----------------------------------
Thomas R. Bates, Jr.
President and Chief Executive
Officer
A-36
132
EXHIBIT A
EVI WEATHERFORD, INC.
RESTATED CERTIFICATE OF INCORPORATION
1. The name of the Corporation is EVI Weatherford, Inc.
2. The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
4. The total number of shares of stock of all classes which the Corporation
has authority to issue is Two Hundred and Fifty-Three Million (253,000,000)
shares, of which Two Hundred and Fifty Million (250,000,000) shares shall be
Common Stock, with a par value of one dollar ($1.00) per share ("Common Stock"),
and Three Million (3,000,000) shares shall be Preferred Stock, with a par value
of one dollar ($1.00) per share ("Preferred Stock").
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions of the shares of each class of stock
are as follows:
PREFERRED STOCK
Preferred Stock may be issued from time to time by the Board of
Directors as shares of one or more series. Subject to the provisions hereof
and the limitations prescribed by law, the Board of Directors is hereby
vested with the authority and is expressly authorized, prior to issuance,
by adopting resolutions providing for the issuance of, or providing for a
change in the number of, shares of any particular series and, if and to the
extent from time to time required by law, by filing a certificate pursuant
to the General Corporation Law (or other law hereafter in effect relating
to the same or substantially similar subject matter), to establish or
change the number of shares to be included in each such series and to fix
the designation and relative powers, preferences and rights and the
qualifications and limitations or restrictions thereof relating to the
shares of each such series. The vested authority of the Board of Directors
with respect to each series shall include, but not be limited to, the
determination of the following:
(a) the distinctive serial designation of such series and the
number of shares constituting such series (provided that the aggregate
number of shares constituting all series of Preferred Stock shall not
exceed Three Million (3,000,000));
(b) the annual dividend rate, if any, on shares of such series and
the preferences, if any, over any other series (or of any other series
over such series) with respect to dividends, and whether dividends shall
be cumulative and, if so, from which date or dates;
(c) whether the shares of such series shall be redeemable and, if
so, the terms and conditions of such redemption, including the date or
dates upon and after which such shares shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary
under different conditions and at different redemption dates;
(d) the obligation, if any, of the Corporation to purchase or
redeem shares of such series pursuant to a sinking fund or purchase fund
and, if so, the terms of such obligation;
(e) whether shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or classes or any
stock of any series of the same class or any other class or classes or
any evidences of indebtedness and, if so, the terms and conditions of
such conversion or exchange,
A-37
133
including the price or prices or the rate or rates of conversion or
exchange and the terms of adjustment, if any;
(f) whether the shares of such series shall have voting rights, in
addition to the voting rights provided by law, and if so, the terms of
such voting rights, including, without limitation, whether such shares
shall have the right to vote with the Common Stock on issues on an
equal, greater or lesser basis;
(g) the rights of the shares of such series in the event of a
voluntary or involuntary liquidation, dissolution, winding up or
distribution of assets of the Corporation;
(h) whether the shares of such series shall be entitled to the
benefit of conditions and restrictions upon (i) the creation of
indebtedness of the Corporation or any subsidiary, (ii) the issuance of
any additional stock (including additional shares of such series or of
any other series) or (iii) the payment of dividends or the making of
other distributions on the purchase, redemption or other acquisition by
the Corporation or any subsidiary of any outstanding stock of the
Corporation; and
(i) any other relative rights, powers, preferences, qualifications,
limitations or restrictions thereof relating to any such series.
Except where otherwise set forth in the resolution or resolutions
adopted by the Board of Directors providing for the issuance of any series
of Preferred Stock, the number of shares comprising such series may be
increased or decreased (but not below the number of shares then
outstanding) from time to time by like action of the Board of Directors.
The shares of Preferred Stock of any one series shall be identical with the
other shares in such series in all respects except as to the dates from and
after which dividends thereon shall cumulate, if cumulative.
Shares of any series of Preferred Stock which have been redeemed
(whether through the operation of a sinking fund or otherwise) or purchased
by the Corporation, or which, if convertible or exchangeable, have been
converted into or exchanged for shares of stock of any other class or
classes shall have the status of authorized and unissued shares of
Preferred Stock and may be reissued as a part of the series of which they
were originally a part or may be reclassified and reissued as part of a new
series of Preferred Stock to be created by resolution or resolutions of the
Board of Directors or as part of any other series of Preferred Stock, all
subject to the conditions or restrictions on issuance set forth in the
resolution or resolutions adopted by the Board of Directors providing for
the issuance of any series of Preferred Stock and to any filing required by
law.
Subject to the rights of any outstanding shares of any series of
Preferred Stock, this Restated Certificate of Incorporation may be amended
from time to time in a manner that would solely modify or change the
relative powers, preferences and rights and the qualifications and
limitations or restrictions of any issued shares of any series of Preferred
Stock then outstanding with the only required vote or consent for approval
of such amendment being the affirmative vote or consent of the holders of a
majority of the outstanding shares of the series of Preferred Stock so
affected provided that the powers, preferences and rights and the
qualification and limitations or restrictions of such series after giving
effect to such amendment are no greater than the powers, preferences and
rights and the qualifications and limitations or restrictions permitted to
be fixed and determined by the Board of Directors with respect to the
establishment of any new series of shares of Preferred Stock pursuant to
the authority vested in the Board of Directors by this Article 4. Approval
of any such amendment by the holders of the Common Stock shall not be
required and any such amendment shall be deemed not to have affected the
holders of the Common Stock adversely.
The number of authorized shares of Preferred Stock may be increased or
decreased by the affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote without the separate vote of holders of
Preferred Stock as a class.
A-38
134
COMMON STOCK
Subject to all of the rights of the Preferred Stock, and except as may
be expressly provided with respect to the Preferred Stock herein, by law or
by the Board of Directors pursuant to this Article 4:
(a) dividends may be declared and paid or set apart for payment
upon Common Stock out of any assets or funds of the Corporation legally
available for the payment of dividends and may be payable in cash, stock
or otherwise;
(b) the holders of Common Stock shall have the exclusive right to
vote for the election of directors and on all other matters requiring
stockholder action, each share being entitled to one vote; and
(c) upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the net assets of the Corporation shall
be distributed pro rata to the holders of Common Stock in accordance
with their respective rights and interests to the exclusion of the
holders of the Preferred Stock.
5. The Corporation is to have perpetual existence.
6. In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized:
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the Corporation.
To set apart out of any of the funds of the Corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any
such reserve in the manner in which it was created.
By a majority vote of the whole board, to designate one or more
committees. Any such committee, to the extent provided in the resolution of
the board of directors, or in the by-laws of the Corporation, shall have
and may exercise all the powers and authority of the board of directors in
the management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in
reference to amending the certificate of incorporation (except that a
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of
directors as provided in Section 151(a) of the Delaware General Corporation
Law, fix any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes, or any other series of the same or
any other class or classes of stock of the Corporation), adopting an
agreement of merger or consolidation under Section 251 or 252 of the
Delaware General Corporation Law, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution, or amending the bylaws of the
Corporation; and, unless the resolution, bylaws or certificate of
incorporation expressly so provides, no such committee shall have the power
or authority to declare a dividend, to authorize the issuance of stock or
to adopt a certificate of ownership and merger pursuant to Section 253 of
the Delaware General Corporation Law.
When and as authorized by the stockholders in accordance with statute,
to sell, lease or exchange all or substantially all of the property and
assets of the Corporation, including its good will and its corporate
franchises, upon such terms and conditions and for such consideration,
which may consist in whole or in part of money or property including shares
of stock in, and/or other securities of, any other corporation or
corporations, as its board of directors shall deem expedient and for the
best interest of the Corporation.
7. Elections of directors need not be by written ballot unless the by-laws
of the Corporation shall so provide.
A-39
135
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the Corporation.
Whenever a compromise or arrangement is proposed between this Corporation
and its creditors or any class of them and/or between this Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of this
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
8. All of the powers of the Corporation, insofar as the same may be
lawfully vested by this Restated Certificate of Incorporation in the Board of
Directors of the Corporation, are hereby conferred upon the Board of Directors
of the Corporation.
In furtherance and not in limitation of the foregoing provisions of this
Article 8, and for the purpose of the orderly management of the business and the
conduct of the affairs of the Corporation, the Board of Directors of the
Corporation shall have the power to adopt, amend or repeal from time to time any
provision of the by-laws of the Corporation (including, without limitation,
By-laws governing the conduct of, and the matters which may properly be brought
before, meetings of the stockholders and By-laws specifying the manner and
extent to which prior notice shall be given of the submission of proposals to be
submitted at any meeting of stockholders or of nominations of elections of
directors to be held at any such meeting) by the vote of a majority of the
entire Board of Directors, subject to the right of the stockholders of the
Corporation entitled to vote thereon to adopt, amend or repeal by-laws of the
Corporation. In addition to any requirements of law and any other provision of
this Restated Certificate of Incorporation or any resolution or resolutions of
the Board of Directors adopted pursuant to Article 4 of this Restated
Certificate of Incorporation (and notwithstanding the fact that a lesser
percentage may be specified by law, this Restated Certificate of Incorporation
or any such resolution or resolutions), the affirmative vote of the holders of
80% or more of the combined voting power of the then outstanding shares of stock
of all classes and series of stock the holders of which are entitled to vote
generally in the election of directors, voting together as a single class, shall
be required to adopt, amend, alter or repeal any provision of the By-laws.
9. The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
10. To the fullest extent that the General Corporation Law of the State of
Delaware as it exists on the date hereof and as it may hereafter be amended
permits the limitation or elimination of the liability of directors, no director
of the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article shall apply to or have any effect on the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
A-40
136
EXHIBIT B
BY-LAWS
OF
EVI WEATHERFORD, INC.
AMENDED AND RESTATED ON , 1998
ARTICLE I
STOCKHOLDERS
1. Annual Meeting. The annual meeting of stockholders shall be held on the
second Friday in May in each year (or if that be a legal holiday in the place
where the meeting is to be held, on the next succeeding full business day), at
the principal office of the corporation at 11:00 o'clock A.M. unless a different
date, hour or place within or without the State of Delaware is fixed by the
Board of Directors or the President. The purposes for which the annual meeting
is to be held, in addition to those prescribed by law, by the Certificate of
Incorporation or by these By-Laws, may be specified by the Board of Directors or
the President.
2. Notice of Meetings. A written notice stating the place, date and hour of
all meetings of stockholders, and in the case of special meetings, the purposes
of the meeting shall be given by the Secretary (or other person authorized by
these By-Laws or by-law) not less than ten nor more than sixty days before the
meeting to each stockholder entitled to vote thereat and to each stockholder
who, under the Certificate of Incorporation or under these By-Laws is entitled
to such notice, by delivering such notice to him or by mailing it, postage
prepaid, and addressed to such stockholder at his address as it appears in the
records of the corporation. Notice need not be given to a stockholder if a
written waiver of notice is executed before or after the meeting by such
stockholder, if communication with such stockholder is unlawful, or if such
stockholder attends the meeting in question, unless such attendance was for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting was not lawfully called or
convened. If a meeting is adjourned to another time or place, notice need not be
given of the adjourned meeting if the time and place are announced at the
meeting at which the adjournment is taken, except that if the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
3. Quorum. The holders of a majority in interest of all stock issued,
outstanding and entitled to vote at a meeting shall constitute a quorum. Any
meeting may be adjourned from time to time by a majority of the votes properly
cast upon the question, whether or not a quorum is present.
4. Voting and Proxies. Stockholders shall have one vote for each share of
stock entitled to vote owned by them of record according to the books of the
corporation unless otherwise provided by law or by the Certificate of
Incorporation. Stockholders may vote either in person or by written proxy, but
no proxy shall be voted or acted upon after three years from its date, unless
the proxy provides for a longer period. Proxies shall be filed with the
Secretary of the meeting, or of any adjournment thereof. Except as otherwise
limited therein, proxies shall entitle the persons authorized thereby to vote at
any adjournment of such meeting. A proxy purporting to be executed by or on
behalf of a stockholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
5. Action at Meeting. When a quorum is present, any matter before the
meeting shall be decided by vote of the holders of a majority of the shares of
stock voting on such matters except where a larger vote is required by law, by
the Certificate of Incorporation or by these By-Laws. Any election by
stockholders shall be determined by plurality of the votes cast, except where a
larger vote is required by law, by the Certificate of Incorporation or by these
By-Laws. No ballot shall be required for any election unless requested by a
stockholder entitled to vote in the election. The corporation shall not directly
or indirectly vote any share of its own stock; provided, however, that the
corporation may vote shares which it holds in a fiduciary capacity to the extent
permitted by law.
A-41
137
6. Action Without a Meeting. Any action required or permitted by law to be
taken at any annual or special meeting of stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent shall
be given to those stockholders who have not consented in writing.
7. Stockholder Lists. The Secretary (or other person authorized by these
By-Laws or by-law) shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
ARTICLE II
DIRECTORS
1. Powers. The business of the corporation shall be managed by a Board of
Directors consisting of ten members, which number may be increased or decreased
from time to time by the Board of Directors, who may exercise all the powers of
the corporation except as otherwise provided by law.
2. Tenure. Except as otherwise provided by law, by the Certificate of
Incorporation or by these By-Laws, Directors shall hold office until their
successors are elected and qualified or until their earlier resignation or
removal. Any Director may resign by delivering his written resignation to the
corporation. Such resignation shall be effective upon receipt unless it is
specified to be effective at some other time or upon the happening of some other
event.
3. Vacancies. Any vacancy occurring in the Board of Directors may be filled
by any vote or other concurrence of the remaining directors or by vote of the
stockholders.
4. Removal. A Director may be removed from office (a) with or without cause
by vote of the holders of the majority of the shares of stock entitled to vote
in the election of Directors or (b) to the extent permitted by law, for cause by
vote of the majority of the Directors then in office. A Director may be removed
for cause only after reasonable notice and opportunity to be heard before the
body proposing to remove him.
5. Meetings. Regular meetings of the Board of Directors may be held without
notice at such time, date and place as the Board of Directors may from time to
time determine. Special meetings of the Board of Directors may be called, orally
or in writing, by three or more Directors, designating the time, date and place
thereof. Directors may participate in meetings of the Board of Directors by
means of conference telephone or similar communications equipment by means of
which all Directors participating in the meeting can hear each other, and
participation in a meeting in accordance herewith shall constitute presence in
person at such meeting.
6. Notice of Meetings. Notice of the time, date and place of all special
meetings of the Board of Directors shall be given to each Director by the
Secretary, or Assistant Secretary, or in the case of the death, absence,
incapacity or refusal of such persons, by one of the Directors calling the
meeting. Notice shall be given to each Director in person or by telephone or by
telegram sent to his business or home address at least twenty-four hours in
advance of the meeting, or by written notice mailed to his business or home at
least forty-eight hours in advance of the meeting. Notice need not be given to
any Director if a written waiver of notice is executed by him before or after
the meeting, or if communication with such Director is unlawful. A notice or
waiver of notice of a meeting of the Board of Directors need not specify the
purposes of the meeting.
A-42
138
7. Quorum. At any meeting of the Board of Directors, a majority of the
Directors then in office shall constitute a quorum. Less than a quorum may
adjourn any meeting from time to time and the meeting may be held as adjourned
without further notice.
8. Action at Meeting. At any meeting of the Board of Directors at which a
quorum is present, a majority of the Directors present may take any action on
behalf of the Board of Directors, unless a larger number is required by law, by
the Certificate of Incorporation or by these Bylaws.
9. Action by Consent. Any action required or permitted to be taken at any
meeting of the Board of Directors may be taken without a meeting if all members
of the Board of Directors consent thereto in writing, and the writing or
writings are filed with the minutes of the Board of Directors. Such consent
shall be treated as a vote of the Board of Directors for all purposes.
10. Committees. The Board of Directors, by a majority vote of the Directors
then in office, may establish one or more committees, and may delegate thereto
some or all of its powers except those which by law, by the Certificate of
Incorporation, or by these By-Laws may not be delegated. Except as the Board of
Directors may otherwise determine, any such committee may make rules for the
conduct of its business, but in the absence of such rules its business shall be
conducted so far as possible in the same manner as is provided in these By-Laws
for the Board of Directors. All members of such committees shall hold their
committee offices at the pleasure of the Board of Directors, and the Board may
abolish any committee at any time. Each such committee shall report its action
to the Board of Directors who shall have power to rescind any action of any
committee without retroactive effect.
ARTICLE III
OFFICERS
1. Officers. The officers of the corporation shall be a Chairman of the
Board and Chief Executive Officer, a President, one or more Vice Presidents, any
one or more of which may be designated Executive Vice President or Senior Vice
President, a Secretary and a Treasurer. The Board of Directors may appoint such
other officers and agents, including Chief Financial Officer, Controller,
Assistant Vice Presidents, Assistant Secretaries, and Assistant Treasurers, in
each case as the Board of Directors shall deem necessary, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined by the Board. Any two or more offices may be held by the
same person. No officer shall execute, acknowledge, verify or countersign any
instrument on behalf of the corporation in more than one capacity, if such
instrument is required by law, by these by-laws or by any act of the corporation
to be executed, acknowledged, verified, or countersigned by two or more
officers. The Chairman of the Board shall be elected from among the directors.
With the foregoing exceptions, none of the other officers need be a director,
and none of the officers need be a stockholder of the corporation.
2. Election and Term of Office. The officers of the corporation shall be
elected annually by the Board of Directors at its first regular meeting held
after the annual meeting of stockholders or as soon thereafter as conveniently
possible. Each officer shall hold office until his successor shall have been
chosen and shall have qualified or until his death or the effective date of his
resignation or removal, or until he shall cease to be a director in the case of
the Chairman.
3. Removal and Resignation. Any officer or agent elected or appointed by
the Board of Directors may be removed without cause by the affirmative vote of a
majority of the Board of Directors whenever, in its judgment, the best interests
of the corporation shall be served thereby, but such removal shall be without
prejudice to the contractual rights, if any, of the person so removed. Any
officer may resign at any time by giving written notice to the corporation. Any
such resignation shall take effect at the date of the receipt of such notice or
at any later time specified therein, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
A-43
139
4. Vacancies. Any vacancy in any office may be filled for the unexpired
portion of the term by the Board of Directors.
5. Salaries. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors or pursuant to its direction; and no
officer shall be prevented from receiving such salary by reason of his also
being a director.
6. Chairman of the Board. The Chairman of the Board shall be the chief
executive officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control the business and affairs of
the corporation. The Chairman shall preside at all meetings of the Board of
Directors or of the stockholders of the corporation. The Chairman shall
formulate and submit to the Board of Directors matters of general policy for the
corporation and shall perform such other duties as usually appertain to the
office or as may be prescribed by the Board of Directors. He shall have the
power to appoint and remove subordinate officers, agents and employees, except
those elected or appointed by the Board of Directors. The Chairman of the Board
shall keep the Board of Directors informed and shall consult with them
concerning the business of the corporation. He may sign with the Secretary or
any other officer of the corporation thereunto authorized by the Board of
Directors, certificates for shares of the corporation and any deeds, bonds,
mortgages, contracts, checks, notes, drafts, or other instruments that the Board
of Directors has authorized to be executed, except in cases where the signing
and execution thereof has been expressly delegated by these by-laws or by the
Board of Directors to some other officer or agent of the corporation, or shall
be required by law to be otherwise executed. He shall vote, or give a proxy to
any other officer of the corporation to vote, all shares of stock of any other
corporation standing in the name of the corporation and in general he shall
perform all other duties normally incident to the office of Chairman and Chief
Executive Officer and such other duties as may be prescribed by the stockholders
or the Board of Directors from time to time.
7. President. The President shall be the chief operating officer of the
corporation and, subject to the powers of the Chairman and Chief Executive
Officer and the control of the Board of Directors, shall in general supervise
and control the operations of the corporation. In the absence of the Chairman of
the Board, the President shall preside at all meetings of the Board of Directors
and of the stockholders. He may also preside at any such meeting attended by the
Chairman if he is so designated by the Chairman. He shall have the power to
appoint and remove subordinate officers, agents and employees, except those
elected or appointed by the Board of Directors or by the Chairman and Chief
Executive Officer. The President shall keep the Chairman and the Board of
Directors informed and shall consult with them concerning the operations of the
corporation. He may sign with the Secretary or any other officer of the
corporation thereunto authorized by the Board of Directors, certificates for
shares of the corporation and any deeds, bonds, mortgages, contracts, checks,
notes, drafts, or other instruments that the Board of Directors has authorized
to be executed, except in cases where the signing and execution thereof has been
expressly delegated by these by-laws or by the Board of Directors to some other
officer or agent of the corporation, or shall be required by law to be otherwise
executed. He shall vote, or give a proxy to any other officer of the corporation
to vote, all shares of stock of any other corporation standing in the name of
the corporation and in general he shall perform all other duties normally
incident to his office and such other duties as may be prescribed by the
stockholders or the Board of Directors from time to time.
8. Vice Presidents. In the absence of the Chairman and the President, or in
the event of their inability or refusal to act, the Executive Vice President (or
in the event there shall be no Vice President designated Executive Vice
President, any Vice President designated by the Board) shall perform the duties
and exercise the powers of the President. Any Vice President may sign, with the
Secretary or Assistant Secretary, certificates for shares of the corporation.
The Vice Presidents shall perform such other duties as from time to time may be
assigned to them by the Chairman, the President or the Board of Directors.
9. Secretary. The Secretary shall (a) keep the minutes of the meetings of
the stockholders, the Board of Directors and committees of directors; (b) see
that all notices are duly given in accordance with the provisions of these
by-laws and as required by law; (c) be custodian of the corporate records and of
the seal of the corporation, and see that the seal of the corporation or a
facsimile thereof is affixed to all certificates for shares prior to the issue
thereof and to all documents, the execution of which on behalf of the
corporation under its
A-44
140
seal is duly authorized in accordance with the provisions of these by-laws; (d)
keep or cause to be kept a register of the post office address of each
stockholder which shall be furnished by such stockholder; (e) sign with the
President, or an Executive Vice President or Vice President, certificates for
shares of the corporation, the issue of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the corporation; and (g) in general, perform all duties
normally incident to the office of Secretary and such other duties as from time
to time may be assigned to him by the Chairman, the President or the Board of
Directors.
10. Treasurer. If required by the Board of Directors, the Treasurer shall
give a bond for the faithful discharge of his duties in such sum and with such
surety or sureties as the Board of Directors shall determine. He shall (a) have
charge and custody of and be responsible for all funds and securities of the
corporation; (b) receive and give receipts for moneys due and payable to the
corporation from any source whatsoever and deposit all such moneys in the name
of the corporation in such banks, trust companies, or other depositories as
shall be selected in accordance with these by-laws; (c) prepare, or cause to be
prepared, for submission at each regular meeting of the Board of Directors, at
each annual meeting of the stockholders, and at such other times as may be
required by the Board of Directors, the Chairman or the President, a statement
of financial condition of the corporation in such detail as may be required; and
(d) in general, perform all the duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Chairman,
the President or the Board of Directors.
11. Assistant Secretary or Treasurer. The Assistant Secretaries and
Assistant Treasurers shall, in general, perform such duties as shall be assigned
to them by the Secretary or the Treasurer, respectively, or by the Chairman, the
President or the Board of Directors. The Assistant Secretaries and Assistant
Treasurers shall, in the absence of the Secretary or Treasurer, respectively,
perform all functions and duties which such absent officers may delegate, but
such delegation shall not relieve the absent officer from the responsibilities
and liabilities of his office. The Assistant Secretaries may sign, with the
President or a Vice President, certificates for shares of the corporation, the
issue of which shall have been authorized by a resolution of the Board of
Directors. The Assistant Treasurers shall respectively, if required by the Board
of Directors, give bonds for the faithful discharge of their duties in such sums
and with such sureties as the Board of Directors shall determine.
12. Other Powers and Duties. Subject to these By-Laws, each officer of the
corporation shall have in addition to the duties and powers specifically set
forth in these By-Laws, such duties and powers as are customarily incident to
his office, and such duties and powers as may be designated from time to time by
the Board of Directors.
ARTICLE IV
CAPITAL STOCK
1. Certificates of Stock. Each stockholder shall be entitled to a
certificate of the capital stock of the corporation in such form as may from
time to time be prescribed by the Board of Directors. Such certificate shall be
signed by the President or a Vice President and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary. Such signatures may be
facsimile if the certificate is signed by a transfer agent or registrar, other
than the corporation or its employee. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been placed on such
certificate shall have ceased to be such officer, transfer agent or registrar
before such certificate is issued, it may be issued by the corporation with the
same effect as if he were such officer, transfer agent or registrar at the time
of its issue. Every certificate for shares of stock which are subject to any
restriction on transfer and every certificate issued when the corporation is
authorized to issue more than one class or series of stock shall contain such
legend with respect thereto as is required by law.
2. Transfers. Subject to any restrictions on transfer, shares of stock may
be transferred on the books of the corporation by the surrender to the
corporation of its transfer agent of the certificate therefor properly endorsed
or accompanied by a written assignment or power of attorney properly executed,
with transfer stamps
A-45
141
(if necessary) affixed, and with such proof of the authenticity of signature as
the corporation or its transfer agent may reasonably require.
3. Record Holders. Except as may otherwise be required by law, by the
Certificate of Incorporation or by these By-Laws, the corporation shall be
entitled to treat the record holder of stock as shown on its books as the owner
of such stock for all purposes, including the payment of dividends and the right
to vote with respect thereto, regardless of any transfer, pledge or other
disposition of such stock, until the shares have been transferred on the books
of the corporation in accordance with the requirements of these By-Laws.
It shall be the duty of each stockholder to notify the corporation of his
post office address.
4. Record Date. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock the Board of Directors may fix, in advance, a
record date, which shall not be more than sixty nor less than ten days before
the date of such meeting, nor more than sixty days prior to any other action. In
order that the corporation may determine the stockholders entitled to receive
the payment of any dividend or other distribution or any allotment of any
rights, the Board of Directors may fix in advance a record date and a payment
date therefor. In such case only stockholders of record on such record date
shall be so entitled notwithstanding any transfer of stock on the books of the
corporation after the record date.
5. Replacement of Certificates. In case of the alleged loss, destruction or
mutilation of a certificate of stock, a duplicate certificate may be issued in
place thereof, upon such terms as the Board of Directors may prescribe.
ARTICLE V
INDEMNIFICATION
This corporation shall indemnify, to the fullest extent that the General
Corporation Law of the State of Delaware as it exists on the date hereof and as
it may hereafter be amended, (a) each of its present and former officers and
Directors, and (b) each of its present or former officers, Directors, agents or
employees who are serving or have served at the request of this corporation as
an officer, Director or partner (or in any similar position) of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred in connection with any threatened,
pending or completed action, suit or proceeding, whether by or in the right of
this corporation, by a third party or otherwise, to which such person is made a
party or threatened to be made a party by reason of such office in this
corporation or in another corporation, partnership, joint venture, trust or
other enterprise.
To the fullest extent that the General Corporation Law of the State of
Delaware as it exists on the date hereof and as it may hereafter be amended,
under general or specific authority granted by the Board of Directors, (a) this
corporation may furnish such indemnification to its agents and employees with
respect to their activities on behalf of this corporation; (b) this corporation
may furnish such indemnification to each present or former officer, Director,
employee or agent of a constituent corporation absorbed in a consolidation or
merger with this corporation and to each officer, Director, agent or employee
who is or was serving at the request of such constituent corporation as an
officer, Director, agent or employee of another corporation, partnership, joint
venture, trust or other enterprise; and (c) this corporation may purchase and
maintain indemnification insurance on behalf of any of the officers, Directors,
agents or employees whom it is required or permitted to indemnify as provided in
this Article.
A-46
142
ARTICLE VI
MISCELLANEOUS PROVISIONS
1. Fiscal Year. Except as otherwise determined by the Board of Directors,
the fiscal year of the corporation shall end on December 31 of each year.
2. Seal. The Board of Directors shall have power to adopt and alter the
seal of the corporation.
3. Execution of Instruments. All deeds, leases, transfers, contracts,
bonds, notes and other obligations to be entered into by the corporation in the
ordinary course of its business without Director action, may be executed on
behalf of the corporation by the President or the Treasurer.
4. Voting of Securities. Unless otherwise provided by the Board of
Directors, the President or Treasurer may waive notice of and act on behalf of
this corporation, or appoint another person or persons to act as proxy or
attorney in fact for this corporation with or without discretionary power and/or
power of substitution, at any meeting of stockholders or shareholders of any
other corporation or organization, any of whose securities are held by this
corporation.
5. Resident Agent. The Board of Directors may appoint a resident agent upon
whom legal process may be served in any action or proceeding against the
corporation.
6. Corporate Records. The original or attested copies of the Certificate of
Incorporation, By-Laws and records of all meetings of the incorporators,
stockholders and the Board of Directors and the stock and transfer records,
which shall contain the names of all stockholders, their record addresses and
the amount of stock held by each, shall be kept at the principal office of the
corporation, at the office of its counsel, or at an office of its transfer
agent.
7. Certification of Incorporation. All references in these By-Laws to the
Certificate of Incorporation shall be deemed to refer to the Certificate of
Incorporation of the corporation, as amended and in effect from time to time.
8. Amendments. These By-Laws may be amended or repealed or additional
By-Laws adopted by the stockholders or by the Board of Directors; provided, that
(a) the Board of Directors may not amend or repeal this Section or any provision
of these By-Laws which by law, by the Certificate of Incorporation or by these
By-Laws requires action by the stockholders, and (b) any amendment or repeal of
these By-Laws by the Board of Directors and any By-Law adopted by the Board of
Directors may be amended or repealed by the stockholders.
A-47
143
Appendix B
[Morgan Stanley Letterhead]
March 4, 1998
Board of Directors
EVI, Inc.
4400 Post Oak Parkway
Suite 1760
Houston, Texas 77027
Members of the Board:
We understand that Weatherford Enterra, Inc. ("Weatherford") and EVI, Inc.
("EVI") propose to enter into an Agreement and Plan of Merger substantially in
the form of the draft dated March 4, 1998 (the "Merger Agreement") which
provides, among other things, for the merger (the "Merger") of Weatherford with
and into EVI. Pursuant to the Merger, each outstanding share of common stock,
par value $0.10 per share, of Weatherford (the "Weatherford Common Stock"),
other than shares held in treasury or held by EVI or any affiliate of
Weatherford or EVI, will be converted into the right to receive 0.95 shares
(the "Exchange Ratio") of common stock, par value $1.00 per share, of EVI (the
"EVI Common Stock"). The terms and conditions of the Merger are more fully set
forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to the
Merger Agreement is fair from a financial point of view to EVI.
For purposes of the opinion set forth herein, we have:
(I) reviewed certain publicly available financial statements and
other information of Weatherford and EVI, respectively;
(II) reviewed certain internal financial statements and other
financial and operating data concerning Weatherford and EVI
prepared by the managements of Weatherford and EVI,
respectively;
(III) analyzed certain financial projections prepared by the
managements of Weatherford and EVI, respectively;
(IV) discussed the past and current operations and financial
condition and the prospects of Weatherford with senior
executives of Weatherford;
(V) discussed the past and current operations and financial
condition and the prospects of EVI with senior executives of
EVI;
(VI) reviewed the pro forma impact of the Merger on EVI's earnings
per share,
144
cash flow, consolidated capitalization and financial ratios;
(VII) discussed with senior management of EVI and Weatherford their
estimates of the synergies and cost savings expected to be
derived from the Merger;
(VIII) reviewed the reported prices and trading activity for the
Weatherford Common Stock and the EVI Common Stock;
(IX) compared the financial performance of Weatherford and EVI and
the prices and trading activity of the Weatherford Common
Stock and the EVI Common Stock with that of certain other
comparable publicly-traded companies and their securities;
(X) reviewed the financial terms, to the extent publicly
available, of certain comparable merger transactions;
(XI) reviewed the Merger Agreement and related documents; and
(XII) performed such other analyses as we have deemed appropriate.
We have assumed and relied upon without independent verification the accuracy
and completeness of the information reviewed by us for the purposes of this
opinion. With respect to the financial projections, including the estimates of
the synergies and cost savings expected to be derived from the Merger, we have
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the future financial performance
of Weatherford and EVI. In addition, we have assumed that the Merger will be
consummated in accordance with the terms set forth in the Merger Agreement,
including, among other things, that the Merger will be accounted for as a
"pooling-of-interests" business combination in accordance with U.S. Generally
Accepted Accounting Principles and the Merger will be treated as a tax-free
reorganization and/or exchange, each pursuant to the Internal Revenue Code of
1986. We have not made any independent valuation or appraisal of the assets or
liabilities of Weatherford, nor have we been furnished with any such
appraisals. Our opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to us as of, the
date hereof.
We have been retained to provide the opinion letter to the Board of Directors
of EVI in connection with this transaction and will receive a fee for our
services. In the past, Morgan Stanley & Co. Incorporated and its affiliates
have provided financial advisory and financing services for EVI and its
affiliates and have received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of EVI and may not be used for any other purpose without our prior
written consent, except that this opinion may be included in its entirety in
any filing made by EVI in respect of the transaction with the Securities and
Exchange Commission.
In addition, this opinion does not in any manner address the prices at which
EVI's
145
Common Stock will trade following consummation of the Merger, and Morgan
Stanley expresses no opinion or recommendation as to how the shareholders of
the Company and EVI should vote at the shareholders' meetings held in
connection with the Merger.
Based upon and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to EVI.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Stephen A. Trauber
---------------------------
Stephen A. Trauber
Principal
146
APPENDIX C
[MERRILL LYNCH LETTERHEAD]
March 4, 1998
Board of Directors
Weatherford Enterra, Inc.
1360 Post Oak Blvd., Suite 1000
Houston, Texas 77056-3098
Members of the Board of Directors:
Weatherford Enterra, Inc. (the "Company") and EVI, Inc. ("EVI") propose to
enter into an Agreement and Plan of Merger (the "Agreement") pursuant to which
the Company will be merged with EVI in a transaction (the "Merger") in which
each outstanding share of the Company's common stock, par value $0.10 per share
(the "Company Shares"), will be exchanged into 0.95 shares (the "Exchange
Ratio") of the common stock of EVI, par value $1.00 per share (the "EVI
Shares").
You have asked us whether, in our opinion, the Exchange Ratio is fair, from
a financial point of view, to the holders of the Company Shares.
In arriving at the opinion set forth below, we have among other things:
(1) Reviewed certain publicly available business and financial information
relating to the Company and EVI that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets, liabilities and prospects
of the Company and EVI furnished to us by the Company's and EVI's
managements, as well as the amount and timing of the cost savings and
related expenses and synergies expected to result from the Merger
furnished to us by the management of the Company (the "Expected
Synergies");
(3) Conducted discussions with members of senior management and
representatives of the Company and EVI concerning the matters described
in clauses 1 and 2 above, as well as their respective businesses and
prospects before and after giving effect to the Merger and the Expected
Synergies;
(4) Reviewed the market prices and valuation multiples for the Company
Shares and EVI Shares and compared them with those of certain publicly
traded companies that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and EVI and compared
them with those of certain companies which we deemed to be relevant;
(6) Compared the proposed financial terms of the Merger with the financial
terms of certain other transactions that we deemed to be relevant;
(7) Participated in certain discussions and negotiations among
representatives of the Company and EVI and their financial and legal
advisors;
(8) Reviewed the potential pro forma impact of the Merger;
(9) Reviewed a draft of the Agreement; and
(10) Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary including our
assessment of general economic, market and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly
147
available, and we have not assumed any responsibility for independently
verifying such information or undertaken an independent evaluation or appraisal
of any of the assets or liabilities of the Company or EVI or been furnished with
any such evaluation or appraisal. In addition, we have not assumed any
obligation to conduct any physical inspection of the properties or facilities of
the Company or EVI. With respect to the financial forecast information and the
Expected Synergies furnished to or discussed with us by the Company or EVI, we
have assumed that they have been reasonably prepared and reflect the best
currently available estimates and judgment of the Company's or EVI's management
as to the expected future financial performance of the Company or EVI, as the
case may be, and the Expected Synergies. We have further assumed that the Merger
will be accounted for as a pooling of interests under generally accepted
accounting principles and that it will qualify as a tax-free reorganization for
U.S. federal income tax purposes. We have also assumed that the final form of
the Agreement will be substantially similar to the last draft reviewed by us.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof. We have assumed that in the course of obtaining the
necessary regulatory or other consents or approvals (contractual or otherwise)
for the Merger, no restrictions, including any divestiture requirements or
amendments or modifications, will be imposed that will have a material adverse
effect on the contemplated benefits of the Merger.
We are acting as financial advisor to the Company in connection with the
Merger and will receive a fee from the Company for our services, a significant
portion of which is contingent upon the consummation of the Merger. In addition,
the Company has agreed to indemnify us for certain liabilities arising our of
our engagement. We have, in the past, provided financial advisory and financing
services to the Company and may continue to do so and have received, and may
receive, fees for the rendering of such services. In addition, in the ordinary
course of our business, we may actively trade the Company Shares and other
securities of the Company, as well as the EVI Shares and other securities of EVI
for our own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
In connection with the preparation of this opinion, we have not been
authorized by the Company or the Board of Directors to solicit, nor have we
solicited, third-party indications of interest for the acquisition of all or any
part of the Company.
This opinion is for the use and benefit of the Board of Directors of the
Company. Our opinion does not address the merits of the underlying decision by
the Company to engage in the Merger and does not constitute a recommendation to
any shareholder as to how such shareholder should vote on the proposed Merger or
any matter related thereto.
We are not expressing any opinion herein as to the prices at which the
Company Shares or the EVI Shares will trade following the announcement or
consummation of the Merger.
On the basis of and subject to the foregoing, we are of the opinion that,
as of the date hereof, the Exchange Ratio is fair from a financial point of view
to the holders of the Company Shares.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
2
148
APPENDIX D
[SIMMONS & COMPANY INTERNATIONAL LETTERHEAD]
March 4, 1998
Board of Directors
Weatherford Enterra, Inc.
1360 Post Oak Boulevard, Suite 1000
Houston, Texas 77056-3098
Members of the Board:
You have informed us that Weatherford Enterra, Inc. (the "Company") and
EVI, Inc. ("EVI") propose to enter into an Agreement and Plan of Merger (the
"Agreement") pursuant to which the Company will be merged (the "Proposed
Merger") with and into EVI in a transaction in which each issued and outstanding
share of common stock, par value $0.10 per share, of the Company (the "Company
Common Stock") will be converted into the right to receive 0.95 shares (the
"Exchange Ratio") of common stock, par value $1.00 per share, of EVI (the "EVI
Common Stock"). Cash will be exchanged in lieu of fractional shares of the EVI
Common Stock.
You have requested the opinion of Simmons & Company International
("Simmons") as investment bankers as to the fairness, from a financial point of
view, of the Exchange Ratio to the holders of the Company Common Stock.
Simmons, as a specialized energy-related investment banking firm, is
continuously engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, private placements of debt and equity,
and the management and underwriting of sales of equity and debt to the public.
Simmons has previously rendered investment banking services to the Company in
connection with a number of transactions for which Simmons received customary
compensation. In addition, in the ordinary course of business, Simmons may
actively trade the securities of the Company and EVI for its own account and for
the accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
In connection with rendering its opinion, Simmons has reviewed and
analyzed, among other things, the following: (i) a draft of the Agreement dated
March 4, 1998 and related disclosure letters furnished to Simmons by the
Company; (ii) financial statements and other information concerning the Company,
including the Annual Reports on Form 10-K of the Company for the years ended
December 31, 1994 through 1996, the Quarterly Reports on Form 10-Q of the
Company for the quarters ended March 31, 1997, June 30, 1997 and September 30,
1997, Proxy Solicitation Materials on Schedule 14A dated April 10, 1997; (iii)
certain other internal information, primarily financial in nature and including
fourth quarter 1997 results and financial forecasts, concerning the business and
operations of the Company furnished by the Company for purposes of Simmons'
analysis; (iv) certain publicly available information concerning the trading of
the Company Common Stock; (v) certain publicly available information concerning
EVI, including the Annual Reports on Form 10-K of EVI for the years ended
December 31, 1994 through 1996, the Quarterly Reports on Form 10-Q of EVI for
the quarters ended March 31, 1997, June 30, 1997 and September 30, 1997, Proxy
Solicitation Materials on Schedule 14A dated May 6, 1997, Current Reports on
Forms 8-K and 8-K/A since January 1, 1997 and Registration Statements on Forms
S-3, S-4, and S-4/A since January 1, 1997; (vi) certain other internal
information, primarily financial in nature and including fourth quarter 1997
results and financial forecasts, concerning the business and operations of EVI
furnished by EVI for purposes of Simmons' analysis; (vii) certain publicly
available information concerning the trading of EVI Common Stock; (viii) certain
publicly available information with respect to certain other companies that
Simmons believes to be comparable to the Company or EVI and the trading markets
for certain of such other companies' securities; and (ix) certain publicly
available information concerning the nature and terms of certain other
transactions considered relevant to the inquiry. Simmons has also met with
certain officers and employees of the Company and of EVI to discuss the
foregoing as well as other matters believed relevant to the inquiry.
149
In arriving at its opinion, Simmons has assumed and relied upon the
accuracy and completeness of all of the financial and other information provided
by the Company and EVI, or publicly available, including, without limitation,
information with respect to asset conditions, tax positions, liability reserves
and insurance coverages, and has not assumed any responsibility to independently
verify any such information. With respect to the financial forecasts and other
data reviewed by Simmons, Simmons has assumed, with your consent, that such
forecasts and other data, including, without limitation, the information
provided by the managements of the Company and EVI with respect to projected
cost savings and operating efficiencies resulting from the Proposed Merger, have
been reasonably prepared and reflect the best currently available estimates and
judgments of the respective managements of the Company and EVI as to the
expected future financial performance of their respective companies and of the
companies combined in the Proposed Merger. Simmons has not conducted a physical
inspection of any of the assets, properties or facilities of the Company, nor
has Simmons made or obtained any independent evaluations or appraisals of any of
such assets, properties or facilities. Simmons has assumed that the Proposed
Merger would be treated as a "pooling of interests" for accounting purposes and
as a tax-free reorganization for federal income tax purposes. In addition,
although Simmons has discussed the prospects of the Company and of EVI with
certain representatives of their respective managements, Simmons has been
provided with only limited financial projections and other similar analyses
prepared by the Company's management with respect to the Company's future
performance and by EVI's management with respect to EVI's future performance.
In conducting its analysis and arriving at its opinion as expressed herein,
Simmons has considered such financial and other factors as it deemed appropriate
under the circumstances including, among others, the following: (i) the
historical and current financial position and results of operations of the
Company and EVI; (ii) the business prospects of the Company and EVI; (iii) the
potential personnel and operating expense reductions that could be achieved in
the Proposed Merger; (iv) the historical and current market for the Common
Stock, for EVI Common Stock and for the equity securities of certain other
companies believed to be comparable to the Company or EVI; (v) the estimated pro
forma effect of the Proposed Merger on the Company's capitalization and
historical and future cash flows, earnings per share and cash flow per share;
and (vi) such other financial analyses and studies which Simmons deemed
appropriate. Simmons has also taken into account its assessment of general
economic, market and financial conditions and its experience in connection with
similar transactions and securities' valuation generally. Simmons' opinion
necessarily is based upon conditions as they exist and can be evaluated on, and
on the information made available at, the date hereof.
Simmons is acting as financial advisor to the Company in this transaction
and will receive a customary fee for its services, which is contingent upon the
consummation of the Proposed Merger. This opinion is for the use and benefit of
the Board of Directors of the Company. Our opinion does not address the merits
of the underlying decision by the Company to engage in the Proposed Merger and
does not constitute a recommendation to any shareholder as to how such
shareholder should vote on the Proposed Merger or any matter related thereto. We
are not expressing any opinion herein as to the prices at which the Company
Common Stock or EVI Common Stock will trade following the announcement or
consummation of the Proposed Merger.
In connection with the preparation of this opinion, we have not been
authorized by the Company or the Board of Directors to solicit, nor have we
solicited, third-party indications of interest for the acquisition of all or any
part of the Company.
Based upon and subject to the foregoing, Simmons is of the opinion, as
investment bankers, that, as of the date hereof, the Exchange Ratio is fair,
from a financial point of view, to the holders of the Company Common Stock.
Sincerely,
SIMMONS & COMPANY INTERNATIONAL
150
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, except under certain
circumstances, including a breach of the director's duty of loyalty, acts or
omissions of the director not in good faith or which involve intentional
misconduct or a knowing violation of law, the approval of an improper payment of
a dividend or an improper purchase by the corporation of stock or any
transaction from which the director derived an improper personal benefit. The
Registrant's Restated Certificate of Incorporation provides that the
Registrant's directors are not liable to the Registrant or its stockholders for
monetary damages for breach of their fiduciary duty, subject to the described
exceptions specified by Delaware law.
Section 145 of the Delaware General Corporation Law grants to the
Registrant the power to indemnify each officer and director of the Registrant
against liabilities and expenses incurred by reason of the fact that he is or
was an officer or director of the Registrant if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Registrant and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The By-laws of the
Registrant provide for indemnification of each officer and director of the
Registrant to the fullest extent permitted by Delaware law. David J. Butters and
Robert B. Millard, employees of Lehman Brothers Inc. ("Lehman Brothers"),
constitute two of the seven members of the Board of Directors of the Registrant.
Under the restated certificates of incorporation, as amended to date, of Lehman
Brothers and its parent, Lehman Brothers Holdings Inc. ("Holdings"), both
Delaware corporations, Messrs. Butters and Millard, in their capacity as
directors of the Registrant, are to be indemnified by Lehman Brothers and
Holdings to the fullest extent permitted by Delaware law. Messrs. Butters and
Millard are serving as directors of the Registrant at the request of Lehman
Brothers and Holdings.
Section 145 of the Delaware General Corporation Law also empowers the
Registrant to purchase and maintain insurance on behalf of any person who is or
was an officer or director of the Registrant against liability asserted against
or incurred by him in any such capacity, whether or not the Registrant would
have the power to indemnify such officer or director against such liability
under the provisions of Section 145. The Registrant has purchased and maintains
a directors' and officers' liability policy for such purposes. Messrs. Butters
and Millard are insured against certain liabilities which they may incur in
their capacity as directors pursuant to insurance maintained by Holdings.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
2.1 -- Agreement and Plan of Merger dated as of March 4, 1998,
by and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.1 to
Amendment No. 1 to Form 8-K on Form 8-K/A, File 1-13086,
filed March 9, 1998).
2.2 -- Share Purchase Agreement made and entered into as of
January 30, 1998, by and among the shareholders of Nika
Enterprises Ltd., an Alberta corporation, listed on the
signature pages thereto and EVI Oil Tools Canada Ltd., an
Alberta corporation (incorporated by reference to Exhibit
No. 2.1 to the Form 8-K, File 1-13086, filed March 3,
1998).
2.3 -- Agreement and Plan of Merger dated December 12, 1996, by
and among EVI, Inc., Christiana Acquisition, Inc.,
Christiana Companies, Inc. and C2, Inc. (incorporated by
reference to Exhibit No. 2.1 to Form 8-K, File 1-13086,
filed December 31, 1997).
II-1
151
2.4 -- Agreement dated December 12, 1997, by and among EVI,
Inc., Christiana Companies, Inc., Total Logistic Control
LLC and C2, Inc. (incorporated by reference to Exhibit
No. 2.2 to Form 8-K, File 1-13086, filed December 31,
1997).
2.5 -- Letter Agreement dated December 12, 1997, by and among
EVI, Inc., Christiana Acquisition, Inc., Christiana
Companies, Inc. and C2, Inc. (incorporated by reference
to Exhibit No. 2.3 to Form 8-K, File 1-13086, filed
December 31, 1997).
2.6 -- Stock Purchase Agreement dated as of October 9, 1997,
between EVI, Inc. and PACCAR Inc (incorporated by
reference to Exhibit No. 2.1 to Form 8-K, File 1-13086,
filed October 21, 1997).
2.7 -- Stock Purchase Agreement dated as of October 9, 1997,
among certain shareholders of BMW Monarch (Lloydminster)
Ltd., the shareholders of BMW Pump Inc., the shareholder
of Makelki Holdings Ltd., the shareholder of 589979
Alberta Ltd., the shareholders of 600969 Alberta Ltd.,
the shareholders of 391862 Alberta Ltd. and EVI, Inc.
(incorporated by reference to Exhibit No. 2.2 to Form
8-K, File 1-13086, filed October 21, 1997).
2.8 -- Agreement and Plan of Merger dated as of July 16, 1997,
as amended, by and among XLS Holding, Inc., EVI, Inc. and
GPXL, Inc. (incorporated by reference to Exhibit No. 2.1
to Form 8-K, File 1-13086, filed August 26, 1997).
2.9 -- Stock Purchase Agreement dated as of February 21, 1997,
among Seigo Arai, Kanematsu USA Inc. and Energy Ventures,
Inc. (incorporated by reference to Exhibit No. 2.1 to
Form 8-K, File 1-13086, filed March 17, 1997).
2.10 -- Agreement and Plan of Merger dated as of December 5,
1996, among Energy Ventures, Inc., GulfMark Acquisition
Co., GulfMark International, Inc. and New GulfMark
International, Inc. (incorporated by reference to Exhibit
No. 2.2 to Form 8-K, File 1-13086, filed December 26,
1996).
2.11 -- Agreement and Plan of Distribution dated as of December
5, 1996, by and among GulfMark International, Inc., New
GulfMark International, Inc. and Energy Ventures, Inc.
(incorporated by reference to Exhibit No. 2.3 to Form
8-K, File 1-13086, filed December 26, 1996).
2.12 -- First Amendment to Agreement and Plan of Merger dated as
of March 27, 1997, by and among Energy Ventures, Inc.,
GulfMark Acquisition Co., GulfMark International, Inc.
and GulfMark Offshore, Inc. (incorporated by reference to
Exhibit No. 2.3 to the Registration Statement on Form S-4
(Reg. No. 333-24133)).
2.13 -- Stock Purchase Agreement dated as of September 14, 1996,
by and among Parker Drilling Company and Energy Ventures,
Inc. (incorporated by reference to Exhibit 2.1 to Form
8-K, File 1-13086, filed October 3, 1996).
2.14 -- Agreement and Plan of Merger dated as of June 20, 1996
between Energy Ventures, Inc., TCA Acquisition, Inc. and
Tubular Corporation of America (incorporated by reference
to Exhibit No. 2.1 to Form 8-K, File 1-13086, filed
June 24, 1996).
3.1 -- Restated Certificate of Incorporation of the Registrant,
as amended (incorporated by reference to Exhibit No. 3.1
to the Form 8-K, File 1-13086, filed May 14, 1997).
3.2 -- By-laws of the Registrant (incorporated by reference to
Exhibit No. 3.2 to Form 10-K, File 1-13086, filed
March 1, 1994).
4.1 -- See Exhibit Nos. 3.1 and 3.2 for provisions of the
Restated Certificate of Incorporation, as amended, and
By-laws of the Registrant defining the rights of the
holders of Common Stock.
II-2
152
4.2 -- Credit Agreement dated as of February 17, 1998, among
EVI, Inc., EVI Oil Tools Canada Ltd., the Subsidiary
Guarantors defined therein, Chase Bank of Texas, National
Association, as U.S. Administrative Agent, The Bank of
Nova Scotia, as Documentation Agent and Canadian Agent,
ABN AMRO Bank, N.V., as Syndication Agent, and the other
Lenders defined therein, including the Form of Note
(incorporated by reference to Exhibit No. 4.1 to the Form
8-K, File 1-13086, filed March 3, 1998).
4.3 -- Indenture dated March 15, 1994, among Energy Ventures,
Inc., as Issuer, the Subsidiary Guarantors party thereto,
as Guarantors, and Chemical Bank, as Trustee
(incorporated by reference to Form 8-K, File 1-13086,
filed April 5, 1994).
4.4 -- Specimen 10 1/4% Senior Note due 2004 of Energy Ventures,
Inc. (incorporated by reference to Form 8-K, File
1-13086, filed April 5, 1994).
4.5 -- First Supplemental Indenture by and among Energy
Ventures, Inc., Prideco and Chemical Bank, as trustee,
dated June 30, 1995 (incorporated by reference to Exhibit
No. 4.4 to the Registration Statement on Form S-3 (Reg.
No. 33-61933)).
4.6 -- Second Supplemental Indenture by and among Energy
Ventures, Inc., EVI Arrow, Inc., EVI Watson, Inc. and The
Chase Manhattan Bank, as trustee, dated effective as of
December 6, 1996 (incorporated by reference to Exhibit
4.6 to Form 10-K, File 1-13086, filed March 20, 1997).
4.7 -- Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997 (incorporated by
reference to Exhibit 99.2 to Form 8-K, File 1-13086,
filed October 27, 1997).
4.8 -- Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997
(incorporated by reference to Exhibit 99.3 to Form 8-K,
File 1-13086, filed October 27, 1997).
4.9 -- Fifth Supplemental Indenture by and between EVI, Inc. and
The Chase Manhattan Bank dated as of December 12, 1997
(including the Form of Note and Form of Exchange Note)
(incorporated by reference to Exhibit 4.1 to Form 8-K,
File 1-13086, filed December 31, 1997).
4.10 -- Indenture dated as of October 15, 1997, between EVI, Inc.
and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit No. 4.13 to the Registration
Statement on Form S-3 (Reg. No. 333-45207)).
4.11 -- First Supplemental Indenture dated as of October 28,
1997, between EVI, Inc. and The Chase Manhattan Bank, as
Trustee (including Form of Debenture) (incorporated by
reference to Exhibit 4.2 to Form 8-K, File 1-13086, filed
November 5, 1997).
4.12 -- Registration Rights Agreement dated November 3, 1997, by
and among EVI, Inc., Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation,
Credit Suisse First Boston Corporation, Lehman Brothers
Inc., Prudential Securities Incorporated and Schroder &
Co. Inc. (incorporated by reference to Exhibit 4.3 to
Form 8-K, File 1-13086, filed November 5, 1997).
+5.1 -- Opinion of Fulbright & Jaworski L.L.P., regarding
legality of securities.
+8.1 -- Opinion of Fulbright & Jaworski L.L.P., regarding certain
tax matters.
+8.2 -- Opinion of Baker & Botts, L.L.P., regarding certain tax
matters.
+23.1 -- Consent of Fulbright & Jaworski L.L.P. (included in
Exhibits 5.1 and 8.1).
+23.2 -- Consent of Baker & Botts, L.L.P. (included in Exhibit
8.2).
*23.3 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of EVI, Inc.
II-3
153
*23.4 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford Enterra, Inc.
*23.5 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Christiana Companies, Inc.
*23.6 -- Consent of Arthur Andersen LLP, with respect to the
GulfMark Retained Assets' financial statements.
*23.7 -- Consent of Ernst & Young LLP with respect to the
consolidated financial statements of Trico Industries,
Inc.
*23.8 -- Consent of Arthur Andersen & Co. with respect to the
combined financial statements of BMW Monarch
(Lloydminster) Ltd. and BMW Pump Inc.
*23.9 -- Consents of Thomas R. Bates, Jr., Philip Burguieres,
William E. Macaulay, Robert K. Moses, Jr., Randall D.
Stilley, James R. Burke and Curtis W. Huff with respect
to being named a director and/or executive officer of the
Registrant.
*24.1 -- Powers of Attorney (contained on page II-6).
*99.1 -- Proxy card for use at Special Meeting of Stockholders of
EVI, Inc.
*99.2 -- Proxy card for use at Special Meeting of Stockholders of
Weatherford Enterra, Inc.
*99.3 -- Consent of Morgan Stanley & Co. Incorporated with respect
to their fairness opinion (included in Appendix B to the
Joint Proxy Statement/Prospectus forming part of this
Registration Statement on Form S-4).
*99.4 -- Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated with respect to their fairness opinion.
*99.5 -- Consent of Simmons & Company International with respect
to their fairness opinion.
*99.6 -- Consolidated Financial Statements of Christiana
Companies, Inc. as of June 30, 1997 and 1996 and for each
of the three years in the period ended June 30, 1997, and
as of December 31, 1997 and 1996 and for each of the six
month periods ended December 31, 1997 and 1996.
- ---------------
* Filed herewith
+ To be filed by amendment
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant
has not filed with this Registration Statement certain instruments defining the
rights of holders of long-term debt of the Registrant and its subsidiaries
because the total amount of securities authorized under any of such instruments
does not exceed 10% of the total assets of the Registrant and its subsidiaries
on a consolidated basis. The Registrant agrees to furnish a copy of any such
agreements to the Securities and Exchange Commission upon request.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore,
II-4
154
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) Prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items
of the applicable form; and
(2) Every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
section 10(a)(3) of the Securities Act, and is used in connection with an
offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
155
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on April 6, 1998.
EVI, INC.
By:/s/ BERNARD J. DUROC-DANNER
-----------------------------------
Bernard J. Duroc-Danner
President, Chief Executive
Officer and Director
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Bernard J. Duroc-Danner and James G. Kiley, or
any of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same and all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting said attorney-in-fact and agent, and any of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ BERNARD J. DUROC-DANNER President, Chief Executive April 6, 1998
- ----------------------------------------------------- Officer and Director
Bernard J. Duroc-Danner (Principal Executive Officer)
/s/ JAMES G. KILEY Vice President and Chief April 6, 1998
- ----------------------------------------------------- Financial Officer
James G. Kiley (Principal Financial Officer)
/s/ FRANCES R. POWELL Vice President, Accounting April 6, 1998
- ----------------------------------------------------- and Controller
Frances R. Powell (Principal Accounting Officer)
/s/ DAVID J. BUTTERS Director and Chairman of the Board April 6, 1998
- -----------------------------------------------------
David J. Butters
/s/ URIEL E. DUTTON Director April 6, 1998
- -----------------------------------------------------
Uriel E. Dutton
Director
- -----------------------------------------------------
Sheldon S. Gordon
/s/ SHELDON B. LUBAR Director April 6, 1998
- -----------------------------------------------------
Sheldon B. Lubar
/s/ ROBERT B. MILLARD Director April 6, 1998
- -----------------------------------------------------
Robert B. Millard
Director
- -----------------------------------------------------
Robert A. Rayne
II-6
156
EXHIBIT INDEX
NO. DESCRIPTION
--- -----------
2.1 -- Agreement and Plan of Merger dated as of March 4, 1998,
by and between EVI, Inc. and Weatherford Enterra, Inc.
(incorporated by reference to Exhibit No. 2.1 to
Amendment No. 1 to Form 8-K on Form 8-K/A, File 1-13086,
filed March 9, 1998).
2.2 -- Share Purchase Agreement made and entered into as of
January 30, 1998, by and among the shareholders of Nika
Enterprises Ltd., an Alberta corporation, listed on the
signature pages thereto and EVI Oil Tools Canada Ltd., an
Alberta corporation (incorporated by reference to Exhibit
No. 2.1 to the Form 8-K, File 1-13086, filed March 3,
1998).
2.3 -- Agreement and Plan of Merger dated December 12, 1996, by
and among EVI, Inc., Christiana Acquisition, Inc.,
Christiana Companies, Inc. and C2, Inc. (incorporated by
reference to Exhibit No. 2.1 to Form 8-K, File 1-13086,
filed December 31, 1997).
2.4 -- Agreement dated December 12, 1997, by and among EVI,
Inc., Christiana Companies, Inc., Total Logistic Control
LLC and C2, Inc. (incorporated by reference to Exhibit
No. 2.2 to Form 8-K, File 1-13086, filed December 31,
1997).
2.5 -- Letter Agreement dated December 12, 1997, by and among
EVI, Inc., Christiana Acquisition, Inc., Christiana
Companies, Inc. and C2, Inc. (incorporated by reference
to Exhibit No. 2.3 to Form 8-K, File 1-13086, filed
December 31, 1997).
2.6 -- Stock Purchase Agreement dated as of October 9, 1997,
between EVI, Inc. and PACCAR Inc (incorporated by
reference to Exhibit No. 2.1 to Form 8-K, File 1-13086,
filed October 21, 1997).
2.7 -- Stock Purchase Agreement dated as of October 9, 1997,
among certain shareholders of BMW Monarch (Lloydminster)
Ltd., the shareholders of BMW Pump Inc., the shareholder
of Makelki Holdings Ltd., the shareholder of 589979
Alberta Ltd., the shareholders of 600969 Alberta Ltd.,
the shareholders of 391862 Alberta Ltd. and EVI, Inc.
(incorporated by reference to Exhibit No. 2.2 to Form
8-K, File 1-13086, filed October 21, 1997).
2.8 -- Agreement and Plan of Merger dated as of July 16, 1997,
as amended, by and among XLS Holding, Inc., EVI, Inc. and
GPXL, Inc. (incorporated by reference to Exhibit No. 2.1
to Form 8-K, File 1-13086, filed August 26, 1997).
2.9 -- Stock Purchase Agreement dated as of February 21, 1997,
among Seigo Arai, Kanematsu USA Inc. and Energy Ventures,
Inc. (incorporated by reference to Exhibit No. 2.1 to
Form 8-K, File 1-13086, filed March 17, 1997).
2.10 -- Agreement and Plan of Merger dated as of December 5,
1996, among Energy Ventures, Inc., GulfMark Acquisition
Co., GulfMark International, Inc. and New GulfMark
International, Inc. (incorporated by reference to Exhibit
No. 2.2 to Form 8-K, File 1-13086, filed December 26,
1996).
2.11 -- Agreement and Plan of Distribution dated as of December
5, 1996, by and among GulfMark International, Inc., New
GulfMark International, Inc. and Energy Ventures, Inc.
(incorporated by reference to Exhibit No. 2.3 to Form
8-K, File 1-13086, filed December 26, 1996).
2.12 -- First Amendment to Agreement and Plan of Merger dated as
of March 27, 1997, by and among Energy Ventures, Inc.,
GulfMark Acquisition Co., GulfMark International, Inc.
and GulfMark Offshore, Inc. (incorporated by reference to
Exhibit No. 2.3 to the Registration Statement on Form S-4
(Reg. No. 333-24133)).
157
NO. DESCRIPTION
--- -----------
2.13 -- Stock Purchase Agreement dated as of September 14, 1996,
by and among Parker Drilling Company and Energy Ventures,
Inc. (incorporated by reference to Exhibit 2.1 to Form
8-K, File 1-13086, filed October 3, 1996).
2.14 -- Agreement and Plan of Merger dated as of June 20, 1996
between Energy Ventures, Inc., TCA Acquisition, Inc. and
Tubular Corporation of America (incorporated by reference
to Exhibit No. 2.1 to Form 8-K, File 1-13086, filed June
24, 1996).
3.1 -- Restated Certificate of Incorporation of the Registrant,
as amended (incorporated by reference to Exhibit No. 3.1
to the Form 8-K, File 1-13086, filed May 14, 1997).
3.2 -- By-laws of the Registrant (incorporated by reference to
Exhibit No. 3.2 to Form 10-K, File 1-13086, filed March
1, 1994).
4.1 -- See Exhibit Nos. 3.1 and 3.2 for provisions of the
Restated Certificate of Incorporation, as amended, and
By-laws of the Registrant defining the rights of the
holders of Common Stock.
4.2 -- Credit Agreement dated as of February 17, 1998, among
EVI, Inc., EVI Oil Tools Canada Ltd., the Subsidiary
Guarantors defined therein, Chase Bank of Texas, National
Association, as U.S. Administrative Agent, The Bank of
Nova Scotia, as Documentation Agent and Canadian Agent,
ABN AMRO Bank, N.V., as Syndication Agent, and the other
Lenders defined therein, including the form of Note
(incorporated by reference to Exhibit No. 4.1 to the Form
8-K, File 1-13086, filed March 3, 1998).
4.3 -- Indenture dated March 15, 1994, among Energy Ventures,
Inc., as Issuer, the Subsidiary Guarantors party thereto,
as Guarantors, and Chemical Bank, as Trustee
(incorporated by reference to Form 8-K, File 1-13086,
filed April 5, 1994).
4.4 -- Specimen 10 1/4% Senior Note due 2004 of Energy Ventures,
Inc. (incorporated by reference to Form 8-K, File
1-13086, filed April 5, 1994).
4.5 -- First Supplemental Indenture by and among Energy
Ventures, Inc., Prideco and Chemical Bank, as trustee,
dated June 30, 1995 (incorporated by reference to Exhibit
No. 4.4 to the Registration Statement on Form S-3 (Reg.
No. 33-61933)).
4.6 -- Second Supplemental Indenture by and among Energy
Ventures, Inc., EVI Arrow, Inc., EVI Watson, Inc. and The
Chase Manhattan Bank, as trustee, dated effective as of
December 6, 1996 (incorporated by reference to Exhibit
4.6 to Form 10-K, File 1-13086, filed March 20, 1997).
4.7 -- Third Supplemental Indenture by and among EVI, Inc.,
Ercon, Inc. and The Chase Manhattan Bank, as trustee,
dated effective as of May 1, 1997 (incorporated by
reference to Exhibit 99.2 to Form 8-K, File 1-13086,
filed October 27, 1997).
4.8 -- Fourth Supplemental Indenture by and among EVI, Inc., XLS
Holding, Inc., XL Systems, Inc. and The Chase Manhattan
Bank, as trustee, dated effective as of August 25, 1997
(incorporated by reference to Exhibit 99.3 to Form 8-K,
File 1-13086, filed October 27, 1997).
4.9 -- Fifth Supplemental Indenture by and between EVI, Inc. and
The Chase Manhattan Bank dated as of December 12, 1997
(including the Form of Note and Form of Exchange Note)
(incorporated by reference to Exhibit 4.1 to Form 8-K,
File 1-13086, filed December 31, 1997).
4.10 -- Indenture dated as of October 15, 1997, between EVI, Inc.
and The Chase Manhattan Bank, as Trustee (incorporated by
reference to Exhibit No. 4.13 to the Registration
Statement on Form S-3 (Reg. No. 333-45207)).
158
NO. DESCRIPTION
--- -----------
4.11 -- First Supplemental Indenture dated as of October 28,
1997, between EVI, Inc. and The Chase Manhattan Bank, as
Trustee (including form of Debenture) (incorporated by
reference to Exhibit 4.2 to Form 8-K, File 1-13086, filed
November 5, 1997).
4.12 -- Registration Rights Agreement dated November 3, 1997, by
and among EVI, Inc., Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation,
Credit Suisse First Boston Corporation, Lehman Brothers
Inc., Prudential Securities Incorporated and Schroder &
Co. Inc. (incorporated by reference to Exhibit 4.3 to
Form 8-K, File 1-13086, filed November 5, 1997).
+5.1 -- Opinion of Fulbright & Jaworski L.L.P., regarding
legality of securities.
+8.1 -- Opinion of Fulbright & Jaworski L.L.P., regarding certain
tax matters.
+8.2 -- Opinion of Baker & Botts, L.L.P., regarding certain tax
matters.
+23.1 -- Consent of Fulbright & Jaworski L.L.P. (included in
Exhibits 5.1 and 8.1).
+23.2 -- Consent of Baker & Botts, L.L.P. (included in Exhibit
8.2).
*23.3 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of EVI, Inc.
*23.4 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Weatherford Enterra, Inc.
*23.5 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of Christiana Companies, Inc.
*23.6 -- Consent of Arthur Andersen LLP, with respect to the
GulfMark Retained Assets' financial statements.
*23.7 -- Consent of Ernst & Young LLP with respect to the
consolidated financial statements of Trico Industries,
Inc.
*23.8 -- Consent of Arthur Andersen & Co. with respect to the
combined financial statements of BMW Monarch
(Lloydminster) Ltd. and BMW Pump Inc.
*23.9 -- Consents of Thomas R. Bates, Jr., Philip Burguieres,
William E. Macaulay, Robert K. Moses, Jr., Randall D.
Stilley, James R. Burke and Curtis W. Huff with respect
to being named a director and/or executive officer of the
Registrant.
*24.1 -- Powers of Attorney (contained on page II-6).
*99.1 -- Proxy card for use at Special Meeting of Stockholders of
EVI, Inc.
*99.2 -- Proxy card for use at Special Meeting of Stockholders of
Weatherford Enterra, Inc.
*99.3 -- Consent of Morgan Stanley & Co. Incorporated with respect
to their fairness opinion (included in Appendix B to the
Joint Proxy Statement/Prospectus forming part of this
Registration Statement on Form S-4).
*99.4 -- Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated with respect to their fairness opinion.
*99.5 -- Consent of Simmons & Company International with respect
to their fairness opinion.
*99.6 -- Consolidated Financial Statements of Christiana
Companies, Inc. as of June 30, 1997 and 1996 and for each
of the three years in the period ended June 30, 1997, and
as of December 31, 1997 and 1996 and for each of the six
month periods ended December 31, 1997 and 1996.
- ---------------
* Filed herewith
+ To be filed by amendment
159
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Registrant
has not filed with this Registration Statement certain instruments defining the
rights of holders of long-term debt of the Registrant and its subsidiaries
because the total amount of securities authorized under any of such instruments
does not exceed 10% of the total assets of the Registrant and its subsidiaries
on a consolidated basis. The Registrant agrees to furnish a copy of any such
agreements to the Securities and Exchange Commission upon request.