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EXHIBIT 10.23
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made as of September
8, 1998, between WEATHERFORD INTERNATIONAL, INC., a Delaware corporation
("Weatherford"), and _______________ (the "Non-Employee Director").
W I T N E S S E T H:
WHEREAS, the Non-Employee Director serves on the Board of Directors of
Weatherford and Weatherford desires to have the Non-Employee Director remain as
a director and desires to encourage stock ownership by the Non-Employee
Director;
WHEREAS, Weatherford has, as an inducement, determined to grant to the
Non-Employee Director the option set forth in this Agreement in order that the
Non-Employee Director may obtain an interest in the stock ownership of
Weatherford;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Weatherford and the
Non-Employee Director hereby agree as follows:
1. Grant.
(a) Weatherford hereby grants to the Non-Employee Director an option
(the "Option") effective on September 8, 1998 (the "Date of Grant") to purchase
60,000 shares of Weatherford Common Stock, $1.00 par value per share ("Common
Stock"), having an exercise price equal to the closing sale price of the Common
Stock on the New York Stock Exchange, Inc. on September 8, 1998. Weatherford and
the Non-Employee Director agree that the Option shall be subject to the terms of
this Agreement. Weatherford and the Non-Employee Director further agree that
this Agreement sets forth the complete terms of the Option as in effect on the
date hereof.
(b) No Option shall be exercisable after the expiration of 10 years
from the date the Option becomes first exercisable.
(c) Subject to the terms and conditions of this Agreement, the Option
provides the Non- Employee Director with the option to purchase 60,000 shares of
Common Stock at a price of $18.125 per share (the "Option Price").
(d) The Option shall be considered to be a non-statutory option that is
not intended to be an incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
(e) Subject to earlier vesting in the event of (i) a "Change in
Control" as provided in Section 1(g) hereof, or (ii) in the event the
Non-Employee Director dies, retires or incurs a disability while serving as a
Non-Employee director of Weatherford as provided for in Section 6, the Option
shall become exercisable following three years from the date hereof.
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(f) Notwithstanding the provisions of Section 1(e) hereof, the Option
shall be exercisable with respect to all of the shares subject to the Option
upon the occurrence of a Change in Control (as defined herein). For purposes of
this Agreement, a Change in Control shall mean the occurrence of one or more of
the following events: (i) any "person", including a "group", as those terms are
used in Section 13(d)(3) of the Securities Exchange Act of 1934, other than an
affiliate of Weatherford as of the Date of Grant, becomes the beneficial owner,
directly or indirectly, of securities of Weatherford representing 30% or more of
the combined voting power of Weatherford's then outstanding voting securities;
(ii) Weatherford is merged or consolidated with or into another corporation and
immediately after giving effect to the merger or consolidation either (A) less
than 65% of the outstanding voting securities of the surviving or resulting
entity are then beneficially owned in the aggregate by (x) the stockholders of
Weatherford immediately prior to such merger or consolidation or (y) if a record
date has been set to determine the stockholders of Weatherford entitled to vote
on such merger or consolidation, the stockholders of Weatherford as of such
record date, or (B) the Board of Directors, or similar governing body, of the
surviving or resulting entity does not have as a majority of its members the
persons specified in clause (iii)(A) and (B) below; (iii) if at any time the
following do not constitute a majority of the Board of Directors of Weatherford
(or any successor entity referred to in clause (ii) above): (A) persons who are
directors of Weatherford on the Date of Grant and (B) persons who, prior to
their election as a director of Weatherford (or successor entity if applicable),
were nominated, recommended or endorsed by a formal resolution of the Board of
Directors of Weatherford; (iv) persons who are directors of Weatherford as of
the beginning of any calendar year cease to constitute a majority of the members
of the Board of Directors at any time during that calendar year; or (v)
Weatherford transfers all or substantially all of its assets as contemplated by
Delaware corporate law on a consolidated basis to another corporation or entity
which is a less than a 50% owned subsidiary of Weatherford.
(g) The Non-Employee Director may exercise the Option by delivering to
Weatherford a written notice stating (i) that he wishes to exercise the Option
on the date such notice is so delivered, (ii) the number of shares of stock with
respect to which the Option is to be exercised, (iii) the address to which the
certificate representing such shares of stock should be mailed, and (iv) the
social security number of the Non-Employee Director. In order to be effective,
such written notice shall be accompanied by payment of the purchase price of
such shares of stock. Each such payment shall be made by cashier's check drawn
on a national banking association and payable to the order of Weatherford in
United States dollars.
If, at the time of receipt by Weatherford of such written notice, (i)
Weatherford has unrestricted surplus in an amount not less than the Option Price
of such shares of stock, (ii) all accrued cumulative preferential dividends and
other current preferential dividends on all outstanding shares of preferred
stock of Weatherford have been fully paid, (iii) the acquisition by Weatherford
of its own shares of stock for the purpose of enabling the Non-Employee Director
to exercise the Option is otherwise permitted by applicable law and without any
vote or consent of any stockholder of Weatherford, and (iv) there shall have
been adopted, and there shall be in full force and effect, a resolution of the
Board of Directors of Weatherford authorizing the acquisition by Weatherford of
its own shares of stock for such purpose, then the Non-Employee Director may
deliver to Weatherford, in payment of the Option Price of the shares of stock
with respect to which the Option is exercised, (x) certificates registered in
the name of the Non-Employee Director that represent a number of shares of stock
legally and beneficially owned by the Non-Employee Director (free of all
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liens, claims and encumbrances of every kind) and having a fair market value on
the date of receipt by Weatherford of such written notice that is not greater
than the Option Price of the shares of stock with respect to which the Option is
to be exercised, such certificates to be accompanied by stock powers duly
endorsed in blank by the record holder of the shares of stock represented by
such certificates, with the signature of such record holder guaranteed by a
national banking association (or in lieu of such certificates, other
arrangements for the transfer of such shares to Weatherford which are
satisfactory to Weatherford), and (y) if the Option Price of the shares of stock
with respect to which the Option is to be exercised exceeds such fair market
value, a cashier's check drawn on a national banking association and payable to
the order of Weatherford in an amount, in United States dollars, equal to the
amount of such excess. Notwithstanding the provisions of the immediately
preceding sentence, the Board of Directors, in its sole discretion, may refuse
to accept shares of stock in payment of the Option Price for the shares of stock
with respect to which the Option is to be exercised and, in that event, any
certificates representing shares of stock that were received by Weatherford with
such written notice shall be returned to the Non-Employee Director, together
with notice by Weatherford to the Non-Employee Director of the refusal of the
Board of Directors to accept such shares of stock. If, at the expiration of
seven business days after the delivery to the Non- Employee Director of such
written notice from Weatherford, the Non-Employee Director shall not have
delivered to Weatherford a cashier's check drawn on a national banking
association and payable to the order of Weatherford in an amount, in United
States dollars, equal to the Option Price of the shares of stock with respect to
which the Option is to be exercised, such written notice from the Non- Employee
Director to Weatherford shall be ineffective to exercise the Option.
As promptly as practicable after the receipt by Weatherford of (i) such
written notice from the Non-Employee Director and (ii) payment, in the form
required by the foregoing provisions of this Section 1(g) of the Option Price of
the shares of stock with respect to which the Option is to be exercised, a
certificate representing the number of shares of stock with respect to which the
Option has been so exercised, such certificate to be registered in the name of
the Non-Employee Director, provided that such delivery shall be considered to
have been made when such certificate shall have been mailed, postage prepaid, to
the Non-Employee Director at the address specified for such purpose in such
written notice from the Non-Employee Director to Weatherford.
2. Changes in Weatherford's Capital Structure. The existence of this
Agreement shall not affect in any way the right or power of Weatherford or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in Weatherford's capital structure or its
business, or any merger or consolidation of Weatherford, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Common
Stock or the rights thereof, or the dissolution or liquidation of Weatherford,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
If Weatherford shall effect a subdivision or consolidation of shares or
other capital adjustment of, or the payment of a dividend in capital stock or
other equity securities of Weatherford on, its Common Stock, or other increase
or reduction of the number of shares of the Common Stock without receiving
consideration therefor in money, services, or property, or the reclassification
of its Common Stock, in whole or in part, into other equity securities of
Weatherford, then (a) the number, class and per share price of shares of stock
subject to the Option shall be appropriately
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adjusted (or in the case of the issuance of other equity securities as a
dividend on, or in a reclassification of, the Common Stock, the Option shall
extend to such other securities) in such a manner as to entitle the Non-Employee
Director to receive, upon exercise of the Option, for the same aggregate cash
consideration, the same total number and class or classes of shares (or in the
case of a dividend of, or reclassification into, other equity securities, such
other securities) the Non-Employee Director would have held after such
adjustment if the Non-Employee Director had exercised the Option in full
immediately prior to the event requiring the adjustment, or, if applicable, the
record date for determining stockholders to be affected by such adjustment; and
(b) the number and class of shares then reserved for issuance under this
Agreement (or in the case of a dividend of, or reclassification into, other
equity securities, such other securities) shall be adjusted by substituting for
the total number and class of shares of stock then received, the number and
class or classes of shares of stock (or in the case of a dividend of, or
reclassification into, other equity securities, such other securities) that
would have been received by the owner of an equal number of outstanding shares
of Common Stock as a result of the event requiring the adjustment. Comparable
rights shall accrue to the Non- Employee Director in the event of successive
subdivisions, consolidations, capital adjustments, dividends or
reclassifications of the character described above.
If Weatherford shall distribute to all holders of its shares of Common
Stock (including any such distribution made to non-dissenting stockholders in
connection with a consolidation or merger in which Weatherford is the surviving
corporation and in which holders of shares of Common Stock continue to hold
shares of Common Stock after such merger or consolidation) evidences of
indebtedness or cash or other assets (other than cash dividends payable out of
consolidated retained earnings not in excess of, in any one year period, the
greater of (a) in an amount per share of Common Stock equal to $1.00 per share
of Common Stock (as the same may be adjusted from time to time by the Board of
Directors of Weatherford to reflect the effect of changes in capitalization) and
(b) two times the aggregate amount of dividends per share paid during the
preceding calendar year and dividends or distributions payable in shares of
Common Stock or other equity securities of Weatherford described in the
immediately preceding paragraph, but including stock or other securities of any
corporation or other entity owned by Weatherford), then in each case the Option
Price shall be adjusted by reducing the Option Price in effect immediately prior
to the record date for the determination of stockholders entitled to receive
such distribution by the fair market value, as determined in good faith by the
Board of Directors of Weatherford (whose determination shall be described in a
statement filed in Weatherford's corporate records and be available for
inspection by any holder of the Option) of the portion of the evidence of
indebtedness or cash or other assets so to be distributed applicable to one
share of Common Stock; provided that in no event shall the Option Price be less
than the par value of a share of Common Stock. In the event such adjustment
would result in the Option Price being less than the par value of a share of
Common Stock but for the foregoing proviso, the terms of the Option shall be
appropriately adjusted so as to maintain the economic value of the Option,
including through an adjustment to the number of shares of Common Stock subject
to the Option and through a provision allowing the Non-Employee Director to
receive the evidence of indebtedness or cash or other assets so to be
distributed applicable to one share of Common Stock for each share of Common
Stock that may be purchased on the exercise of the Option. Such adjustment shall
be made whenever any such distribution is made, and shall become effective on
the date of the distribution retroactive to the record date for the
determination of the stockholders entitled to receive such distribution. In
addition, in the event Weatherford distributes shares or other securities of a
subsidiary corporation or other entity to the holders of the Common
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Stock, the Board of Directors may, in lieu of the adjustment provided above,
make provision allowing the Non-Employee Director to receive the shares or
securities of the corporation or entity that are subject to the distribution.
Comparable adjustments shall be made in the event of successive distributions of
the character described above.
If Weatherford shall make a tender offer for, or grant to all of its
holders of its shares of Common Stock the right to require Weatherford or any
subsidiary of Weatherford to acquire from such stockholders shares of, Common
Stock, at a price in excess of the Fair Market Value (a "Put Right") or
Weatherford shall grant to all of its holders of its shares of Common Stock the
right to acquire shares of Common Stock for less than the Fair Market Value (a
"Purchase Right") then, in the case of a Put Right, the Option Price shall be
adjusted by multiplying the Option Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such Put
Right by a fraction, the numerator of which shall be the number of shares of
Common Stock then outstanding minus the number of shares of Common Stock that
could be purchased at the Fair Market Value for the aggregate amount that would
be paid if all Put Rights are exercised and the denominator of which is the
number of shares of Common Stock that would be outstanding if all Put Rights are
exercised; and, in the case of a Purchase Right, the Option Price shall be
adjusted by multiplying the Option Price in effect immediately prior to the
record date for the determination of the stockholders entitled to receive such
Purchase Right by a fraction, the numerator of which shall be the number of
shares of Common Stock then outstanding plus the number of shares of Common
Stock that could be purchased at the Fair Market Value for the aggregate amount
which would be paid if all Purchase Rights are exercised and the denominator of
which is the number of shares of Common Stock that would be outstanding if all
Purchase Rights are exercised. In addition, the number of shares subject to the
Option shall be increased by multiplying the number of shares then subject to
the Option by a fraction which is the inverse of the fraction used to adjust the
Option Price. Notwithstanding the foregoing, if any such Put Rights or Purchase
Rights shall terminate without being exercised, the Option Price and number of
shares subject to the Option shall be appropriately readjusted to reflect the
Option Price and number of shares subject to the Option that would have been in
effect if such unexercised Rights had never existed. Comparable adjustments
shall be made in the event of successive transactions of the character described
above.
In the event of a merger of one or more corporations or entities with
or into Weatherford in which Weatherford is not the sole survivor or there is an
exchange, conversion or modification to the ownership of the then outstanding
shares of Common Stock of Weatherford, a consolidation of Weatherford and any
one or more corporations or entities, a statutory share or interest exchange in
which all of the Common Stock is acquired or any other similar business
combination with respect to Weatherford in which the Common Stock is acquired by
a third party, the Non-Employee Director, at no additional cost, shall be
entitled to receive, upon any exercise of the Option, in lieu of the number of
shares as to which the Option shall then represent the right to purchase, the
number and class of shares of stock or other securities, assets or other
property, including cash, to which the Non-Employee Director would have been
entitled to receive or continue to hold pursuant to the terms of the agreement
of merger, consolidation, share or interest exchange or other similar
transaction if at the time of such merger, consolidation, share or interest
exchange the Non-Employee Director had been a holder of a number of shares of
Common Stock equal to the number of shares as to which the Option shall then
represent the right to purchase. Comparable rights shall accrue to
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the Non-Employee Director in the event of successive mergers, consolidations,
share or interest exchanges or other transactions of the character described
above.
If a corporate transaction described in Section 424(a) of the Code
which involves Weatherford is to take place and there is to be no surviving
corporation while the Option remains in whole or in part unexercised, it shall
be cancelled by the Board of Directors of Weatherford as of the effective date
of any such corporate transaction but before the date the Non-Employee Director
shall be provided with a notice of such cancellation and the Non-Employee
Director shall have the right to exercise the Option in full (without regard to
any limitations on exercise set forth in or imposed by this Agreement) to the
extent it is then still unexercised during a 30-day period preceding the
effective date of such corporate transaction.
For purposes of this Section 2, Fair Market Value per share of Common
Stock shall mean the closing price of a share of Common Stock as reported by the
principal national securities exchange on which the Common Stock is then listed
if the Common Stock is then listed on a national securities exchange, or the
average bid and asked prices of a share of Common Stock as reported in the
NASDAQ listing if the Common Stock is not then listed on a national securities
exchange, on the trading day immediately preceding the first trading day on
which, as a result of the establishment of a record date or otherwise, the
trading price reflects that an acquiror of Common Stock in the public market
will not participate in or receive the payment of any applicable dividend or
distribution.
Except as hereinbefore expressly provided, the issue by Weatherford of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of Weatherford convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock then
subject to the Option.
3. Exercise of Options. The Option may be exercised from time to time
as to the total number of shares that may then be issuable upon the exercise
thereof or any portion thereof in the manner and subject to the limitations
provided for in Section 1 hereof.
4. Assignment. The Option may not be transferred or assigned in any
manner by the Non-Employee Director.
5. Requirement of Law.
(a) In the event the shares issuable on exercise of the Option are not
registered under the Securities Act of 1933, Weatherford may imprint on the
certificate for such shares the following legend or any other legend which
counsel for Weatherford considers necessary or advisable to comply with
Securities Act of 1933:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any state and may not be sold or transferred except upon such
registration or upon receipt by the Corporation of an
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opinion of counsel satisfactory to the Corporation, in form and
substance satisfactory to the Corporation, that registration is not
required for such sale or transfer.
Weatherford may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act of 1933. Weatherford
shall not be obligated to take any other affirmative action in order to cause
the exercise of the Option or the issuance of shares of Common Stock pursuant
thereto to comply with any law or regulation of any governmental authority.
(b) Weatherford shall reserve or acquire such number of shares of
Common Stock as may be necessary from time to time to allow the Option to be
exercised.
6. Termination. The Option, to the extent it shall not previously have
been exercised, shall terminate as follows:
(a) If the Non-Employee Director ceases to serve on the Board of
Directors of Weatherford prior to three years from the date hereof, for any
reason, with or without cause, other than for death, retirement under the then
established rules of the Board of Directors, or for disability, the Option shall
terminate and be immediately forfeited, and not be exercisable. If the
Non-Employee Director ceases to serve on the Board of Directors of Weatherford
after three years from the date hereof, the Option shall continue in effect
until September 8, 2011.
(b) If the Non-Employee Director dies prior to three years from the
date hereof, the Option shall be immediately exercisable and continue in effect
until 10 years following the date of his death. If the Non-Employee Director
dies on or after three years from the date hereof, the Option shall continue in
effect until September 8, 2011. After the death of the Non-Employee Director,
his executors, administrators or any persons to whom his Option may be
transferred by will or by the laws of descent and distribution shall have the
right, at any time prior to the Option's expiration to exercise it.
(c) If the Non-Employee Director shall retire from the Board of
Directors of Weatherford under the then established rules of the Board of
Directors of Weatherford, prior to three years from the date hereof, the
Non-Employee Director shall only be entitled to exercise the Option for a number
of shares determined by multiplying the number of shares subject to the Option
by a fraction, the numerator of which is the total whole years of service of the
Non-Employee Director as a director of Weatherford from the date hereof and the
denominator of which is three. With respect to the portion of the Option that
may be so exercised it shall be exercisable until 10 years following the date of
the Non-Employee Director's retirement. If the Non-Employee Director shall
retire from the Board of Directors of Weatherford on or after three years from
the date hereof, the Option shall continue until September 8, 2011.
(d) If the Non-Employee Director shall cease to be a director of
Weatherford due to disability prior to three years from the date hereof, the
Option shall be immediately exercisable and continue in effect until 10 years
following the date the Non-Employee Director ceases to be a director of
Weatherford due to disability. If the Non-Employee Director shall cease to be a
director of Weatherford due to disability on or after three years from the date
hereof, the Option shall continue in effect until September 8, 2011.
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7. Amendment. This Agreement may not be changed, amended or modified
except by an agreement in writing signed on behalf of each of the parties
hereto.
8. No Rights as a Stockholder. The Non-Employee Director shall not have
any rights as a stockholder with respect to any shares of Common Stock issuable
upon the exercise of the Option until the date of issuance of the stock
certificate or certificates representing such shares following the Non-Employee
Director's exercise of the Option pursuant to its terms and conditions and
payment for such shares. Except as otherwise provided in this Agreement, no
adjustment shall be made for dividends or other distributions made with respect
to the Common Stock the record date for the payment of which is prior to the
date of issuance of the stock certificate or certificates representing such
shares following the Non-Employee Director's exercise of the Option.
9. Governing Law. The validity, construction and performance of this
Agreement shall be governed by the laws of the State of Delaware. Any invalidity
of any provision of this Agreement shall not affect the validity of any other
provision.
10. Notices. All notices, demands, requests or other communications
hereunder shall be in writing and shall be deemed to have been duly made or
given if mailed by registered or certified mail, return receipt requested. Any
such notice mailed to Weatherford shall be addressed to its principal executive
office at 515 Post Oak Blvd., Suite 600, Houston, Texas 77027, and any notice
mailed to the Non-Employee Director shall be addressed to the Non-Employees
Director's residence address as it appears on the books and records of
Weatherford or to such other address as either party may hereafter designate in
writing to the other.
11. No Rights to Continue as Director. The granting of the Option by
Weatherford to the Non-Employee Director shall not impose upon Weatherford any
obligation to retain the Non- Employee Director on the Board of Directors of the
Weatherford.
12. Binding Effect. This Agreement shall, except as otherwise provided
to the contrary in this Agreement, inure to the benefit of and bind the
successors and assigns of Weatherford. This Agreement shall, except as otherwise
provided to the contrary in this Agreement, inure to the benefit of and bind the
heirs, executors, administrators, legal representatives and assigns of the Non-
Employee Director.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
as of the day and year first above mentioned.
WEATHERFORD INTERNATIONAL, INC.
By:
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Name:
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Title:
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Non-Employee Director
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