-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JjEAHD7c+ugtanhtQK2kxWt3l3K4KWde+Cgn+jXtlwdlp+Ki/QrnOeJOCzRU5xUP qMhYA213nKytB7d5RkQ1EA== 0000912057-95-008325.txt : 19951006 0000912057-95-008325.hdr.sgml : 19951006 ACCESSION NUMBER: 0000912057-95-008325 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19951005 EFFECTIVENESS DATE: 19951024 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEATHERFORD ENTERRA INC CENTRAL INDEX KEY: 0000029302 STANDARD INDUSTRIAL CLASSIFICATION: OIL & GAS FILED MACHINERY & EQUIPMENT [3533] IRS NUMBER: 741681642 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 033-63215 FILM NUMBER: 95578840 BUSINESS ADDRESS: STREET 1: 1360 POST OAK BLVD STE 1000 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7134399400 MAIL ADDRESS: STREET 1: 1360 POST OAK BLVD STE 1000 CITY: HOUSTON STATE: TX ZIP: 77056 FORMER COMPANY: FORMER CONFORMED NAME: WEATHERFORD INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DIXEL INDUSTRIES INC DATE OF NAME CHANGE: 19750618 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on October 5, 1995 Registration No. 33-__________ - ----------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- FORM S-8 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 -------------- WEATHERFORD ENTERRA, INC. (Exact name of issuer as specified in its charter) Delaware 74-1681642 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1360 Post Oak Boulevard, Suite 1000, Houston, Texas 77056-3098 (Address of Principal Executive Offices) (Zip Code) Weatherford Enterra, Inc. 1991 Stock Option Plan Weatherford Enterra, Inc. Restricted Stock Incentive Plan D. Dale Wood Stock Option Agreement Enterra Corporation Severance Agreements/Weatherford International Incorporated Change of Control Agreements - ------------------------------------------------------------------------------ (Full title of the plans) H. SUZANNE THOMAS Sr. Vice President, Secretary and General Counsel Weatherford Enterra, Inc. 1360 Post Oak Boulevard, Suite 1000 Houston, Texas 77056-3098 (Name and address of agent for service) (713) 439-9400 (Telephone number, including area code, of agent for service) -------------- Copies to: FULBRIGHT & JAWORSKI L.L.P. ATTN: CHARLES L. STRAUSS 1301 MCKINNEY, SUITE 5100 HOUSTON, TEXAS 77010-3095 CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------------- AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION TO BE REGISTERED REGISTERED PER SHARE PRICE FEE - -------------------------------------------------------------------------------------- Common Stock, 1,959,500 $.10 par value shares (1) $12.94 $25,355,930(2) $8,743.43(2) - --------------------------------------------------------------------------------------
(1) There are also registered hereby such indeterminate number of shares of Common Stock as may become issuable by reason of the anti-dilution provisions of the Weatherford Enterra, Inc. 1991 Stock Option Plan; Weatherford Enterra, Inc. Restricted Stock Incentive Plan; D. Dale Wood Stock Option Agreement; and Enterra Corporation Severance Agreements/Weatherford International Incorporated Change of Control Agreements. (2) Pursuant to Rule 457(h), the maximum aggregate offering price is estimated, solely for the purpose of determining the registration fee, on the basis of the average of the high and low prices of the Common Stock as reported on the New York Stock Exchange on October 3, 1995. ============================================================================== PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents, which have been filed by Weatherford Enterra, Inc., a Delaware corporation (the "Company"), with the Securities and Exchange Commission (the "Commission"), are incorporated by reference into this Registration Statement: 1. Annual Report on Form 10-K of the Company for the year ended December 31, 1994, filed by the Company under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 2. Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 1995. 3. Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 1995. 4. Current Report on Form 8-K of the Company filed with the Commission on July 8, 1995. Any document filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Registration Statement and prior to the filing of a post- effective amendment hereto which indicates that all securities offered have been sold or which deregisters all such securities then remaining unsold, shall be deemed to be incorporated herein by reference and to be a part hereof from the date of filing of such document. ITEM 4. DESCRIPTION OF SECURITIES. The Company is authorized by its Restated Certificate of Incorporation (the "Certificate") to issue 80,000,000 shares of Common Stock, $.10 par value, of which 27,182,892 shares were legally issued and outstanding on September 30, 1995 and 1,000,000 shares of Serial Preferred Stock, $1.00 par value, of which no shares were issued and outstanding on September 30, 1995. The Company held 32,104 shares of Common Stock in its treasury as of such date. On October 5, 1995, the Company issued approximately 24,000,000 shares of Common Stock in conjunction with the merger of Enterra Corporation into Weatherford International Incorporated, the predecessor of the Company. Also on October 5, 1995, the Company effected a one- for-two reverse stock split of shares of Common Stock. All of the share numbers stated in this paragraph reflect such reverse stock split. The Board of Directors of the Company is authorized by the Certificate to provide for the issuance of one or more series of Serial Preferred Stock. The Board of Directors has the power to fix various terms with respect to each such series, including voting powers, designations, preferences, II-1 dividend rates, conversion and exchange provisions, redemption provisions and the amounts which holders are entitled to receive upon any liquidation, dissolution or winding up of the Company. All outstanding shares of Common Stock are fully paid and nonassessable. The holders of Common Stock are entitled to one vote for each share on all matters voted on by stockholders, including the election of directors, and are not permitted to cumulate their votes for the election of directors. The holders of Common Stock have no preemptive rights to subscribe for or purchase any additional securities issued by the Company. Subject to the preferential rights of the holders of the Serial Preferred Stock, if any is outstanding, the holders of Common Stock are entitled to receive any dividends which may be declared by the Board of Directors out of funds legally available therefor and to share pro rata in the net assets of the Company upon liquidation. However, dividends have not been paid on the Common Stock since December 1982, and the Company does not anticipate paying dividends on the Common Stock at any time in the foreseeable future. Certain provisions of the Certificate and By-Laws of the Company could have the effect of preventing a change in control of the Company in certain situations. These provisions generally provide for (a) the classification of the Board of Directors of the Company into three classes having staggered terms of three years each; (b) the removal of directors only for cause and with the approval of holders of at least 80% of the then outstanding voting stock entitled to vote for the election of directors; (c) the filling of any vacancy on the Board of Directors by the remaining directors then in office; (d) the limitation of the number of directors to a minimum of six and a maximum of fifteen, with the exact number to be determined by the Board of Directors; (e) the elimination of the stockholder written consent procedure; (f) the calling of special meetings of stockholders only by the Board of Directors; (g) the requirement that certain business combinations involving the Company and any beneficial owner of 20% or more of the outstanding voting securities of the Company be approved by holders of at least 80% of the then outstanding shares of voting stock of the Company, including those held by such beneficial owner, unless the business combination is approved by the continuing directors then in office or certain minimum price requirements are met; and (h) the increased stockholder vote required to amend, repeal or adopt any provision inconsistent with the foregoing provisions to 80% or more of the then outstanding shares of voting stock. The transfer agent and registrar for the Common Stock is American Stock Transfer and Trust Company. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. The legality of the issuance of the shares of Common Stock offered hereby has been passed upon for the Company by H. Suzanne Thomas, Sr. Vice President, Secretary and General Counsel of the Company. Ms. Thomas is a participant in the Weatherford Enterra, Inc. 1991 Stock Option Plan and the Weatherford Enterra, Inc. Restricted Stock Incentive Plan and has a Weatherford International Incorporated Change of Control Agreement. As of the date hereof, Ms. Thomas owned beneficially 37,221 shares of Common Stock and held options to purchase an additional 28,000 shares of Common Stock (such numbers reflect the one-for-two reverse stock split effected by the Company on October 5, 1995). II-2 ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Certificate contains a provision that eliminates the personal monetary liability of a director to the Company and its stockholders for breach of his fiduciary duty of care as a director to the extent currently allowed under the Delaware General Corporation Law ("DGCL"). If a director were to breach the duty of care in performing his duties as a director, neither the Company nor its stockholders could recover monetary damages from the director, and the only course of action available to the Company's stockholders would be equitable remedies, such as an action to enjoin or rescind a transaction involving a breach of the fiduciary duty of care. To the extent certain claims against directors are limited to equitable remedies, the provision in the Certificate may reduce the likelihood of derivative litigation and may discourage stockholders or management from initiating litigation against directors for breach of their duty of care. Additionally, equitable remedies may not be effective in many situations. If a stockholder's only remedy is to enjoin the completion of the Board of Directors' action, this remedy would be ineffective if the stockholder does not become aware of a transaction or event until after it has been completed. In such a situation, it is possible that the stockholders and the Company would have no effective remedy against the directors. The directors do not have liability for monetary damages for grossly negligent business decisions (in violation of their duty of care), including decisions made in connection with attempts to acquire the Company. Liability for monetary damages remains for (i) any breach of the duty of loyalty to the Company or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) payment of an improper dividend or improper repurchase of the Company's stock under Section 174 of the DGCL or (iv) any transaction from which the director derived an improper personal benefit. The Certificate further provides that in the event the DGCL is amended to allow the further elimination or limitation of the liability of directors, then the liability of the Company's directors shall be limited to the fullest extent permitted by the amended DGCL. The DGCL permits a corporation to indemnify certain persons, including officers and directors, who were or are (or are threatened to be made) parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in right of the corporation) by reason of their being officers or directors of the corporation. The indemnity may include expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him, provided the officer or director acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests and, in the case of criminal proceedings, provided he had no reasonable cause to believe that his conduct was unlawful. The By-Laws of the Company provide indemnification to the fullest extent allowed pursuant to the foregoing provisions of the DGCL. The DGCL further permits a corporation to indemnify certain persons, including officers and directors, who were or are (or are threatened to be made) parties to any threatened, pending or completed action, suit or proceeding by or in the right of the corporation to procure a judgment in its favor by reason of their status officers as or directors of the corporation. The indemnity may include expenses (including attorneys' fees) actually and reasonably incurred by him, provided the officer or director acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation's best interests. However, no such person will be indemnified as to matters for which he is found to be liable for negligence or misconduct in the performance of his duties to the II-3 corporation unless, and only to the extent that, indemnification is ordered by a court. The By-Laws of the Company provide indemnification to the fullest extent allowed pursuant to the foregoing provisions of the DGCL. The Company also has entered, or will enter, into an indemnification agreement with each of its directors and certain of its officers. Each such indemnification agreement provides for indemnification to the fullest extent permitted by the DGCL and for the advancement of expenses, including attorneys' fees and other costs, expenses and obligations, paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal) any threatened, pending or completed action, suit or proceeding related to the fact that such director was serving for or at the request of the Company. To the extent that the Board of Directors or the stockholders of the Company may in the future wish to limit or repeal the ability of the Company to indemnify or advance expenses to officers and directors, such repeal or limitation may not be effective as to officers and directors who are parties to an indemnification agreement, since their rights to full protection are contractually assured by the indemnification agreement. Delaware corporations also are authorized to obtain insurance to protect officers and directors from certain liabilities, including liabilities against which the corporation cannot indemnify its directors and officers. The Company currently has in effect a directors' and officers' liability insurance policy providing aggregate coverage in the amount of $10,000,000. All of the foregoing indemnification provisions provide that such provisions are not to be deemed exclusive of any other right to indemnity to which a director or officer may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"), may be permitted to directors, officers or persons controlling the Company pursuant to the foregoing provisions, or otherwise, the Company has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. The following is a list of all Exhibits filed with this Registration Statement: EXHIBIT NO. *4.1-- Restated Certificate of Incorporation of the Company, as amended through October 5, 1995. II-4 4.2-- By-Laws of the Company, as amended through March 17, 1994 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated April 28, 1994 (File No. 1-7867)). *4.3-- Weatherford Enterra, Inc. 1991 Stock Option Plan, as amended through October 5, 1995. *4.4-- Weatherford Enterra, Inc. Restricted Stock Incentive Plan, as amended through October 5, 1995. *4.5-- D. Dale Wood Stock Option Agreement dated October 5, 1995 between D. Dale Wood and the Company. *4.6-- Enterra Corporation Severance Agreement with M. Timothy Carey, C. Paul Evans, Brian Charles Goff, Steven C. Grant, Edward C. Grimes, Steven W. Krablin, Windell D. Norris, Jr., J. Joseph Percle, Michael Peter Smith, Michael L. Stansberry and D. Dale Wood. *4.7-- Amendment 1995-1 to Severance Agreement with M. Timothy Carey, C. Paul Evans, Brian Charles Goff, Steven C. Grant, Edward C. Grimes, Steven W. Krablin, Windell D. Norris, Jr., J. Joseph Percle, Michael Peter Smith, Michael L. Stansberry and D. Dale Wood. 4.8-- Weatherford International Incorporated Change of Control Agreements with Philip Burguieres, James R. Burke, M.E. Eagles, Norman W. Nolen and H. Suzanne Thomas (incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 1-7867)); James D. Green, Gay S. Mayeux, Jon Nicholson and Weldon W. Walker (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 1-7867)); and Philip D. Gardner, Robert A. Seekely and F. Thomas Tilton (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report Form 10-Q for the quarter ended March 31, 1995 (File No. 1-7867)). 4.9-- First Amendment to Change of Control Agreement with Philip Burguieres, James R. Burke, M.E. Eagles, Norman W. Nolen, H. Suzanne Thomas, James D. Green, Gay S. Mayeux, Jon Nicholson and Weldon W. Walker (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report Form on Form 10-Q for the quarter ended March 31, 1995 (File No. 1-7867)); and Philip D. Gardner, Robert A. Seekely and Frederick T. Tilton (incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-4 (Registration No. 33-62195)). 4.10-- Second Amendment to Change of Control Agreement with Philip Burguieres, James R. Burke, M.E. Eagles, Norman W. Nolen, H. Suzanne Thomas, James D. Green, Gay S. Mayeux, Jon Nicholson and Weldon W. Walker (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-4 (Registration No. 33-62195)). *5.1-- Opinion of H. Suzanne Thomas, General Counsel of the Company. II-5 *23.1-- Consent of Arthur Andersen LLP. *23.2-- Consent of H. Suzanne Thomas, General Counsel of the Company (contained in Exhibit 5.1 hereto). *24.1--Power of Attorney (contained on page II-9 hereof). __________ * Filed herewith. II-6 ITEM 9. UNDERTAKINGS. The undersigned hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; PROVIDED, HOWEVER, that paragraphs (i) and (ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Company pursuant to Section 13 or Section 15(d) of the Exchange Act, that are incorporated by reference in this Registration Statement. (2) That, for the purpose 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 herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post- effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Exchange Act, and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Exchange Act, that is incorporated by reference in the registration statement 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. Insofar as indemnification for liabilities arising under the Securities Act 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 Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, II-7 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 and will be governed by the final adjudication of such issue. II-8 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, Weatherford Enterra, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, State of Texas, on October 5, 1995. WEATHERFORD ENTERRA, INC. By: /s/ Philip Burguieres ----------------------------- Philip Burguieres Chairman, President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. POWER OF ATTORNEY Each person whose signature appears below appoints Philip Burguieres and H. Suzanne Thomas, and both of them, either of whom may act without the joinder of the other, as 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, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney- in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, 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 their substitute or substitutes may lawfully do or cause to be done by virtue hereof. SIGNATURE TITLE DATE --------- ----- ---- Chairman, President, /s/ Philip Burguieres Chief Executive October 5, 1995 - ------------------------ Officer and Director (Philip Burguieres) (Principal Executive Officer) Senior Vice President, Chief Financial /s/ Norman W. Nolen Officer and Treasurer October 5, 1995 - ------------------------ (Principal Financial and (Norman W. Nolen) Accounting Officer) II-9 SIGNATURE TITLE DATE --------- ----- ---- /s/ Thomas N. Amonett Director October 5, 1995 - ------------------------ (Thomas N. Amonett) Director - ------------------------ (William E. Greehey) /s/ John A. Hill Director October 5, 1995 - ------------------------ (John A. Hill) /s/ John W. Johnson Director October 5, 1995 - ------------------------ (John W. Johnson) /s/ William E. Macaulay Director October 5, 1995 - ------------------------ (William E. Macaulay) /s/ Robert K. Moses, Jr. Director October 5, 1995 - ------------------------ (Robert K. Moses, Jr.) /s/ Robert L. Parker, Sr. Director October 5, 1995 - ------------------------ (Robert L. Parker, Sr.) /s/ R. Rudolph Reinfrank Director October 5, 1995 - ------------------------ (R. Rudolph Reinfrank) /s/ Roger M. Widmann Director October 5, 1995 - ------------------------ (Roger M. Widmann) II-10 INDEX TO EXHIBITS EXHIBIT NO. DESCRIPTION - ------- -------------------------------------------------------- *4.1 -- Restated Certificate of Incorporation of the Company, as amended through October 5, 1995. 4.2 -- By-Laws of the Company, as amended through March 17, 1994 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated April 28, 1994 (File No. 1-7867)). *4.3 -- Weatherford Enterra, Inc. 1991 Stock Option Plan, as amended through October 5, 1995. *4.4 -- Weatherford Enterra, Inc. Restricted Stock Incentive Plan, as amended through October 5, 1995. *4.5 -- D. Dale Wood Stock Option Agreement dated October 5, 1995 between D. Dale Wood and the Company. *4.6 -- Enterra Corporation Severance Agreement with M. Timothy Carey, C. Paul Evans, Brian Charles Goff, Steven C. Grant, Edward C. Grimes, Steven W. Krablin, Windell D. Norris, Jr., J. Joseph Percle, Michael Peter Smith, Michael L. Stansberry and D. Dale Wood. *4.7 -- Amendment 1995-1 to Severance Agreement with M. Timothy Carey, C. Paul Evans, Brian Charles Goff, Steven C. Grant, Edward C. Grimes, Steven W. Krablin, Windell D. Norris, Jr., J. Joseph Percle, Michael Peter Smith, Michael L. Stansberry and D. Dale Wood. 4.8 -- Weatherford International Incorporated Change of Control Agreement with Philip Burguieres, James R. Burke, M.E. Eagles, Norman W. Nolen and H. Suzanne Thomas (incorporated by reference to Exhibit 10.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 1-7867)); James D. Green, Gay S. Mayeux, Jon Nicholson and Weldon W. Walker (incorporated by reference to Exhibit 10.4 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 1-7867)); and Philip D. Gardner, Robert A. Seekely and F. Thomas Tilton (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 (File No. 1-7867)). 4.9 -- First Amendment to Change of Control Agreement with Philip Burguieres, James R. Burke, M.E. Eagles, Norman W. Nolen, H. Suzanne Thomas, James D. Green, Gay S. Mayeux, Jon Nicholson and Weldon W. Walker (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995 (File No. 1-7867)); and Philip D. Gardner, Robert A. Seekely and Frederick T. Tilton (incorporated by reference to Exhibit 10.2 to the Company's Registration Statement on Form S-4 (Registration No. 33-62195)). 4.10-- Second Amendment to Change of Control Agreement with Philip Burguieres, James R. Burke, M.E. Eagles, Norman W. Nolen, H. Suzanne Thomas, James D. Green, Gay S. Mayeux, Jon Nicholson and Weldon W. Walker (incorporated by reference to Exhibit 10.1 to the Company's Registration Statement on Form S-4 (Registration No. 33-62195)). *5.1 -- Opinion of H. Suzanne Thomas, General Counsel of the Company. *23.1 -- Consent of Arthur Andersen, LLP. *23.2 -- Consent of H. Suzanne Thomas, General Counsel of the Company (contained in Exhibit 5.1 hereto). *24.1 -- Power of Attorney (contained on page II-9). EX-4.1 2 EXHIBIT 4.1 (15PGS) RESTATED CERTIFICATE OF INCORPORATION OF WEATHERFORD ENTERRA, INC. (Originally incorporated on December 14, 1970 under the name Dixel Industries, Inc.) FIRST: The name of the Corporation is Weatherford Enterra, Inc. SECOND: The registered office of the Corporation in the State of Delaware is located at 32 Loockerman Square, Suite L-100 in the City of Dover, County of Kent. The name and address of its registered agent is The Prentice-Hall Corporation System, Inc., 32 Loockerman Square, Suite L-100, Dover, Delaware. THIRD: The nature of the business, objects and purposes to be transacted, promoted or carried on by the Corporation are: To manufacture, purchase or otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and with goods, wares and merchandise and personal property of every class and description; To acquire, and pay for in cash, stock or bonds of this Corporation or otherwise, the goodwill, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, partnership, trust, joint stock company, syndicate, firm, association or corporation; To acquire, hold, use, sell, assign, lease, grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademarks and trade names, relating to or useful in connection with any business of this Corporation; To acquire by purchase, subscription or otherwise, and to receive, hold, own, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust certificates in respect of the shares of capital stock, scrip, warrants, rights, bonds, debentures, notes, trust receipts and other securities, obligations, chosen in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, trusts or persons, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof; To borrow or raise moneys for any of the purposes of the Corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures and other negotiable or non-negotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the Corporation, whether at the time owned or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds or other obligations of the Corporation for its corporate purposes; To purchase, receive, take by grant, gift, devise, bequest or otherwise, lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with, real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the Corporation's property and assets, or any interest therein, wherever situated; and To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this Restated Certificate of Incorporation, but the business and purposes specified in each of the foregoing clauses of this article shall be regarded as independent business and purposes. FOURTH: The total number of shares of stock of all classes which the Corporation shall have authority to issue is 81,000,000, of which 1,000,000 shares of the par value of $1 each shall be designated Serial Preferred Stock (the "Serial Preferred Stock"), and of which 80,000,000 shares of the par value of $.10 each shall be designated Common Stock (the "Common Stock"). A statement of all powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of the Serial Preferred Stock and the Common Stock is as follows: A. REVERSE STOCK SPLIT Effective as of 12:15 p.m. on October 5, 1995 (the "Effective Time"), each two shares of Common Stock issued and outstanding immediately prior to the Effective Time shall automatically be changed and converted, without any action on the part of the holder thereof, into one share of Common Stock and, in lieu of interests in a fraction of a share of Common Stock, each holder whose aggregate holdings of Common Stock prior to the Effective Time amounted to a number of shares not evenly divisible by two shall be entitled to receive for such interest in a fraction of a share of Common Stock, and at the Effective Time such interest in a fraction of a share of Common Stock shall be converted into the right to receive, upon the surrender of the stock certificates formerly representing shares of Common Stock, an amount in cash equal to $12.88 for such interest in a fraction of a share of Common Stock. -2- B. SERIAL PREFERRED STOCK (1) Shares of Serial Preferred Stock may be issued from time to time in one or more series, each such series to have distinctive serial designations, as shall hereafter be determined in the resolution or resolutions providing for the issue of such Preferred Stock from time to time adopted by the Board of Directors pursuant to authority so to do, which is hereby vested in the Board of Directors. (2) Each series of Preferred Stock (a) may have such number of shares; (b) may have such voting powers, full or limited, or may be without voting powers; (c) may be subject to redemption at such time and at such prices; (d) may be entitled to receive dividends (which may be cumulative or noncumulative), at such rate or rates, on such conditions, from such date or dates, and at such times, and payable in preference to, or in such relation to, the dividends payable on any other class or classes or series of stock; (e) may have such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; (f) may be made convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation at such price or prices or at such rates of exchange, and with such adjustments; (g) may be entitled to the benefit of a sinking fund or purchase fund to be applied to the purchase or redemption of shares of such series in such amount or amounts; (h) may be entitled to the benefit of conditions and restrictions upon the creation of indebtedness of the Corporation or any subsidiary, upon the issue of any additional stock (including additional shares of such series or of any other series) and upon the payment of dividends or the making of other distributions on and the purchase, redemption or other acquisition by the Corporation or any subsidiary of any outstanding stock of the Corporation; and (i) may have such other relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof; -3- as shall be stated in said resolution or resolutions providing for the issue of such Serial Preferred Stock. Except where otherwise set forth in the resolution or resolutions adopted by the Board of Directors providing for the issue of any series of Serial 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. (3) Shares of any series of Serial 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 Serial 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 Serial 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 issue of any series of Serial Preferred Stock and to any filing required by law. C. COMMON STOCK (1) Except as otherwise provided by law or by the resolution or resolutions of the Board of Directors providing for the issue of any series of the Serial Preferred Stock, the Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, each holder of the Common Stock being entitled to one vote for each share held. (2) Subject to all of the rights of the Serial Preferred Stock or any series thereof, the holders of the Common Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available therefor, dividends payable in cash, stock or otherwise. (3) Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, and after the holders of the Serial Preferred Stock of each series shall have been paid in full the amounts to which they respectively shall be entitled, or a sum sufficient for such payments in full shall have been set aside, the remaining net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock in accordance with their respective rights and interests, to the exclusion of the holders of the Serial Preferred Stock. D. GENERAL PROVISIONS (1) Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting -4- of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders. Special meetings of stockholders of the Corporation may be called only by the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors, upon not less than thirty nor more than sixty days written notice. Notwithstanding anything contained in this Restated Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the Corporation entitled to vote for the election of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this paragraph (1), Section D of Article FOURTH. (2) No stockholder shall be entitled as a matter of right to subscribe for or receive additional shares of any class of stock of the Corporation, whether now or hereafter authorized, or any bonds, debentures or other securities convertible into stock, but such additional shares of stock or other securities convertible into stock may be issued or disposed of by the Board of Directors to such persons on such terms as, in its discretion, it shall deem advisable. FIFTH: The Corporation is to have perpetual existence. SIXTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized: (1) To make, alter or repeal the by-laws of the Corporation, in the manner and subject to any limitations contained in such by-laws, to the extent such action is not inconsistent with the provisions of this Restated Certificate of Incorporation. (2) To authorize and cause to be executed mortgages and liens upon the real and personal property of the Corporation. (3) 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. (4) By a majority of the whole Board of Directors, to designate one or more committees, each committee to consist of two or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution or in the by-laws of the Corporation, shall have and may exercise the powers 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; provided, however, the by-laws may provide that in the absence or disqualification of any member of such -5- committee or committees the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. (5) When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholders meeting duly called upon such notice as is required by statute, this Restated Certificate of Incorporation or the by-laws of the Corporation, to sell, lease or exchange all or substantially all the property and assets of the Corporation, including its goodwill 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 securities of any other corporation or corporations, as the Board of Directors shall deem expedient and for the best interests of the Corporation; provided, however, that to the extent any such sale, lease or exchange would constitute a "Business Combination" as defined in Article ELEVENTH of this Restated Certificate of Incorporation, the provisions of such Article ELEVENTH shall control and no such sale, lease or exchange shall be made except upon compliance with and pursuant to the applicable terms and provisions of such Article ELEVENTH. SEVENTH: 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 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. EIGHTH: 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 -6- or in the by-laws of the Corporation. Elections of directors need not be by written ballot unless the by-laws of the Corporation shall so provide. NINTH: 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; provided, however, that to the extent that any provision of this Restated Certificate of Incorporation requires for approval of any such amendment, alteration, change or repeal the approving vote of a greater percentage of the capital stock of the Corporation having voting power with respect to such action than the percentage required by statute, then such provision shall be controlling and no such action shall be taken except upon a vote meeting the greater percentage requirements of such provision. TENTH: Board of Directors. A. NUMBER, ELECTION AND TERMS. The business and affairs of the Corporation shall be managed by a Board of Directors consisting of not less than six nor more than fifteen persons. The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors. At the 1983 annual meeting of stockholders, the directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1984 annual meeting of stockholders, the term of office of the second class to expire at the 1985 annual meeting of stockholders and the term of office of the third class to expire at the 1986 annual meeting of stockholders. At each annual meeting of stockholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. B. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Subject to the rights of the holders of any series of Serial Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of the class to which they have been elected expires. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. C. REMOVAL. Subject to the rights of the holders of any series of Serial Preferred Stock then outstanding, any director or the entire Board of Directors, may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the Corporation entitled to vote for the election of directors. -7- D. AMENDMENT, REPEAL, ETC. Notwithstanding anything contained in this Restated Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all the shares of the Corporation entitled to vote for the election of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this Article TENTH. E. LIMITATION OF LIABILITY. A director of the Corporation shall not 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 Delaware General Corporation Law, as the same exists or hereafter may be amended, or (iv) for any transaction from which the director derived an improper personal benefit. This section shall not eliminate or limit the liability of a director for any act or omission occurring prior to the effective date of the amendment adding this section to the Company's Restated Certificate of Incorporation. Any repeal or modification of this section by the stockholders of the Company shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. If the Delaware General Corporation Law hereafter is amended to authorize the further elimination or limitation of the personal liability of directors, then the liability of each director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Delaware General Corporation Law. ELEVENTH: Vote Required for Certain Business Combinations. A. HIGHER VOTE REQUIRED FOR APPROVAL OF CERTAIN BUSINESS COMBINATIONS. (1) HIGHER VOTE FOR CERTAIN BUSINESS COMBINATIONS. In addition to any affirmative vote required by law or this Restated Certificate of Incorporation, and except as otherwise expressly provided in paragraph B of this Article ELEVENTH: (a) any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (i) any Interested Stockholder (as hereinafter defined) or (ii) any other corporation (whether or not itself an Interested Stockholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Stockholder; or (b) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Stockholder or any Affiliate of any Interested Stockholder of any assets of the Corporation or any Subsidiary having an aggregate Fair Market Value (as hereinafter defined) of $1,000,000 or more; or -8- (c) the issuance or transfer by the Corporation or any Subsidiary (in one transaction or a series of transactions) of any securities of the Corporation or any Subsidiary to any Interested Stockholder or any Affiliate of any Interested Stockholder in exchange for cash, securities or other property (or a combination thereof) having an aggregate Fair Market Value of $1,000,000 or more; or (d) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation proposed by or on behalf of an Interested Stockholder or any Affiliate of any Interested Stockholder; or (e) any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Stockholder) which has the effect, directly or indirectly, of increasing the proportionate share of the outstanding shares of any class of equity or convertible securities of the Corporation or any Subsidiary which is directly or indirectly owned by any Interested Stockholder or any Affiliate of any Interested Stockholder; shall require the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors (the "Voting Stock"), voting together as a single class (it being understood that for purposes of this Article ELEVENTH, each share of the Voting Stock shall have the number of votes granted to it pursuant to Article FOURTH of this Restated Certificate of Incorporation, including any resolution of the Board of Directors providing for the designation of any series of the Serial Preferred Stock). Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percentage may be specified, by law or in any agreement with any national securities exchange or otherwise. (2) DEFINITION OF "BUSINESS COMBINATION." The term "Business Combination" as used in this Article ELEVENTH shall mean any transaction which is referred to in any one or more of clauses (a) though (e) of such paragraph (1) of this paragraph A. B. WHEN HIGHER VOTE IS NOT REQUIRED. The provisions of paragraph A of this Article ELEVENTH shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote as is required by law and any other provisions of this Restated Certificate of Incorporation, if all of the conditions specified in either of the following paragraphs (1) and (2) are met: -9- (1) APPROVAL BY CONTINUING DIRECTORS. The Business Combination shall have been approved by a majority of the Continuing Directors (as hereinafter defined.) (2) PRICE AND PROCEDURE REQUIREMENTS. All of the following conditions shall have been met: (a) The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the highest of the following: (i) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers fees) paid by the Interested Stockholder for any shares of Common Stock acquired by it (A) within the two-year period immediately prior to the first public announcement of the proposal of the Business Combination (the "Announcement Date") or (B) in the transaction in which it became an Interested Stockholder, whichever is higher; (ii) the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (such latter date is referred to in this Article ELEVENTH as the "Determination Date"), whichever is higher; and (iii) (if applicable) the price per share equal to the Fair Market Value per share of Common Stock determined pursuant to subparagraph B(2)(a)(ii) above, multiplied by the ratio of (A) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers fees) paid by the Interested Stockholder for any shares of Common Stock acquired by it within the two-year period immediately prior to the Announcement Date to (B) the Fair Market Value per share of Common Stock on the first day in such two-year period upon which the Interested Stockholder acquired any shares of Common Stock. (b) The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of shares of any other class of outstanding Voting Stock (other than Institutional Voting Stock, as hereinafter defined) shall be at least equal to the highest of the following (it being intended that the requirements of this subparagraph (B)(2)(b) shall be required to be met with respect to every class of outstanding Voting Stock -10- (other than Institutional Voting Stock)), whether or not the Interested Stockholder has previously acquired any shares of a particular class of Voting Stock: (i) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it (A) within the two-year period immediately prior to the Announcement Date or (B) in the transaction in which it became an Interested Stockholder, whichever is higher; (ii) (if applicable) the highest preferential amount per share to which the holders of shares of such class of Voting Stock are entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation; (iii) the Fair Market Value per share of such class of Voting Stock on the Announcement Date or on the Determination Date, whichever is higher; and (iv) (if applicable) the price per share equal to the Fair Market Value per share of such class of Voting Stock determined pursuant to subparagraph B(2)(a)(iii) above, multiplied by the ratio of (A) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers fees) paid by the Interested Stockholder for any shares of such class of Voting Stock acquired by it within the two-year period immediately prior to the Announcement Date to (B) the Fair Market Value per share of such class of Voting Stock on the first day in such two-year period upon which the Interested Stockholder acquired any shares of such class of Voting Stock. (c) The consideration to be received by holders of a particular class of outstanding Voting Stock (including Common Stock) shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class of Voting Stock. If the Interested Stockholder has paid for shares of any class of Voting Stock with varying forms of consideration, the form of consideration for such class of Voting Stock shall be either cash or the form used to acquire the largest number of shares of such class of Voting Stock previously acquired by it. (d) After such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such Business Combination: (i) except as approved by a majority of the Continuing Directors, there shall have been no failure to declare -11- and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) on the outstanding Serial Preferred Stock; (ii) there shall have been (A) no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any subdivision of the Common Stock), except as approved by a majority of the Continuing Directors, and (B) any increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding shares of the Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Continuing Directors; and (iii) such Interested Stockholder shall not have become the beneficial owner of any additional shares of Voting Stock except as part of the transaction which results in such Interested Stockholder becoming an Interested Stockholder. (e) After such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Corporation, whether in anticipation of or in connection with such Business Combination or otherwise. (f) A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934 and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to public stockholders of the Corporation at least 30 days prior to the consummation of such Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). C. CERTAIN DEFINITIONS. For the purposes of this Article ELEVENTH: (1) A "person" shall mean any individual, firm, corporation or other entity. (2) "Interested Stockholder" shall mean any person (other than the Corporation or any Subsidiary) who or which: (a) is the beneficial owner, directly or indirectly, of more than 20% of the voting power of the outstanding Voting Stock; or (b) is an Affiliate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner, directly or indirectly, of 20% or more of the voting power of the then outstanding Voting Stock; or -12- (c) is an assignee of or has otherwise succeeded to any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Stockholder, if such assignment or succession shall have occurred in the course of a transaction or series of transactions not involving a public offering within the meaning of the Securities Act of 1933. (3) A person shall be a "beneficial owner" of any Voting Stock: (a) which such person or any of its Affiliates or Associates (as hereinafter defined) beneficially owns, directly or indirectly; or (b) which such person or any of its Affiliates or Associates has (i) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding; or (c) which are beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Voting Stock. (4) For purposes of subparagraph (2) of this paragraph C, the number of shares of Voting Stock deemed to be outstanding shall include shares deemed owned through application of subparagraph (3) of this paragraph C but shall not include any other shares of Voting Stock which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. (5) "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on May 27, 1983. (6) "Subsidiary" means any corporation of which a majority of any class of equity security is owned, directly or indirectly, by the Corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in subparagraph (2) of this paragraph C, the term "Subsidiary" shall mean only a corporation of which a majority of each class of equity security is owned, directly or indirectly, by the Corporation. (7) "Continuing Director" means any member of the Board of Directors of the Corporation (the "Board") who is unaffiliated with the Interested Stockholder and was a member of the Board prior to the time that the -13- Interested Stockholder became an Interested Stockholder, and any successor of a Continuing Director who is unaffiliated with the Interested Stockholder and is recommended to succeed a Continuing Director by a majority of Continuing Directors then on the Board. (8) "Fair Market Value" means: (a) in the case of stock, the highest closing sales price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange Listed Stocks, or, if such stock is not quoted on the Composite Tape for the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Securities Exchange Act of 1934 on which such stock is listed, or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by the Board of Directors in good faith; and (b) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined by the Board of Directors in good faith. (9) "Institutional Voting Stock" shall mean any class of Voting Stock which was issued to and continues to be held solely by one or more insurance companies, pension funds, commercial banks, savings banks or similar financial institutions or institutional investors. (10) In the event of any Business Combination in which the Corporation survives, the phrase "consideration other than cash" as used in subparagraphs (2)(a) and (b) of paragraph B of this Article ELEVENTH shall include the shares of Common Stock and/or the shares of any other class of outstanding Voting Stock retained by the holders of such shares. D. DETERMINATION BY DIRECTORS. Notwithstanding anything to the contrary in this Article ELEVENTH, the directors of the Corporation shall have the power to determine for the purposes of this Article ELEVENTH, on the basis of information known to them after reasonable inquiry, (1) whether a person is an Interested Stockholder, (2) the number of shares of Voting Stock beneficially owned by any person, (3) whether a person is an Affiliate or Associate of another, (4) whether a class of Voting Stock is Institutional Voting Stock, and (5) whether the assets which are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary in any Business Combination has, an aggregate Fair Market Value of $1,000,000 or more. -14- E. NO EFFECT ON FIDUCIARY OBLIGATIONS OF INTERESTED STOCKHOLDERS. Nothing contained in this Article ELEVENTH shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. F. AMENDMENT, REPEAL, ETC. Notwithstanding any other provisions of this Restated Certificate of Incorporation or the by-laws of the Corporation (and notwithstanding the fact that a lesser percentage may be specified by law, this Restated Certificate of Incorporation or the by-laws of the Corporation), the affirmative vote of the holders of 80% or more of the voting power of the shares of the then outstanding Voting Stock, voting together as a single class, shall be required to amend or repeal, or adopt any provisions inconsistent with, this Article ELEVENTH of this Restated Certificate of Incorporation. IN WITNESS WHEREOF, this Restated Certificate of Incorporation, which only restates and integrates and does not further amend the provisions of the Restated Certificate of Incorporation of this Corporation as heretofore amended or supplemented, there being no discrepancies between those provisions and the provisions of this Restated Certificate of Incorporation, and it having been duly adopted by the Corporation's Board of Directors in accordance with Section 245 of the Delaware General Corporation Law, has been executed by its duly authorized officer this 5th day of October, 1995. WEATHERFORD ENTERRA, INC. By /s/ H. Suzanne Thomas ----------------------------------------------- H. Suzanne Thomas Senior Vice President, Secretary and General Counsel -15- EX-4.3 3 EXHIBIT 4.3 WEATHERFORD ENTERRA, INC. 1991 STOCK OPTION PLAN AS AMENDED AND RESTATED THROUGH OCTOBER 5, 1995 1. PURPOSE. This 1991 Stock Option Plan (the "Plan") of Weatherford Enterra, Inc. (the "Company"), for executive officers and other key employees (who may be members of the Board of Directors) of the Company and of certain related corporations, and others providing services to the Company and such related corporations (an "Optionee"), is intended to advance the best interest of the Company and those related corporations by providing those persons who have a substantial responsibility for its management and growth with additional incentive and by increasing their proprietary interest in the success of the Company and those related corporations--thereby encouraging them to continue their employment or affiliation. 2. ADMINISTRATION. The Plan shall be administered by a committee to be appointed by the Board of Directors of the Company (hereinafter called the "Committee"); and all questions of interpretation and application of the Plan, or of options granted hereunder (hereinafter called the "Options") shall be subject to the determination, which shall be final and binding, of the Committee. The Committee shall consist of not less than three members of the Board of Directors, all of whom shall be "disinterested persons". A "disinterested person" is a person who at the time he exercises discretion with respect to the grant of any Option is not, and for at least one year prior to that time has not been, eligible to receive options under the Plan or under other similar plans of the Company. A majority of its members will constitute a quorum. All determinations of the Committee will be made by a majority of its members. Any decision or determination reduced to writing and signed by a majority of the members will be as effective as if it had been made by a majority vote at a meeting properly called and held. The Plan shall be administered in such a manner as to permit the Options granted hereunder which are designated as such to qualify as "incentive stock options" ("Incentive Options") as described in section 422A of the Internal Revenue Code of 1986, as amended (the "Code"). 3. (a) SHARES AVAILABLE. The stock subject to the Options and other provisions of the Plan shall be shares of the Company's Common Stock, $0.10 par value (the "Stock"). The total amount of the Stock with respect to which Options may be granted shall not exceed in the aggregate 1,814,894 shares; provided, that such aggregate number of shares shall be subject to adjustment in accordance with the provisions of Paragraph 18 hereof. Such shares may be treasury shares or authorized but unissued shares. - 1 - (b) MAXIMUM AWARD. The maximum aggregate number of shares of Stock available for Options to any one Optionee during any 12-month period is 200,000. (c) SHARE COUNTING. For purposes of determining at any time the number of shares that remain available for grant under this Plan, the number of shares then authorized pursuant to Section 3 of the Plan shall be (i) decreased by the "gross" number of shares issued pursuant to exercised Options, (ii) decreased by the "gross" number of shares issuable pursuant to outstanding unexercised Options, and (iii) increased by the difference between the "gross" number of Shares and the "net" number of shares issued pursuant to exercised Options. As used herein, the "gross" number of shares refers to the maximum number of shares that may be issued upon the exercise of an Option. The "net" number of shares refers to the net number of shares actually issued to an Optionee upon exercise of an Option, after reducing the "gross" number of shares by the number of shares tendered back to the Company in payment of the Option Price (as defined hereinafter) for the satisfaction of any tax payment obligation. If an Optionee shall forfeit, voluntarily surrender or otherwise permanently lose his or her right to exercise an Option under any provision of this Plan or otherwise, or if any Option shall terminate or expire pursuant to its terms, the shares subject to the Option shall once again be available to be awarded and issued under this Plan pursuant to a new Option grant hereunder. 4. AUTHORITY TO GRANT OPTIONS. The Committee may grant from time to time to such eligible individuals as it shall from time to time determine an Option, or Options, to buy a stated number of shares of Stock under the terms and conditions of the Plan. With respect to each Option, the Committee shall specify whether such Option shall constitute an Incentive Option or an Option not intended to qualify as an Incentive Option (a "Nonqualified Option"). Subject only to any applicable limitations set forth elsewhere in the Plan, the number of shares of Stock to be covered by any Option shall be as determined by the Committee. 5. ELIGIBILITY. The individuals who shall be eligible to receive Incentive Options shall be such executive officers and other key employees (who may be members of the Board of Directors) of the Company, or of any parent or subsidiary corporation, as the Committee shall determine from time to time. With respect to Incentive Options, any reference to a parent or subsidiary corporation shall mean a parent corporation within the meaning of section 425(e) of the Code or a subsidiary corporation within the meaning of section 425(f) of the Code. The individuals who shall be eligible to receive Nonqualified Options shall be such executive officers and other key employees (who may be members of the Board of Directors) of the Company, or of any parent or subsidiary corporation, or any other person performing services for the Company or any parent or subsidiary corporation, as the Committee shall determine from time to time. With respect to Nonqualified Options, any reference to a parent corporation shall mean a corporation which has actual control of the Company through its direct or indirect - 2 - ownership of not less than 51 percent of each class of voting stock of the Company; and any reference to a subsidiary corporation shall mean a corporation of which the Company owns, directly or indirectly, not less than 40 percent of each class of voting stock. 6. OPTION PRICE. The price at which shares may be purchased pursuant to an Option (the "Option Price") shall be determined by the Committee at the time each Option is granted but shall not be less than 100 percent of the Fair Market Value (as defined hereinafter) of the shares of Stock on the date the Option is granted. In the case of any employee of the Company or a parent or subsidiary corporation who owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the corporation employing the employee or of its parent or subsidiary corporation, the price at which shares may be so purchased under an Incentive Option shall be not less than 110 percent of the Fair Market Value of the Stock on the date the Incentive Option is granted. "Fair Market Value" for purposes of this Plan means the average of the high and low reported sales prices per share of Stock (as reported on the New York Stock Exchange) as of the relevant measuring date, or if there is no sale on the New York Stock Exchange on that date, then as of the next following day on which there is a sale. 7. DURATION OF OPTIONS. Each Option shall expire on the tenth (10th) anniversary date of its grant. In the case of any employee of the Company who owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the corporation employing the employee or of its parent or subsidiary corporation, no Incentive Option shall be exercisable after the expiration of five years after the date such Incentive Option is granted. The Committee in its discretion may provide that an Option shall be exercisable during such 10-year period or five-year period, as the case may be, or during any lesser period of time. 8. MAXIMUM VALUE OF STOCK SUBJECT TO INCENTIVE OPTIONS. Notwithstanding any other provisions of the Plan to the contrary, the aggregate Fair Market Value (determined as of the date the Incentive Option is granted) of the Stock with respect to which Incentive Options are exercisable for the first time by the Optionee in any calendar year (under this Plan and any other incentive stock option plan(s) of the Company and any parent and subsidiary corporation) shall not exceed $100,000. 9. AMOUNT EXERCISABLE. Each Option may be exercised, so long as it is valid and outstanding, from time to time, in whole or in part, in such manner and subject to such conditions, as the Committee in its discretion may provide in the option agreement (described in Paragraph 22 hereof). - 3 - 10. EXERCISE OF OPTIONS. (a) NOTICE. Options shall be exercised by the delivery of written notice (the "Exercise Notice") to the Secretary of the Company setting forth the number of shares with respect to which the Option is to be exercised and the address to which the certificates representing shares of the Stock issuable upon the exercise of such Option shall be mailed (the "Exercise Date"). The date on which the Exercise Notice is delivered to the Company is the "Notice Date". (b) PAYMENT. Unless otherwise prescribed by the Committee, the Optionee shall tender to the Company on, or within three business days after, the Exercise Date full payment of the Option Price for the shares of Stock, together with any federal, state or local taxes required to be collected or withheld by the Company in connection with the exercise of the Option ("Taxes"), in cash (by personal check, cashier's check, certified check, bank draft or postal or express money order payable to the order of the Company or by payroll deduction). Alternatively, subject to the provisions of Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), payment of the Option Price and any Taxes may be made by the Optionee's delivering to the Company the Exercise Notice together with irrevocable instructions to a broker to promptly deliver to the Company an amount equal to the Option Price of such shares of Stock and any Taxes, such amount being either from loan proceeds or from the sale of the shares of Stock to be issued to the Optionee. Alternatively, unless otherwise provided in the option agreement, payment of the Option Price and any Taxes may be made in whole or in part in shares of Stock previously issued to the Optionee, if at the time of delivery of the Exercise Notice (i) the Company has unrestricted earned surplus in an amount not less than the Option Price of such shares, (ii) all accrued cumulative preferential dividends and other current preferential dividends on all outstanding preferred stock of the Company have been fully paid, (iii) the reacquisition or exchange by the Company of its own shares for the purpose of enabling such Optionee to exercise such Option is otherwise permitted by applicable law and without any vote or consent of any shareholder of the Company and would not result in the Company's being in violation of any agreement by which it is bound, and (iv) there shall have been adopted, and there is in full force and effect, a resolution of the Board of Directors of the Company authorizing the reacquisition by the Company of its own shares for such purpose. If payment is made in whole or in part in shares of Stock, then the Optionee shall deliver to the Company, in payment of the Option Price of the shares with respect of which such Option is exercised, (i) certificates registered in the name of such Optionee representing a number of shares of Stock legally and beneficially owned by such Optionee, free of all liens, claims, and encumbrances of every kind, and having a Fair Market Value on the date of delivery of such notice that is not greater than the Option Price of the shares with respect to which such Option is to be exercised, such certificates to be accompanied by stock powers duly endorsed in blank by the record holder of the shares represented by such certificates, with the signature of such record holder guaranteed by a national banking - 4 - association, and (ii) if the Option Price of the shares with respect to which such Option is to be exercised exceeds the Fair Market Value of such certificates, payment of the difference shall be made as provided above. Notwithstanding the foregoing provisions of this Paragraph 10, the Committee, in its sole discretion, may refuse to accept shares of Stock in payment of the Option Price of the shares with respect to which such Option is to be exercised and, in that event, any certificates representing shares of Stock which were delivered to the Company with such written notice shall be returned to such Optionee together with notice by the Company to such Optionee of the refusal of the Committee to accept such shares of Stock. (c) STOCK PURCHASE AGREEMENT. In its sole and absolute discretion, the Committee may require, as an additional condition to the issuance of Stock upon exercise of an Option, that the Optionee furnish the Committee with an executed copy of a stock purchase agreement, in such form as may be required by the Committee, at the time the Exercise Notice is delivered to the Company or within three business days after the proposed agreement is presented to the Optionee, if later. (d) SHARE CERTIFICATES. As promptly as practicable after the receipt by the Company of (i) the Exercise Notice from the Optionee setting forth the number of shares with respect to which such Option is to be exercised, (ii) payment of the Option Price of such shares in the form required by the foregoing provisions of this Paragraph 10, and (iii) a fully executed stock purchase agreement in the form required by the Committee, if any is so required, the Company shall cause to be delivered to such Optionee (or to a specified escrow agent, if so required under the terms of any applicable stock purchase agreement) certificates representing the number of shares of Stock with respect to which such Option has been so exercised, such certificates to be registered in the name of such Optionee, provided that such delivery shall be considered to have been made when such certificates shall have been mailed, postage prepaid, to such Optionee at the address specified for such purpose in the Exercise Notice from the Optionee to the Company. (e) VALUATION. Any calculation with respect to an Optionee's income, required tax withholding or otherwise shall be made using the Fair Market Value of such shares of Stock on the Notice Date, whether or not the Exercise Notice is delivered to the Company before or after the close of trading on that date, unless otherwise specified by the Committee. 11. TRANSFERABILITY OF OPTIONS. Options shall not be transferable by the Optionee otherwise than by will or under the laws of descent and distribution, and shall be exercisable, during his lifetime, only by the Optionee. 12. TERMINATION OF EMPLOYMENT OR AFFILIATION OF OPTIONEE. Except as may be otherwise expressly provided in this Paragraph 12 or elsewhere in the Plan, if the Optionee's employment with the Company is terminated, the Optionee shall have the - 5 - right to exercise the Option, to the extent to which he was entitled to exercise such Option immediately prior to such termination, at any time during the period ending the earlier of 30 days after such termination and the expiration of the Option. Whether authorized leave of absence, or absence on military or government service, shall constitute severance of the employment or affiliation relationship between the Company and the Optionee shall be determined by the Committee at the time thereof. In the event of the death of the Optionee while affiliated with or in the employ of the Company, or within three months after his retirement or termination due to age or disability as provided below, such Option shall terminate on the earlier of one year following the date of such death and the expiration of the Option. After the death of the Optionee, the time for exercise of the Option shall be accelerated and the Option shall be exercisable in full, and the Optionee's executors, administrators or any persons to whom his Option may be transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to such termination, to exercise the Option, in whole or in part, without regard to any limitations set forth in or imposed pursuant to Paragraph 9 hereof. If, before the date of expiration of the Option, the Optionee shall be retired in good standing from the employ of the Company, or the affiliation shall be severed for reasons of age or disability under the then established rules of the Company, the Option shall terminate on the earlier of three months after the date of such retirement or severance and the expiration of the Option. In the event of such retirement or severance, the Optionee shall have the right prior to the termination of such Option to exercise the Option to the extent to which he was entitled to exercise such Option immediately prior to such retirement or severance. For the purpose of determining the employment relationship or other affiliation between the Company and the Optionee, employment by or affiliation with any parent or subsidiary corporation shall be considered employment by or affiliation with the Company. 13. REQUIREMENTS OF LAW. The Company shall not be required to sell or issue any shares of Stock under any Option if the issuance of such shares shall constitute or result in a violation by the Optionee or the Company of any provision of any law, statute or regulation of any governmental authority. Specifically in connection with the Securities Act of 1933, as now in effect or hereafter amended (the "Securities Act"), upon exercise of any Option, the Company shall not be required to issue such shares unless the Committee has received evidence satisfactory to it to the effect that the Optionee will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Committee shall be final, binding and conclusive. The Company may, but shall in no event be obligated to, register the shares of Stock covered hereby pursuant to the Securities Act. In the event the shares of Stock issuable on exercise of an Option are not registered under the Securities Act, the Company may imprint the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act: - 6 - "The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any State and may not be sold or transferred except upon such registration or upon receipt by the Corporation of an opinion of counsel satisfactory to the Corporation, in form and substance satisfactory to the Corporation, that registration is not required for such sale or transfer." The Company shall not be obligated to take any other affirmative action in order to cause the exercise of an Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. 14. NO RIGHTS AS STOCKHOLDER. No Optionee shall have rights as a stockholder with respect to shares of Stock covered by his Option until the date of issuance of a stock certificate for such shares; and, except as otherwise provided in Paragraph 18 hereof, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such certificate. 15. EMPLOYMENT OR AFFILIATION OBLIGATION. The granting of an Option shall not impose upon the Company or any parent or subsidiary corporation any obligation to employ or become affiliated with, or continue to employ or be affiliated with, any Optionee; and the right of the Company or any parent or subsidiary corporation to terminate the employment or affiliation of any person shall not be diminished or affected by reason of the fact that an Option has been granted to him. 16. FORFEITURE FOR COMPETITION. Notwithstanding any other provision of the Plan, if at any time during the term of an Option granted hereunder the Committee finds by a majority vote, after full consideration of the facts presented on behalf of the Company and the Optionee, that such Optionee, without the written consent of the Company, directly or indirectly owns, operates, manages, controls or participates in the ownership, management, operation or control of, or is employed by or is paid as a consultant or as an independent contractor by a business which competes with the Company or any parent or subsidiary corporation in the trade area served by the Company or any parent or subsidiary corporation at any time during the term of the Option but prior to its exercise in full and in which area the Optionee had performed services for the Company or any parent or subsidiary corporation while employed by it, the Optionee shall forfeit all unexercised Options and all exercised Options under which the Company has not yet delivered the certificates and which had been granted to the Optionee by the Committee earlier. The preceding provisions of this Paragraph 16 shall not be deemed to have been violated solely by reason of the Optionee's ownership of a stock or securities of any publicly owned corporation, provided that such ownership does not result in effective control of such corporation, and provided further that written notice of such ownership, if in excess of one percent of the outstanding stock of said corporation, is given to the Committee within 60 days after the later of - 7 - (i) the date on which the Optionee is notified of the award of an Option, or (ii) the date on which such ownership is acquired. 17. FORFEITURE FOR DISHONESTY. Notwithstanding anything to the contrary in the Plan, if the Committee finds by a majority vote, after full consideration of the facts presented on behalf of both the Company and the Optionee, that the Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his employment by or affiliation with the Company or any parent or subsidiary corporation which damaged the Company or any parent or subsidiary corporation, or for disclosing trade secrets of the Company or any parent or subsidiary corporation, the Optionee shall forfeit all unexercised Options and all exercised Options under which the Company has not yet delivered the certificates and which had been granted the Optionee by the Committee earlier. The decision of the Committee as to the cause of an Optionee's discharge and the damage done to the Company or any parent or subsidiary corporation shall be final. No decision of the Committee, however, shall affect the finality of the discharge of such Optionee by the Company or any parent or subsidiary corporation in any manner. 18. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of outstanding Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. If the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of Stock outstanding, without receiving compensation therefor in money, services or property, then (a) the number, class and per share price of shares of Stock subject to outstanding Options hereunder shall be appropriately adjusted in such a manner as to entitle an Optionee to receive upon exercise of an Option, for the same aggregate cash consideration, the same total number and class of shares as he would have received had he exercised his Option in full immediately prior to the event requiring the adjustment; and (b) the number and class of shares then reserved for issuance under the Plan shall be adjusted by substituting for the total number and class of shares of Stock then reserved that number and class of shares of stock that would have been received by the owner of an equal number of outstanding shares of each class of stock as the result of the event requiring the adjustment; provided in each case that with respect to Incentive Stock Options and Nonqualified Options intended to be qualified as performance-based compensation under Section 162(m)(4)(c) of the Code, no adjustment shall be authorized to the extent that the - 8 - adjustment would cause the Plan to violate Section 422(b)(1) of the Code or would cause any part of such Option to fail to qualify under Section 162(m) of the Code, as the case may be, or any successor provisions thereto, and provided further, that the number of shares of Stock subject to any Option shall always be a whole number. After a merger of one or more corporations into the Company or after a consolidation of the Company and one or more corporations in which the Company shall be the surviving corporation, without regard to any limitations set forth or imposed pursuant to Paragraph 9 hereof, each holder of an outstanding Option shall, at no additional cost, be entitled upon exercise of such Option to receive (subject to any required action by stockholders) in lieu of the number and class of shares as to which such Option shall then be so exercisable, the number and class of shares of stock or other securities to which such Optionee would have been entitled pursuant to the terms of the agreement of merger or consolidation if, immediately prior to such merger or consolidation, such Optionee had been the holder of record of the number and class of shares of Stock equal to the number and class of shares as to which such Option shall be so exercised. Notwithstanding any other provision of this Paragraph 18, if (i) the Company merges or consolidates with any other corporation (other than a wholly owned subsidiary) and is not the surviving corporation (or survives only as a subsidiary of another corporation), (ii) the Company sells all or substantially all of its assets to any other person or entity (other than a wholly owned subsidiary), (iii) the Company is dissolved or liquidated, or (iv) there is a Change of Control (as hereinafter defined) of the Company that is not approved, recommended or supported by the Board of Directors of the Company in actions taken prior to, and with respect to, such Change of Control, the Optionee shall have the right, within 30 days after the approval by the stockholders of the Company of such merger or consolidation, sale of assets or dissolution or the occurrence of such Change of Control, to elect to surrender all or part of such Options outstanding, irrespective of whether such Options are then exercisable, in exchange for a cash payment by the Company in an amount equal to the number of shares of Stock subject to the Option held by such Optionee multiplied by the difference between the Change of Control Price (as defined below) and the Option Price of a particular Option; provided, however, that if the occurrence of an event specified herein is within six months after the date of grant of a particular Option held by an Optionee who is subject to Section 16(b) of the Exchange Act, any cash payment to the Optionee shall be made on the day which is six months and one day after the date of grant of such Option. Notwithstanding the foregoing, if any right granted pursuant to the foregoing would make any of the occurrences specified above ineligible for pooling of interests accounting treatment under APB No. 16 that but for this provision would otherwise be eligible for such accounting treatment, the Optionee shall receive shares of Stock with a Fair Market Value equal to the cash that would otherwise be payable hereunder in substitution for the cash. If an Optionee does not elect to surrender all outstanding Options for a cash payment (or shares of Stock) as provided - 9 - above, such Options, or replacement or substitution Options to be issued by the surviving or acquiring corporation, shall become fully exercisable, to the extent they are not, and shall remain exercisable for three months after the Optionee's termination of employment or until the stated expiration of the term of the Option, whichever is shorter. In the event that the consideration offered to stockholders of the Company in any transaction described in this paragraph consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash. For purpose of this Plan, "Change of Control" means: a) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") acquires of beneficial ownership of 20 percent or more of either (i) the then outstanding shares of Stock or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; provided, however, that for purposes of this subsection (a), a Person shall not include the Company or any subsidiary or any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary; or b) as a result of, or in connection with, a contested election for directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board of Directors of the Company. The Committee shall determine whether a Change of Control has occurred within the herein meaning and shall determine whether any such Change of Control has been approved, recommended or supported by the Board of Directors of the Company, and its determination shall be final and conclusive. For purposes of this Plan, "Change of Control Price" means the higher of (i) the highest reported sales price of a share of Stock in any transaction reported on the New York Stock Exchange during the 60-day period prior to and including the date of the approval by the stockholders of the Company of such merger, sale of assets or dissolution or the occurrence of the Change of Control and (ii) if the Change of Control is the result of a tender or exchange offer, the highest price per share of Stock paid in such tender or exchange offer; provided, however, that in the case of an Option which is held by an Optionee who is subject to Section 16(b) of the Exchange Act and was granted within six months of the occurrence of an event specified herein, then the Change of Control Price for such Option shall be the Fair Market Value of the Stock on the date such Option is cancelled. Except as hereinbefore expressly provided, the issue by the Company of shares of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, class or price of shares of Stock then subject to outstanding Options. - 10 - 19. SUBSTITUTION OPTIONS. Options may be granted under this Plan from time to time in substitution for stock options held by employees of other corporations who are about to become employees of or affiliated with the Company or any parent or subsidiary corporation as the result of a merger or consolidation of the employing corporation with the Company or any parent or subsidiary corporation, or the acquisition by the Company or any parent or subsidiary corporation of the assets of the employing corporation, or the acquisition by the Company or any parent or subsidiary corporation of stock of the employing corporation as the result of which it becomes a subsidiary of the Company. The terms and conditions of the substitute Options so granted may vary from the terms and conditions set forth in this Plan to such extent as the Board of Directors of the Company at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted. 20. AMENDMENT OR TERMINATION OF PLAN. The Board of Directors may modify, revise or terminate this Plan at any time and from time to time; provided, however, that without the further approval of the holders of at least a majority of the outstanding shares of Stock, the Board of Directors may not (i) materially increase the benefits accruing to participants under the Plan; (ii) change the aggregate number of shares of Stock which may be issued under Options pursuant to the provisions of the Plan; (iii) reduce the Option Price at which Options may be granted to an amount less than the Fair Market Value per share at the time the Option is granted; or (iv) change the class of employees eligible to receive Options; provided, however, that the Board shall have the power to make such changes in the Plan and in the regulations and administrative provisions hereunder or in any outstanding Incentive Option as in the opinion of counsel for the Company may be necessary or appropriate from time to time to enable any Incentive Option granted pursuant to the Plan to qualify as an incentive stock option or such other stock option as may be defined under the Code so as to receive preferential federal income tax treatment. 21. INTENTIONALLY OMITTED. 22. WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied in a written option agreement, which shall be subject to the terms and conditions prescribed above and shall be signed by the Optionee and by an authorized officer of the Company for and in the name and on behalf of the Company. Such an option agreement shall contain such other provisions as the Committee in its discretion shall deem advisable. 23. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With respect to administration of the Plan, the Company shall indemnify each present and future member of the Committee and the Board of Directors against, and each member of the Committee and the Board of Directors shall be entitled without further act on his part to indemnity from the Company for, all expenses (including the amount of - 11 - judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a member of the Committee and the Board of Directors, whether or not he continues to be such member of the Committee and the Board of Directors at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such member of the Committee and the Board of Directors (i) in respect of matters as to which he shall be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as such member of the Committee and the Board of Directors, or (ii) in respect of any matter in which any settlement is effected, to an amount in excess of the amount approved by the Company on the advice of its legal counsel; and provided further, that no right of indemnification under the provisions set forth herein shall be available to or enforceable by any such member of the Committee and the Board of Directors unless, within 60 days after institution of any such action, suit or proceeding, he shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Committee and the Board of Directors and shall be in addition to all other rights to which such member of the Committee and the Board of Directors may be entitled as a matter of law, contract or otherwise. 24. EFFECT OF AMENDMENTS. This 1991 Stock Option Plan, as amended through October 5, 1995, constitutes a complete amendment and restatement of such Plan. Any Option granted under the Plan shall be subject to the terms of the Plan as in effect at the time the Option is granted; provided, however, that by agreement between the Committee and the Optionee, any such Option may be amended to incorporate and become subject to the provisions of the Plan as amended through a date which is subsequent to the date on which the Option was granted. 25. EFFECTIVE DATE OF PLAN. The Plan became effective March 19, 1991. No Option shall be granted pursuant to this Plan after March 18, 2001. - 12 - EX-4.4 4 EXHIBIT 4.4 WEATHERFORD ENTERRA, INC. RESTRICTED STOCK INCENTIVE PLAN AS AMENDED AND RESTATED THROUGH OCTOBER 5, 1995 1. INTRODUCTION AND STATEMENT OF PURPOSE. 1.1 This Restricted Stock Incentive Plan (the "Plan") of Weatherford Enterra, Inc. (the "Company"), for executive officers and other key employees of the Company and certain related corporations ("Key Employees"), is intended to advance the best interest of the Company (who may be members of the Board of Directors) and those related corporations by providing those persons who have significant ultimate responsibility for the management and planning of the Company's operations and who directly influence the growth and profits of the Company and those related corporations with additional opportunities for meaningful capital accumulation, and by increasing their proprietary interest in the success of the Company and those related corporations, encourage their continued employment with the Company or those related corporations. It is desired that the benefits available under this Plan, when added to other benefits payable to Key Employees, will furnish total compensation to those employees which is competitive in the Company's industry. 1.2 The Plan provides for two types of awards: Restricted Share grants and Performance Share grants (collectively called "Share Grants"). Restricted Share grants are designed to retain Key Employees in the employ of the Company. Performance Share grants are designed to reward long-term and short-term performance of Key Employees, such as reducing the debt-equity ratio of the Company, achieving certain operating and net income goals or stock appreciation goals (long-term), or selling or acquiring certain business assets, identifying and developing successor candidates for Key Employee positions or raising equity for the Company (short-term). 1.3 A Share Grant under the Plan could consist of a combination of Restricted Shares and Performance Shares, or could consist of only one type of shares, at the Committee's sole discretion. 2. ADMINISTRATION. 2.1 The Plan shall be administered by a committee to be appointed by the Board of Directors of the Company (hereinafter called the "Committee"). The Committee shall consist of not less than three members of the Board of Directors, all of whom shall be "disinterested persons". A "disinterested person" is a person who at the time he exercises discretion with respect to the award of a Share Grant is not, and for at least one year prior to that time has not been, eligible to receive Share Grants under the Plan or under other similar plans of the Company. A majority of the Committee's members will constitute a quorum and all determinations of the Committee will be made by a majority of its members. -1- 2.2 The Committee is empowered to: (a) Make all determinations regarding individuals eligible to participate in the Plan, including prospective employees of the Company who, upon commencing employment, would be Key Employees of the Company (the "Key Employees"); (b) Make all determinations and computations concerning the issuance of Restricted Shares and Performance Shares under the Plan and the number of shares to be granted to each Key Employee; (c) Cause the Company to enter into a written agreement with each Key Employee setting forth the terms and provisions of the Share Grant awarding the Restricted Shares and Performance Shares (the "Share Grant Agreement"); (d) Make rules and regulations for the administration of the Plan which are not inconsistent with the terms and provisions hereof; (e) Construe and administer all terms, provisions, conditions and limitations of the Plan in good faith; (f) Make equitable adjustments for any mistakes or errors in the administration of the Plan or deemed by the Committee to be necessary as the result of any unusual situation or any ambiguity in the Plan; and (g) Select, employ and compensate, from time to time, such consultants, accountants, attorneys and other agents and employees as the Committee may deem necessary or advisable for the proper and efficient administration of the Plan. 2.3 The foregoing list of express powers is not intended to be either complete or exclusive, and the Committee shall, in addition, have such powers, whether or not expressly authorized, which it may deem necessary, desirable, advisable or proper for the supervision and administration of the Plan. Except as otherwise specifically provided herein, the decision or judgment of the Committee on any question arising hereunder in connection with the exercise of any of its powers shall be final, binding and conclusive upon all parties concerned (including the Key Employee and any person claiming by, through or under a Key Employee) and shall not be subject to review. 3. SHARES SUBJECT TO GRANT. 3.1 The stock subject to the Share Grants and other provisions of the Plan shall be shares of the Company's Common Stock, $.10 par value (the "Stock"). The total amount of the Stock with respect to which Share Grants may be granted shall not exceed in the aggregate 160,437 shares, except as provided below. Distributions of shares hereunder may, at the Committee's sole discretion, be made from authorized but unissued shares or shares reacquired by the Company and held as treasury shares. Within such aggregate maximum number of shares -2- there is no maximum number of such shares which may be issued as Restricted Shares or Performance Shares. 3.2 In the event that any Stock issued or granted under the Plan shall be forfeited, for any reason, the aggregate number of additional shares of Stock which may be issued or granted hereunder shall be increased by such number of shares, and said shares of Stock so forfeited may again be the subject of a Share Grant under the Plan. 3.3 In the event that the issued and outstanding shares of the Company's Stock should, as a result of any stock dividend, stock split or spin-off, recapitalization, combination or exchange of shares, merger, consolidation, acquisition of property or stock, separation, reclassification, reorganization, liquidation, or other similar event, be increased or decreased or changed into or exchanged for a different number or kind of share of stock or other securities of the Company or of another corporation, the number and class of additional shares or other securities which may be issued under the Plan will be appropriately adjusted to reflect such action. If any such adjustment results in a fractional share of Stock being issuable under the Plan, such fraction will be disregarded. 4. ELIGIBILITY. The individuals who shall be eligible to receive Stock under this Plan shall be such executive officers and other key employees (who may be members of the Board of Directors) of the Company, or of any parent or subsidiary corporation, as the Committee shall determine from time to time. Any reference to a parent corporation shall mean a corporation which has actual control of the Company through its direct or indirect ownership of not less than 51 percent of each class of voting stock of the Company; and any reference to a subsidiary corporation shall mean a corporation of which the Company owns, directly or indirectly, not less than 40 percent of each class of voting stock. 5. SHARE GRANTS. 5.1 The Committee may cause the Company to issue, from time to time, Restricted Shares or Performance Shares to, and enter into Share Grant Agreements with, such Key Employees as the Committee, in its sole discretion, may determine and designate. Subject to the final authority of the Committee, the selection of the Key Employees may be based on recommendations of the Company's Chief Executive Officer. 5.2 If the Committee decides to make a Share Grant, the Committee will designate the number of shares of Stock to be issued; whether the shares will be Restricted Shares or Performance Shares or a combination of the two types of shares; the nature of the restrictions on the Key Employee's ownership of the shares; the time or times at which the restrictions on ownership will be removed; the condition or conditions upon which the restrictions on ownership will be removed; and such other terms and provisions, not inconsistent with the Plan, as the Committee deems appropriate. The terms and provisions of the Share Grant will be set forth in a Share Grant Agreement. -3- 5.3 If the Committee decides to award Performance Shares to a Key Employee, in addition to the other terms and provisions of the Share Grant Agreement, the Committee will determine the Key Employee's performance objectives and specify the times within the Performance Period at which the Key Employee's performance will be evaluated. 5.4 The Committee will designate at the time of each Share Grant the commencement date and length of the Performance Period. Performance Periods with respect to Restricted Shares generally will be four years, although the Committee will have the discretion to designate a different length for a Performance Period, not less than three nor more than five years. Performance Periods with respect to Performance Shares will be determined by the nature of the applicable performance objectives and achievement thereof but in no event less than six months nor more than eight years. 5.5 The Committee shall have the authority to make a Share Grant to a Key Employee at any time; however, the Committee generally will commence a Share Grant for a Key Employee only one time per year. 6. OWNERSHIP AND RESTRICTIONS ON OWNERSHIP OF SHARES. 6.1 The Key Employee will own the shares of Stock from the date of the Share Grant, subject to the restrictions on ownership and other terms and provisions designated by the Committee and set forth in the Share Grant Agreement. 6.2. The Committee will determine whether a stock certificate representing part or all of the shares granted under the Plan will be issued to the Key Employee at the commencement of a Performance Period or at any time prior to the unrestricted ownership of the shares vesting in the Key Employee. In the event this occurs, the stock certificate will contain a legend restricting the sale, exchange, transfer, assignment, pledge or other disposition of the shares. In addition, the Committee will determine whether a Key Employee will have the right to vote any of the shares prior to the ownership restrictions being removed. The Committee will also determine whether the Key Employee will have the right to receive any dividends paid on any of such shares prior to the ownership restrictions being removed or whether such dividends will be accrued and paid to the Key Employee only when the restrictions on his ownership of the shares are removed. 6.3 All shares of Stock granted pursuant to the Plan will be subject to restrictions on ownership when granted, and a Key Employee will not be able to sell, exchange, transfer, assign, pledge or otherwise dispose of such shares until the restrictions on ownership are removed by the Committee in accordance with the terms and provisions of the Plan and the Share Grant Agreement. Further, the Key Employee may not assign, transfer or otherwise dispose of any right or interest under the Share Grant Agreement, except as provided therein. 7. REMOVAL OF RESTRICTIONS ON OWNERSHIP OF SHARES. 7.1 The Committee will determine, in its sole discretion, when the restrictions on ownership of the shares of stock granted under this Plan will be removed. -4- 7.2 The restrictions on the Key Employee's ownership of any Restricted Shares will be removed on all such shares at the end of a Performance Period or on a certain portion of such shares at times designated by the Committee (such as annually). The Key Employee generally must be employed by the Company at the designated time (or times) in order for the restrictions to be removed, although the Committee can provide otherwise. In the event the Key Employee's employment by the Company terminates prior to the ownership restrictions on the Restricted Shares being removed, the Key Employee will, upon the request of the Committee, for no consideration, forfeit all Restricted Shares which remain subject to such restrictions and surrender to the Company all stock certificates representing such shares, if any have been issued and delivered to him. 7.3 The restrictions on the Key Employee's ownership of any Performance Shares will be removed upon the achievement of the Key Employee's performance objectives or at the end of the Performance Period, unless the Committee has specified otherwise, provided that the Key Employee is still employed by the Company. In the event the Key Employee's employment with the Company terminates prior to his achieving his performance objectives or prior to the end of the Performance Period, the Key Employee will, upon the request of the Committee, for no consideration, forfeit all or part, as applicable, of the Performance Shares which remain subject to ownership restrictions and surrender to the Company all stock certificates representing such shares, if any have been issued and delivered to him. 8. HOLDING PERIOD. Notwithstanding any other provision hereof, any shares of stock granted hereunder must be held by the Key Employee for at least six months prior to sale, assignment, transfer or exchange, and any attempt to sell, assign, transfer or exchange such shares during the six months after grant shall be void. 9. DEATH OR DISABILITY. 9.1 Should a Key Employee's employment be terminated by death or total and permanent disability prior to the removal of the ownership restrictions on any shares of stock granted hereunder, the Committee has the right to remove the restrictions on part or all of such shares. The Committee will determine, in its sole discretion, whether and on which shares the restrictions should be removed, based on the length of service the Key Employee has in the Performance Period, the Key Employee's performance during the Performance Period and such other matters as the Committee deems relevant. 9.2 For purposes of the Plan, the Committee shall determine, in the exercise of its discretion, whether or not a Key Employee is totally and permanently disabled for purposes of the Plan and the date such disability (if any) commenced. Any such determinations by the Committee shall be conclusive and binding on the Key Employee and any person claiming by, through or under the Key Employee. Any determination of total and permanent disability and of the commencement date thereof will be made on the basis of medical reports and other evidence satisfactory to the Committee and in accordance with a uniform, non-discriminatory policy applied by the Committee. However, such determinations will not be binding on the Company or any Key Employee with respect to any other employee benefit or other plan or insurance policy -5- wherein such determinations may be relevant, and need not be consistent with any determinations made under any such other plan or insurance policy. 10. EARLY RETIREMENT. Should a Key Employee take early retirement at the convenience of the Company prior to the removal of the ownership restrictions on any shares of stock granted hereunder, the Committee has the right to remove the restrictions on part or all of the shares. The Committee will determine, in its sole discretion, whether and on which shares the restrictions should be removed, based on the length of service the Key Employee has in the Performance Period, the Key Employee's performance during the Performance Period and such other matters as the Committee deems relevant. 11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change of Control (as defined below) occurs, all restrictions to which the Key Employee's Restricted Shares or Performance Shares remained subject at such time shall automatically terminate and such shares shall become fully vested and transferable. The Company shall promptly deliver to the Key Employee stock certificates for such shares without the legend restricting the sale, exchange, transfer, assignment, pledge or other disposition, other than as may be required by applicable Securities laws. For purposes of this paragraph, a "Change of Control" shall mean: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30 percent of more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however that for purposes of this subsection (a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 11; or (b) Individuals, who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved -6- by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Corporate Transaction") in each case, unless, following such Corporate Transaction, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than 60 percent of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Corporate Transaction or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, 30 percent or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or (d) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. 12. EMPLOYMENT OR AFFILIATION OBLIGATION. The making of a Share Grant shall not impose upon the Company or any parent or subsidiary corporation any obligation to employ or continue to employ a Key Employee, and the right of the Company or any parent or subsidiary corporation to terminate the employment of any person shall not be diminished or affected by reason of the fact that a Share Grant has been granted to him. -7- 13. AMENDMENT OR TERMINATION OF PLAN. 13.1 The Board of Directors, without approval of or notice to the Key Employees, may modify or amend this Plan at any time it deems advisable; provided, however, that without stockholder approval the Board of Directors may not (i) except as permitted in the case of stock splits and other recapitalizations, materially increase the aggregate number of shares which may be granted pursuant to the provisions of the Plan; (ii) materially increase the benefits accruing to the Key Employees under the Plan; or (iii) materially modify the requirements as to eligibility for participation in the Plan. 13.2 The Board of Directors, without approval of or notice to the Key Employees, may terminate the Plan at any time. 13.3 Any amendment or termination of the Plan shall not affect shares already issued or Share Grant Agreements already executed, without the consent of the Key Employee. In each case where the Board of Directors determines it to be appropriate or is advised by counsel that such approval is required, an amendment or termination of the Plan shall be submitted to the stockholders of the Company for approval. 14. MISCELLANEOUS PROVISIONS. 14.1 As a condition to the issuance of shares hereunder, the Company may require the Key Employee receiving such shares to represent and warrant at the time of issuance that the shares are being acquired only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such representation is required under the Securities Act of 1933, or any other applicable law, regulation or rule of any governmental authority. 14.2 During the term of the Plan, the Company will at times reserve and keep available, or have authorized but unissued, such number of shares of Stock as shall be sufficient to satisfy the requirements of the Plan. The inability of the Company to obtain from any regulatory body having jurisdictional authority deemed by the Company's counsel to be necessary to the lawful issuance of Stock hereunder shall relieve the Company of any liability in respect of the non-issuance of such Stock as to which such requisite authority shall not have been obtained. 14.3 Until the issuance of a stock certificate for Restricted Shares or Performance Shares, as appropriate, to a Key Employee (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive cash dividends or other distributions or any other rights as a stockholder of the Company shall exist with respect to such Restricted Shares or Performance Shares, notwithstanding the grant of such shares, the execution of a Share Grant Agreement, or the occurrence of any event or the passing of any period of time giving rise to a right in the Key Employee to receive unrestricted ownership of such shares under the Share Grant Agreement. No adjustment will be made for any cash dividend or other distribution or other rights for which the record date is prior to the date the stock certificates representing such Restricted Shares or Performance Shares are issued, except -8- as otherwise expressly determined by the Committee. The Company shall endeavor in good faith to issue stock certificates for Restricted Shares or Performance Shares which are authorized to be issued under the Plan as promptly as practicable. However, neither the Company, the Committee or any member thereof, any transfer agent nor any other person shall have any liability to any Key Employee (or to any person claiming by, through or under any Key Employee) as the result of any delay in the issuance of any such certificates, including delays resulting from the negligence or willful misconduct of any such person or entity. 14.4 Notwithstanding anything to the contrary contained in this Plan or any Share Grant Agreement entered into hereunder, any Share Grant made under this Plan shall be granted subject to the approval of this Plan by the affirmative vote of the holders of a majority of the Stock of the Company present or represented and entitled to vote at a meeting duly called and held for such purpose in accordance with applicable Delaware law. No Share Grant Agreement entered into under this Plan nor any Share Grant made under this Plan shall create any obligation in the Company prior to such approval. In the event that the holders of a majority of the Stock of the Company do not so approve this Plan, any and all Share Grant Agreements theretofore entered into shall thereupon terminate and shall be void and of no force and effect and no Restricted Shares or Performance Shares shall be issued thereunder. 14.5 Any and all taxes payable with respect to income to a Key Employee resulting from the grant of Restricted Shares or Performance Shares hereunder shall be the sole responsibility of the Key Employee, not of the Company, whether or not the Company shall have withheld or collected from the Key Employee any sums required to be so withheld or calculated in respect of such income, and whether or not any sums so withheld or collected shall be sufficient to provide for any such taxes. The Company or any parent or subsidiary corporation shall be entitled to deduct from other compensation payable to each Key Employee any sums required by federal, state or local tax law to be withheld with respect to the grant of Restricted Shares or Performance Shares hereunder; but, in the alternative, the Company may require the Key Employee to pay such sums directly to the employer corporation. If the Key Employee elects to pay such sums directly, written notice of that election shall be delivered prior to the ownership restrictions on such Shares being removed and, whether pursuant to such election or pursuant to a requirement imposed by the Company, payment in cash or by check of such sums for taxes shall be delivered within ten days after the date on which ownership restrictions on such shares are removed. In addition, any such sums may be satisfied by the Key Employee in shares of Stock, at the discretion of the Committee, if the Key Employee instructs the Company in writing at or before the time the ownership restrictions on such shares are removed to withhold from the shares that number of shares having a value equal to the amount necessary to satisfy the sums required by federal, state or local tax law or if the Key Employee delivers to the Company that number of shares of Stock having a value equal to such amount. The number of shares required to satisfy such taxes will be calculated based on the fair market value of the Stock determined in accordance with the procedures established by the Committee. 14.6 The Company shall be entitled but shall have no obligation to cause the shares of Stock issuable hereunder to be registered under the Securities Act. -9- 15. INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With respect to administration of the Plan, the Company shall indemnify each present and future member of the Committee and the Board of Directors against, and each member of the Committee and the Board of Directors shall be entitled without further act on his part to indemnity from the Company for, all expenses (including the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a member of the Committee and the Board of Directors, whether or not he continues to be such member of the Committee and the Board of Directors at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such member of the Committee and the Board of Directors (i) in respect of matters as to which he shall be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as such member of the Committee and the Board of Directors, or (ii) in respect of any matter in which any settlement is effected in an amount in excess of the amount approved by the Company on the advice of its legal counsel; and provided further, that no right of indemnification under the provisions set forth herein shall be available to or enforceable by any such member of the Committee and the Board of Directors unless, within 60 days after institution of any such action, suit or proceeding, he shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Committee and the Board of Directors and shall be in addition to all other rights to which such member of the Committee and the Board of Directors may be entitled as a matter of law, contract, or otherwise. 16. EFFECT OF AMENDMENTS. This Restricted Stock Incentive Plan, as amended through October 5, 1995, constitutes a complete amendment and restatement of such Plan. Any Share Grant granted under the Plan shall be subject to the terms of the Plan as in effect at the time the Share Grant is granted; provided, however, that by agreement between the Committee and the Key Employee, any such Share Grant may be amended to incorporate and become subject to the provisions of the Plan as amended through a date which is subsequent to the date on which the Share Grant was granted. 17. EFFECTIVE DATE OF PLAN. The Plan, effective March 18, 1987, is of perpetual duration. -10- EX-4.5 5 EXHIBIT 4.5 D. DALE WOOD STOCK OPTION AGREEMENT This Stock Option Agreement dated as of October 5, 1995 is entered into by and between Weatherford Enterra, Inc., a Delaware corporation ("Weatherford"), and D. Dale Wood (the "Optionee"). WITNESSETH: WHEREAS, the Optionee is currently a consultant to Weatherford in accordance with the terms of the Consulting Agreement of even date herewith (the "Consulting Agreement"); and WHEREAS, as part of the Optionee's compensation under the Consulting Agreement, Weatherford has agreed to grant him an option to purchase up to 84,500 shares of common stock, $.10 par value, of Weatherford ("Common Stock"); NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto hereby agree as follows: 1. GRANT OF OPTION. Subject to the terms and conditions hereinafter set forth, Weatherford hereby grants to the Optionee the right and option (the "Option") to purchase up to 84,500 shares (after giving effect to the one-for-two reverse stock split effected on even date herewith) of Common Stock (the "Shares"). Such number of Shares shall be subject to adjustment as hereinafter provided. The Option does not constitute an "incentive stock option" within the meaning of the Internal Revenue Code of 1986, as amended. 2. OPTION PRICE. The option price of the Shares shall be $25.75 per Share. Such price shall be subject to adjustment as hereinafter provided. 3. EXERCISE OF OPTION. The period during which the Option is in effect shall be referred to as the "Option Period", which shall begin on October 5, 1995 (the "Grant Date"). The Option Period shall terminate at midnight on October 4, 2005 (the "Expiration Date"). No exercise of the Option may be made prior to one year after the Grant Date. Subject to the provisions of the preceding paragraph and Section 10 of this Agreement, the Option shall be exercisable as follows: On or after October 5, 1996 20% of the Shares can be purchased by the Optionee. On or after October 5, 1997 20% of the Shares can be purchased by the Optionee, plus any Shares that could have been purchased previously but were not. -1- On or after October 5, 1998 20% of the Shares can be purchased by the Optionee, plus any Shares that could have been purchased previously but were not. On or after October 5, 1999 20% of the Shares can be purchased by the Optionee, plus any Shares that could have been purchased previously but were not. On or after October 5, 2000 All Shares not previously purchased can be purchased by the Optionee. If the Optionee wishes to exercise the Option, the Optionee will deliver a written, signed notice to the Corporate Secretary of Weatherford setting forth the number of Shares with respect to which the Option is being exercised and the address to which the certificates representing such Shares should be mailed. To be effective, such written notice shall be accompanied, at the time of its delivery to the Corporate Secretary, by payment of the option price of such Shares, which payment shall be made by check, payable to the order of Weatherford in an amount, in United States dollars, equal to the option price of such Shares. Alternatively, subject to the provisions of Rule 16b-3 of the Securities Exchange Act of 1934, payment of the option price may be made by the Optionee's delivering to the Corporate Secretary such written, signed exercise notice together with irrevocable instructions to a broker to promptly deliver to Weatherford an amount equal to the option price of such Shares, such amount being either from loan proceeds or from the sale of the Shares to be issued to the Optionee. If, in the opinion of counsel for Weatherford, any law or regulation requires Weatherford to take such action with respect to the Shares specified in such notice, then the date of the delivery of such Shares and payment therefor shall be extended for the period necessary to take such action. 4. LIMITATION OF RIGHTS OF THE OPTIONEE. The Optionee shall have no rights with respect to any Shares not expressly conferred by this Agreement. 5. NO ASSIGNMENT. This Agreement and the Option granted hereunder are of a personal nature and the Optionee's rights with respect thereto may not be sold, mortgaged, pledged, assigned, hypothecated, transferred, conveyed or disposed of in any manner by the Optionee, and shall not be exercisable by any person, other than the Optionee, except as expressly permitted hereby. Any such attempted sale, mortgage, pledge, assignment, hypothecation, transfer, conveyance, disposition or exercise shall be void and Weatherford shall not be bound thereby. Notwithstanding the above and subject to the provisions of Section 10 of this Agreement, the Option granted hereunder may be transferred by will or the laws of descent and distribution. In addition, the Optionee may transfer the Option granted hereunder to his children, -2- grandchildren or spouse or to one or more trusts for the benefit of such family members or to partnerships in which such family members are the only partners (a "Family Transfer"), provided that the Optionee receives no consideration for a Family Transfer and that the option documents relating to the Family Transfer provide for the same terms and conditions that are applicable to the Option. 6. SUCCESSORS. This Agreement shall be binding upon any successors of Weatherford and the heirs, successors and legal representatives of the Optionee. 7. RESTRICTIONS ON TRANSFER; COMPLIANCE WITH THE SECURITIES ACT. A. Weatherford shall use reasonable efforts to register for sale under the Securities Act of 1933 (the "Securities Act") the Shares represented by this Option. Weatherford shall not be obligated to issue any shares of Common Stock pursuant to this Option at any time when the Shares have not been registered under the Securities Act, notwithstanding Weatherford's efforts to do so, and such other state and federal laws, rules or regulations as Weatherford deems applicable and, in the opinion of legal counsel for Weatherford, there is no exemption from the registration requirements of such laws, rules or regulations available for the issuance and sale of such Shares. If the Shares are not registered for sale under the Securities Act, Weatherford shall use reasonable efforts to cause the issuance of any Shares pursuant to this Option to qualify for an exemption from such laws, rules or regulations, if any exemption is available. If such an exemption is available, the Optionee (or the person permitted to exercise this Option under Section 5 or 10 of this Agreement), if requested by Weatherford to do so, will execute and deliver to Weatherford in writing an agreement containing such provisions as Weatherford may require to assure compliance with such exemption and such laws, rules or regulations. B. The Shares shall not be transferable except upon the conditions specified in this Section 7, which conditions are intended, among other things, to ensure compliance with the provisions of the Securities Act in respect of the transfer of the Shares. C. If the Shares are not registered for sale under the Securities Act, the Optionee by acceptance hereof agrees that prior to the transfer or attempted transfer of the Shares, he, or his successor in interest, will give written notice to Weatherford of his intention to effect such transfer. Each such notice shall (i) describe the manner and circumstances of the proposed transfer in sufficient detail, (ii) contain an undertaking by the person giving such notice to furnish such other information as may be required to enable counsel to render the opinions referred to below and (iii) designate the counsel for the person giving such notice. The person giving such notice shall submit a copy thereof to the counsel designated in such notice and Weatherford shall submit a copy thereof to its counsel. (1) If in the opinion of each such counsel the proposed transfer of the Shares may be effected without registration under the Securities Act of the Shares, Weatherford shall, as promptly as practicable, so notify the Optionee, and he shall thereupon be entitled to transfer the Shares in accordance with the terms of the notice delivered by such holder to Weatherford. -3- (2) If in the opinion of either of such counsel the proposed transfer of the Shares may not be effected without registration under the Securities Act of the Shares, Weatherford shall, as promptly as practicable, so notify the Optionee, and Weatherford shall not be obligated to effect such transfer of the Shares. D. If the Shares are not registered for sale under the Securities Act, each certificate for Shares issued upon exercise of this Option shall bear a legend to the effect that the Shares may not be transferred except upon compliance with the provisions of this Section 7, and each certificate for Shares transferred pursuant to Subsection C(1) of this Section 7 shall also bear such a legend unless, in the opinion of counsel for Weatherford, a legend is not required. The legend shall read in the form substantially as follows: "The shares of stock represented by this certificate shall 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 Weatherford Enterra, Inc. of an opinion of counsel satisfactory to Weatherford, in form and substance satisfactory to Weatherford, that registration is not required for such sale or transfer." E. The Optionee hereby covenants and agrees with Weatherford as follows: (1) The Optionee acknowledges that the Shares must be held by him indefinitely unless the Shares are registered for sale by him under the Securities Act or an exemption from such registration is available. He understands that any sale of the Shares made in reliance upon Rule 144 under the Securities Act may be made only in limited amounts after the expiration of two years from the date of receipt of the Shares and otherwise in accordance with the terms and conditions of such Rule. (2) Weatherford may instruct its transfer agent not to transfer any of the Shares unless such agent has been advised by Weatherford or otherwise has been satisfied that the Optionee has complied with the provisions described above. 8. CHANGES IN WEATHERFORD'S CAPITAL STRUCTURE. This Option 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, transfer, lease, exchange or other disposition of all or any part of its assets or business, or any corporate act or proceeding, whether of a similar character or otherwise. If Weatherford shall effect a subdivision or consolidation of shares of Common Stock or the payment of a stock dividend on the Common Stock outstanding, without receiving compensation therefor in money, services or property, or if Weatherford recapitalizes or otherwise changes its capital structure, then -4- (A) The number, class and per share price of the Shares shall be appropriately adjusted in such a manner as to entitle the Optionee to receive upon exercise of this Option, for the same aggregate cash consideration, the same total number and class of shares as he would have received had he exercised this Option in full immediately prior to the event requiring the adjustment; and (B) The number and class of shares then reserved for issuance pursuant to this Option shall be adjusted by substituting for the total number and class of shares of Common Stock then reserved that number and class of shares of stock that would have been received by the owner of an equal number of outstanding shares of Common Stock as a result of the event requiring the adjustment. 9. OTHER ISSUANCES. 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, property, labor or services, upon direct sale, 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, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to this Option. 10. LIMITATIONS ON EXERCISABILITY; DEATH OF OPTIONEE. In the event of the termination of the Consulting Agreement pursuant to subsection (i), (iii) or (iv) of Section 2(b) thereof before October 5, 2000, this Option shall thereafter be exercisable only with respect to such number of Shares that could be purchased by the Optionee immediately prior to such termination. After the death of the Optionee, his executors, administrators or any other person or persons to whom this Option may be transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to the Expiration Date, to exercise this Option, in whole or in part, in accordance with the terms hereof. 11. NOTICES. Every notice or other communication relating to this Option shall be in writing and shall be mailed to or delivered to the party for whom it is intended at such address as may from time to time be designated by it in a notice mailed or delivered to the other party as herein provided; provided that, unless and until some other address be so designated, all notices or communication by the Optionee to Weatherford shall be addressed to the Corporate Secretary of Weatherford and mailed or delivered to Weatherford at its office at the following address: Weatherford Enterra, Inc. 1360 Post Oak Boulevard Suite 1000 Houston, Texas 77056-3098 All notices or communications by Weatherford to the Optionee may be given to the Optionee personally or may be mailed to him at the following address: -5- D. Dale Wood 6846 Oakwood Trace Ct. Houston, Texas 77040 12. AMENDMENT. This Agreement may be amended, modified, superseded or canceled only by a written instrument executed by both parties hereto. 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PROVISIONS. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written. WEATHERFORD ENTERRA, INC. By: /s/ Philip Burguieres ---------------------------- Name: Philip Burguieres Title: Chairman, President and Chief Executive Officer Optionee /s/ D. Dale Wood ------------------------------------ D. DALE WOOD -6- EX-4.6 6 EXHIBIT 4.6 Exhibit 4.6 SEVERANCE AGREEMENT Agreement made as of February 20, 1992 between Enterra Corporation, a Delaware corporation (the "Company"), and M. Timothy Carey (the "Employee"). WHEREAS, the Employee has previously been employed as Executive Vice President of CRC-Evans Pipeline International, Inc., a "Subsidiary" (as defined in Section 1 hereof); and WHEREAS, as of the date of this Agreement the Employee shall become employed by the Company as President of the Oilfield Services and Equipment Group of the Company; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and its Subsidiaries, and, in this regard, the board of directors of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company and its Subsidiaries; WHEREAS, the board of directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Company, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with such Subsidiary is terminated subsequent to a "Change of Control" (as defined in Section l hereof) of the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: 1. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, including any compensation the payment of which has been deferred pursuant to a salary reduction or deferral plan (including a 401(k) plan, other than company matching contributions) or agreement, but exclusive of any cash payments made to him under the Company's Bonus Plan, or any contributions made for his benefit to the Company's 401(k) Plan or CRC-Evans Plan. (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or 2 (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except, pursuant to a revocable proxy as described in the proviso to subsection (ii) above) or disposing of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the board of directors of the Company. (e) "Bonus Plan" shall mean the Company's Management Incentive Bonus Plan, as in effect immediately prior to a Change of Control. (f) "Change of Control" shall be deemed to have taken place if (i) any Person (except the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan, or an Exempted Person), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d)(2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of the Company then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act. (g) "CRC-Evans Plan" shall mean the CRC-Evans Money Purchase Pension Plan, as in effect immediately prior to a Change of Control. (h) "Exempted Person" shall mean any of Shamrock Holdings of California, Inc., a Delaware corporation ("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees from any Exempted Person except where such transferees are Affiliates or Associates of Shamrock or Shamrock Holdings. (i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect immediately prior to a Change of Control. 3 (j) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (k) "Person" shall mean any individual, firm, corporation, partnership or other entity. (l) "Stock Plan" shall mean the Company's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (m) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (n) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date specified therein, as the case may be. (o) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (p) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company or any Subsidiary for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of twenty-six consecutive weeks, (y) for "cause," as defined in Section 8.3 of the Employment Agreement (as assigned and amended), dated as of February l, 1988, among the Company, CRC-Evans Pipeline International, Inc. and the Employee (the "Employment Agreement") , or (z) by reason of the occurrence of the Normal Retirement Date; or (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re-elect the Employee to the officer positions with the Company and its Subsidiaries held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the 4 Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) revocation or any modification (except as may be required in the normal course of business in light of any requirement of or change in federal law or regulations) of the Bonus Plan, 401(k) Plan or CRC-Evans Plan, or any action taken pursuant to the terms of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of equivalent amounts received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the Board to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 5 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the provisions of Section 10 hereof and to adjustment as provided in paragraph (b) below and Section 9(a), in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within fifteen days after the Termination Date (or as soon as possible thereafter in the event that the procedures set forth in Section 10(b) hereof cannot be completed within 15 days), an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) The Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) The average of the annual bonuses earned by the Employee under the Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to twenty-four months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall: (a) pay to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest 6 per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; (c) for vesting purposes only, in the event of a Termination upon a Change of Control occurring prior to the Normal Retirement Date, credit the Employee with the lesser of (i) two additional "years of service" (as defined in the Company's 401(k) Plan) or (ii) the period of time from the Termination Date to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC-Evans Plan, in addition to the years of service that would have otherwise been calculated by reference solely to the Termination Date, it being understood that benefits in respect of the two additional years of service shall to the extent permitted by applicable law be paid to the Employee under the Company's 401(k) Plan or CRC-Evans Plan, and that the Company shall, to the extent necessary to provide the Employee the additional benefits intended hereby, amend the 401(k) Plan or CRC-Evans Plan or pay such additional benefits outside the plan as may be necessary; and (d) permit the Employee to continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as 7 such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefore. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, and subject to the provisions of Section 10 hereof, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee, pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable federal and state securities laws. 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which the Employee may qualify. 8 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The Employment Agreement, the severance plan or policy, if any, applicable to employees of the Company or the Subsidiary which employs the Employee, and any other severance payments required by applicable statutes or provided under government programs may provide compensation and benefits to Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such agreements, plans, policies, statutes or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not the Company or any Subsidiary, shall be responsible for the payment of all federal, state and local taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. CERTAIN REDUCTION OF PAYMENTS. (a) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined as set forth herein that any payment or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the taxation of excess parachute payments under Section 4999 of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the taxation under Section 4999 of the Code. For 9 purposes of this Section 10, present value shall be determined in accordance with Section 280G(d) (4) of the Code. (b) All determinations to be made under this Section 10 shall be made by KPMG Peat Marwick, or the Company's independent public accountant immediately prior to the Change of Control if other than KPMG Peat Marwick (the "Accounting Firm"), which firm shall use its best efforts to provide its determinations and any supporting calculations both to the Company and the Employee within 10 days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Employee. The Company shall in its sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 10. Within five days after the Company's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement. (c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments, as the case may be, will have been made by the Company which should not have been made ("Overpayment") or that additional Agreement Payments which have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. Within two years after the Termination of Employment, the Accounting Firm shall review the determination made by it pursuant to the preceding paragraph. In the event that the Accounting Firm determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Employee which the Employee shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f) (2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount shall be payable by the Employee to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the Federal Rate. (d) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses of any nature resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or 10 expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. 11. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 12. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) the date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any reason other than a Termination upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 13. SUCCESSOR COMPANY. The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the 11 Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any such successor or successors to its business and/or assets, jointly and severally. 14. NOTICE. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 13100 Northwest Freeway Sixth Floor Houston, TX 77040 Attention: Chief Executive Officer With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103-6993 Attention: David R. King, Esq. If to the Employee, to: M. Timothy Carey 14111 Indian Wells Houston, TX 77069 With a required copy to: Wilshire, Scott & Dyer 4450 First City Tower Houston, TX 77002 Attention: Gene Wilshire, Esq. or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service. 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE 12 WITHOUT GIVING EFFECT TO SUCH STATE'S CONFLICT OF LAWS PROVISIONS. 16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. (a) This Agreement is intended to be in addition to the provisions of the Employment Agreement; provided, however, that in the event of a Termination upon a Change of Control, (i) Sections 5 and 6 of the Employment Agreement, and (ii) any similar provisions contained in any agreements then in effect entered into by Employee with CRC-Evans Pipeline International, Inc., a Texas corporation, or its predecessor by merger, shall terminate and be of no further force and effect. Subject to the foregoing, this Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by the Employee and approved by the board and executed on the Company's behalf by a duly authorized officer. The provisions of this Agreement may provide for payments to the Employee under certain compensation or bonus plans (including without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the CRC-Evans Plan) under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by the Company or the Board. (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its Subsidiaries. (c) The Employee acknowledges that from time to time, the Company and its subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives of the Company or its Subsidiaries may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of the Company or its Subsidiaries (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and 13 responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 17. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(p)(ii) of this Agreement. 19. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement on May 4, 1992, but as of the date first above written. Attest: ENTERRA CORPORATION /s/ M. Gay Mather By: /s/ D. Dale Wood - ------------------------------ --------------------------------- M. Gay Mather D. Dale Wood Secretary President and Chief Executive Officer /s/ Shirley M. Brandt /s/ M. Timothy Carey - ------------------------------ --------------------------------- Witness M. TIMOTHY CAREY 14 SEVERANCE AGREEMENT Agreement made as of February 20, 1992 between Enterra Corporation, a Delaware corporation (the "Company"), and C. Paul Evans (the "Employee"). WHEREAS, the Employee has previously been employed as President and Chief Operating Officer of CRC-Evans Pipeline International, Inc., a "Subsidiary" (as defined in Section 1 hereof); and WHEREAS, as of the date of this Agreement the Employee shall become employed by CRC-Evans Pipeline International, Inc. as its President and Chief Executive Officer, and shall also hold the title of President of the Pipeline Services and Equipment Group of the Company; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and its Subsidiaries, and, in this regard, the board of directors of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company and its Subsidiaries; WHEREAS, the board of directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Company's CRC-Evans Pipeline international, Inc. Subsidiary, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with such Subsidiary is terminated subsequent to a "Change of Control" (as defined in Section l hereof) of the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: l. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities,Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, including any compensation the payment of which has been deferred pursuant to a salary reduction or deferral plan (including a 401(k) plan, other than company matching contributions) or agreement, but exclusive of any cash payments made to him under the Company's Bonus Plan, or any contributions made for his benefit to the Company's 401(k) Plan or CRC-Evans Plan. (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and 2 Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except, pursuant to a revocable proxy as described in the proviso to subsection (ii) above) or disposing of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the board of directors- of the Company. (e) "Bonus Plan" shall mean the Company's Management Incentive Bonus Plan, as in effect immediately prior to a Change of Control. (f) "Change of Control" shall be deemed to have taken place if (i) any Person (except the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan, or an Exempted Person), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of the Company then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act. (g) "CRC-Evans Plan" shall mean the CRC-Evans Money Purchase Pension Plan, as in effect immediately prior to a Change of Control. (h) "Exempted Person" shall mean any of Shamrock Holdings of California, Inc., a Delaware corporation ("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees from any Exempted Person except where such 3 transferees are Affiliates or Associates of Shamrock or Shamrock Holdings. (i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect immediately prior to a Change of Control. (j) "Normal Retirement Date" shall mean, the first day of the calendar month coincident with or next following the Employee's 65th birthday. (k) "Person" shall mean any individual, firm, corporation, partnership or other entity. (l) "Stock Plan" shall mean the Company's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (m) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (n) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date specified therein, as the case may be. (o) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (p) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company or any Subsidiary for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of twenty-six consecutive weeks, (y) for "cause," as defined in Section 8.3 of the Employment Agreement (as amended), dated as of February l, 1988, among the Company, CRC-Evans Pipeline International, Inc. and the Employee (the "Employment Agreement"), or (z) by reason of the occurrence of the Normal Retirement Date; or (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; 4 (B) any removal of the Employee from or any failure to re-elect the Employee to the officer positions with the Company and its Subsidiaries held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) revocation or any modification (except as may be required in the normal course of business in light of any requirement of or change in federal law or regulations) of the Bonus Plan, 401(k) Plan or CRC-Evans Plan, or any action taken pursuant to the terms of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of equivalent amounts received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the Board to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, 5 (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice) 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the provisions of Section 10 hereof and to adjustment as provided in paragraph (b) below and Section 9(a), in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within fifteen days after the Termination Date (or as soon as possible thereafter in the event that the procedures set forth in Section 10(b) hereof cannot be completed within 15 days), an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) The Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) The average of the annual bonuses earned by the Employee under the Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to twenty-four months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall: (a) pay to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's 6 Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; (c) for vesting purposes only, in the event of a Termination upon a Change of Control occurring prior to the Normal Retirement Date, credit the Employee with the lesser of (i) two additional "years of service" (as defined in the Company's 401(k) Plan) or (ii) the period of time from the Termination Date to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC-Evans Plan, in addition to the years of service that would have otherwise been calculated by reference solely to the Termination Date, it being understood that benefits in respect of the two additional years of service shall to the extent permitted by applicable law be paid to the Employee under the Company's 401(k) Plan or CRC-Evans Plan, and that the Company shall, to the extent necessary to provide the Employee the additional benefits intended hereby, amend the 401(k) Plan or CRC-Evans Plan or pay such additional benefits outside the plan as may be necessary; and 7 (d) permit the Employee to continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefore. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, and subject to the provisions of Section 10 hereof, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee, pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable federal and state securities laws. 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The Employment Agreement, the severance plan or policy, if any, applicable to employees of the Company or the Subsidiary which employs the Employee, and any other severance payments required by applicable statutes or provided under government programs may provide compensation and benefits to Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such agreements, plans, policies, statutes or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not the Company or any Subsidiary, shall be responsible for the payment of all federal, state and local taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. CERTAIN REDUCTION OF PAYMENTS. (a) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined as set forth herein that any payment or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the taxation of excess parachute payments under Section 4999 of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or 9 distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the taxation under Section 4999 of the Code. For purposes of this Section 10, present value shall be determined in accordance with Section 280G(d) (4) of the Code. (b) All determinations to be made under this Section 10 shall be made by KPMG Peat Marwick, or the Company's independent public accountant immediately prior to the Change of Control if other than KPMG Peat Marwick (the "Accounting Firm"), which firm shall use its best efforts to provide its determinations and any supporting calculations both to the Company and the Employee within 10 days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Employee. The Company shall in its sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 10. Within five days after the Company's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement. (c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments, as the case may be, will have been made by the Company which should not have been made ("Overpayment") or that additional Agreement Payments which have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. Within two years after the Termination of Employment, the Accounting Firm shall review the determination made by it pursuant to the preceding paragraph. In the event that the Accounting Firm determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Employee which the Employee shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); PROVIDED, however, that no amount shall be payable by the Employee to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the Federal Rate. 10 (d) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses of any nature resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. 11. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 12. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) the date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any reason other than a Termination upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 13. SUCCESSOR COMPANY. The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets Of the Company, by agreement in 11 form and substance satisfactory to the Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any such successor or successors to its business and/or assets, jointly and severally. 14. NOTICE. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 13100 Northwest Freeway Sixth Floor Houston, TX 77040 Attention: Chief Executive Officer With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103-6993 Attention: David R. King, Esq. If to the Employee, to: C. Paul Evans CRC-Evans Pipeline International, Inc. 13100 Northwest Freeway Sixth Floor Houston, TX 77040 Attention: C. Paul Evans With a required copy to: Boesche, McDermott & Eskridge 800 Oneok Plaza 100 West 5th Street Tulsa, OK 74103-4216 Attention: David B. McKinney, Esq. 12 or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service. 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO SUCH STATES CONFLICT OF LAWS PROVISIONS. 16. CONTENTS OF AGREEMENT AMENDMENT AND ASSIGNMENT. (a) This Agreement is intended to be in addition to the provisions of the Employment Agreement; provided, however, that in the event of a Termination upon a Change of Control, (i) Sections 5 and 6 of the Employment Agreement, and (ii) any similar provisions contained in any agreements then in effect entered into by Employee with CRC-Evans Pipeline International, Inc., a Texas corporation, or its predecessor by merger, shall terminate and be of no further force and effect. Subject to the foregoing, this Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by the Employee and approved by the board and executed on the Company's behalf by a duly authorized officer. The provisions of this Agreement may provide for payments to the Employee under certain compensation or bonus plans (including without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the CRC-Evans Plan) under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by the Company or the Board. (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its Subsidiaries. (c) The Employee acknowledges that from time to time, the Company and its subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives of the Company or its Subsidiaries may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, 13 procedures or statements of any nature by or on behalf of the Company or its Subsidiaries (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 17. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(p) (ii) of this Agreement. 19. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. 14 IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement on March __, 1992, but as of the date first above written. Attest: ENTERRA CORPORATION /s/ M. Gay Mather By: /s/ D. Dale Wood - ------------------------------ ------------------------------ M. Gay Mather D. Dale Wood Secretary President and Chief Executive Officer /s/ Steven W. Krablin /s/ C. Paul Evans - ------------------------------ -------------------------------- Witness C. PAUL EVANS 15 SEVERANCE AGREEMENT Agreement made as of April 1, 1993 between Pipeline Induction Heat Limited (the "Company") and Brian Charles Goff (the "Employee"). WHEREAS, the Employee is presently employed by the Company as its Managing Director; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and, in this regard, the directors of the Company recognize that, as is the case with many publicly held corporations, the possibility of a change in control of Enterra Corporation ("Enterra"), the parent of the Company, may exist and that such possibility, and the uncertainty and questions which it may raise among management of the Company, may result in the departure or distraction of key management personnel to the detriment of the Company; WHEREAS, the directors of the Company, with the concurrence of Enterra, have determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of Enterra or the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Company, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with the Company is terminated subsequent to a "Change of Control" (as defined in Section l hereof) of Enterra or the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: l. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, if any, but exclusive of any cash payments made to him under the Company's Bonus Plan, if any, or under any type of deferred compensation or retirement plan; (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (a) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (b) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or 2 (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting or disposing of any voting securities of Enterra; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Bonus Plan" shall mean any Company or Enterra bonus plan in which the Employee participates, as in effect immediately prior to a Change of Control. (e) "Change of Control" shall be deemed to have taken place if (i) any Person (except Enterra, any Subsidiary of Enterra, any employee benefit plan of Enterra or of any Subsidiary of Enterra, or any Person or entity organized, appointed or established by Enterra for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d)(2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of Enterra then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act, or (ii) the Company ceases to be controlled, directly or indirectly, by Enterra, or if it sells all or substantially all of its assets to a company not so controlled by Enterra. (f) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (g) "Person" shall mean any individual, firm, corporation, partnership or other entity. (h) "Stock Plan" shall mean Enterra's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (i) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (j) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 3 hereof or any later date specified therein, as the case may be. (k) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (l) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company or Enterra for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of six consecutive months, (y) for "cause," which shall mean misappropriation of funds, habitual insobriety, substance abuse, conviction of a crime involving moral turpitude, or gross negligence in the performance of his duties, which gross negligence has had a material adverse effect on the business, operations, assets, properties or financial condition of the Company and its Subsidiaries, if any, taken as a whole, or (z) by reason of the occurrence of the Normal Retirement Date; or (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries, if any, of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re-elect the Employee to the officer positions with the Company and its subsidiaries, if any, held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) any revocation or material modification (except as may be required in the 4 normal course of business in light of any requirement of or change in applicable law or regulations) of any Bonus Plan or deferred compensation or retirement plan, or any action taken pursuant to the terms of any of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of amounts equivalent to those received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the directors of the Company or of Enterra to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 12 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 5 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the adjustments provided in paragraph (b) below and Section 9(a) hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within 15 days after the Termination Date, an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) the Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) the average of the annual bonuses earned by the Employee under any Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to 24 months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall also: (a) pay to the Employee within 15 days after the Termination Date, unless the Employee has exercised such options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of Enterra's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. Upon such payment, the options or rights shall terminate. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of Enterra's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), and (z) in respect of a Change of Control under Section 1(e)(i) hereof, the highest 6 per share price of Enterra's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of Enterra has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months, after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; and (c) permit the Employee to receive any car allowance or continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefor. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable U.S. federal and state securities laws. 7 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by Enterra, the Company or any of the Company's Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The severance plan or policy, if any, applicable to employees of the Company or any Subsidiary which employs the Employee, and any other severance payments required by employment contracts or statutes or provided under government programs may provide compensation and benefits to the Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such 8 agreements, plans, policies, statues or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not Enterra, the Company or any Subsidiary, shall be responsible for the payment of all taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, one of whom shall be selected by the Company, one of whom shall be selected by the Employee and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 11. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) March 31, 1998 or such earlier date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any 9 reason other than a Termination Upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 12. NOTICES. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and may be delivered personally or mailed by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 2707 North Loop West Suite 1050 Houston, TX 77008 USA Attention: The Chairman With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103 USA Attention: David R. King, Esq. If to the Employee, to: Brian Charles Goff Rest Harrow Benty Heath Lane Willaston Cheshire England or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, on the next business day in the case of overnight express courier service or when actually received if sent in any other fashion. 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF 10 DELAWARE, UNITED STATES OF AMERICA, WITHOUT GIVING EFFECT TO SUCH STATE'S CONFLICT OF LAWS PROVISIONS. 14. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. (a) This Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by (i) the Employee and (ii) after approval by the directors of the Company and, in writing, by the chief executive officer of Enterra, by a duly authorized director of the Company other than the Employee. The provisions of this Agreement may provide for payments to the Employee under certain compensation, bonus or stock option plans under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by the Company or Enterra. (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of Enterra, the Company or any Subsidiary of either. (c) The Employee acknowledges that from time to time, Enterra, the Company and their Subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives thereof may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of Enterra, the Company or any Subsidiary of either (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 15. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or 11 unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 16. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(l)(ii) of this Agreement. 17. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which shall be an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. The COMMON SEAL of ) PIPELINE INDUCTION HEAT ) LIMITED was hereunto ) affixed in the presence ) of:- ) /s/ Chuck Evans Director Secretary SIGNED SEALED and DELIVERED ) by the said BRIAN CHARLES ) /s/ Brian C. Goff GOFF in the presence of:- ) 12 SEVERANCE AGREEMENT Agreement made as of February 8, 1990 between Enterra Corporation, a Delaware corporation (the "Company"), and Steven C. Grant (the "Employee"). WHEREAS, the Employee is presently employed by the Company as its Senior Vice President - Finance and Chief Financial Officer; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and its subsidiaries, and, in this regard, the board of directors of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company; WHEREAS, the board of directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Company, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with the Company is terminated subsequent to a "Change of Control" (as defined in Section 1 hereof) of the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: l. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, including any compensation the payment of which has been deferred pursuant to a salary reduction or deferral plan (including a 401(k) plan, other than company matching contributions) or agreement, but exclusive of any cash payments made to him under the Company's Bonus Plan, or any contributions made for his benefit to the Company's 401(k) Plan or CRC-Evans Plan. (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of 2 the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except, pursuant to a revocable proxy as described in the proviso to subsection (ii) above or the May 2, 1986 option agreement between Shamrock Holdings, Inc. and the shareholders known as the "SGS Group" or their successors) or disposing of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the board of directors of the Company. (e) "Bonus Plan" shall mean the Company's Management Incentive Bonus Plan, as in effect immediately prior to a Change of Control. (f) "Change of Control" shall be deemed to have taken place if (i) any Person (except the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan, or an Exempted Person), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of the Company then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act. (g) "CRC-Evans Plan" shall mean the CRC-Evans Money Purchase Pension Plan, as in effect immediately prior to a Change of Control. (h) "Exempted Person" shall mean any of Shamrock Holdings of California, Inc., a Delaware corporation 3 ("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock Holdings"), or any Affiliate or Associate of shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees from any Exempted Person except where such transferees are Affiliates or Associates of shamrock or Shamrock Holdings. (i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect immediately prior to a Change of Control. (j) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (k) "Person" shall mean any individual, firm, corporation, partnership or other entity. (l) "Stock Plan" shall mean the Company's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (m) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (n) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date specified therein, as the case may be. (o) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (p) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company for any reason other than (x) the Employee's continuous injury or incapacity for a period of six consecutive months, (y) for "cause," which shall mean misappropriation of funds, habitual insobriety, substance abuse, conviction of a crime involving moral turpitude, or gross negligence in the performance of his duties, which gross negligence has had a material adverse effect on the business, operations, assets, properties or financial condition of the Company and its Subsidiaries taken as a whole, or (z) by reason of the occurrence of the Normal Retirement Date; or 4 (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re-elect the Employee to the officer positions with the Company and its Subsidiaries held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) revocation or any modification (except as may be required in the normal course of business in light of any requirement of or change in federal law or regulations) of the Bonus Plan, 401(k) Plan or CRC-Evans Plan, or any action taken pursuant to the terms of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of equivalent amounts received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the Board to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business 5 immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the provisions of Section 10 hereof and to adjustment as provided in paragraph (b) below and Section 9(a), in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within fifteen days after the Termination Date (or as soon as possible thereafter in the event that the procedures set forth in Section 10(b) hereof cannot be completed within 15 days), an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) The Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) The average of the annual bonuses earned by the Employee under the Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to twenty-four months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 6 4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall: (a) pay to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its subsidiaries to the Employee immediately prior to the Change of Control; 7 (c) for vesting purposes only, in the event of a Termination upon a Change of Control occurring prior to the Normal Retirement Date, credit the Employee with the lesser of (i) two additional "years of service" (as defined in the Company's 401(k) Plan) or (ii) the period of time from the Termination Date to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC-Evans Plan, in addition to the years of service that would have otherwise been calculated by reference solely to the Termination Date, it being understood that benefits in respect of the two additional years of service shall be paid to the Employee under the Company's 401(k) Plan or CRC-Evans Plan, and that the Company shall, to the extent necessary to provide the Employee the additional benefits intended hereby, amend the 401(k) Plan or CRC-Evans Plan or pay such additional benefits outside the plan as may be necessary; and (d) permit the Employee to continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefore. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, and subject to the provisions of Section 10 hereof, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee, pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable federal and state securities laws. 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. 8 (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The severance plan or policy, if any, applicable to employees of Enterra or the Subsidiary which employs the Employee, and any other severance payments required by applicable statutes or provided under government programs may provide compensation and benefits to Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such agreements, plans, policies, statues or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not the Company or any Subsidiary, shall be responsible for the payment of all 9 federal, state and local taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. CERTAIN REDUCTION OF PAYMENTS. (a) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined as set forth herein that any payment or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the taxation of excess parachute payments under Section 4999 of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the taxation under Section 4999 of the Code. For purposes of this Section 10, present value shall be determined in accordance with Sect ion 280G(d) (4) of the Code. (b) All determinations to be made under this Section 10 shall be made by Peat Marwick Main & Co., or the Company's independent public accountant immediately prior to the Change of Control if other than Peat Marwick Main & Co. (the "Accounting Firm"), which firm shall use its best efforts to provide its determinations and any supporting calculations both to the Company and the Employee within 10 days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Employee. The Company shall in its sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 10. Within five days after the Company's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement. (c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments, as the case may be, will have been made by the Company which should not have been made 10 ("Overpayment") or that additional Agreement Payments which have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. Within two years after the Termination of Employment, the Accounting Firm shall review the determination made by it pursuant to the preceding paragraph. In the event that the Accounting Firm determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Employee which the Employee shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f) (2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount shall be payable by the Employee to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the Federal Rate. (d) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses of any nature resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. 11. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of 11 competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 12. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) the date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any reason other than a Termination Upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 13. SUCCESSOR COMPANY. The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any such successor or successors to its business and/or assets, jointly and severally. 14. NOTICE. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 2707 North Loop West Suite 1050 Houston, TX 77008 12 Attention: The Chairman With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103 Attention: David R. King, Esq. If to the Employee, to: Steven C. Grant 13610 Alchester Houston, TX 77079 or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service. 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PROVISIONS. 16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. (a) This Agreement supersedes all prior agreements (including, without limitation, the severance agreement dated February 9, 1989 which is hereby terminated) and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by the Employee and approved by the board and executed on the Company's behalf by a duly authorized officer. The provisions of this Agreement may provide for payments to the Employee under certain compensation or bonus plans (including without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the CRC-Evans Plan) under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by the Company or the Board. 13 (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its Subsidiaries. (c) The Employee acknowledges that from time to time, the Company and its subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives of the Company or its Subsidiaries may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of the Company or its Subsidiaries (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 17. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(p)(ii) of this Agreement. 19. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several 14 counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. Attest: ENTERRA CORPORATION /s/ Steven W. Krablin By:/s/ Thomas S. McIntosh - ------------------------------- -------------------------------- Asst. Secretary Thomas S. McIntosh President and Chief Executive Officer /s/ Gay Mather /s/ Steven C. Grant - ------------------------------- ---------------------------------- Witness Steven C. Grant 15 SEVERANCE AGREEMENT Agreement made as of February 8, 1990 between Enterra Corporation, a Delaware corporation (the "Company"), and Edward C. Grimes (the "Employee"). WHEREAS, the Employee is presently employed by Key Oilfield Supply & Rentals Ltd., a "Subsidiary" (as defined in Section 1 hereof), as its President and Chief Operating Officer; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and its Subsidiaries, and, in this regard, the board of directors of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company; WHEREAS, the board of directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Subsidiary, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with the Company is terminated subsequent to a "Change of Control" (as defined in Section 1 hereof) of the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: 1. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, including any compensation the payment of which has been deferred pursuant to a salary reduction or deferral plan (including a 401(k) plan, other than company matching contributions) or agreement, but exclusive of any cash payments made to him under the Company's Bonus Plan, or any contributions made for his benefit to the Company's 401(k) Plan or CRC-Evans Plan. (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of 2 the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except, pursuant to a revocable proxy as described in the proviso to subsection (ii) above or the May 2, 1986 option agreement between Shamrock Holdings, Inc. and the shareholders known as the "SGS Group" or their successors) or disposing of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the board of directors of the Company. (e) "Bonus Plan" shall mean the Company's Management Incentive Bonus Plan, as in effect immediately prior to a Change of Control. (f) "Change of Control" shall be deemed to have taken place if (i) any Person (except the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan, or an Exempted Person), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of the Company then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act. (g) "CRC-Evans Plan" shall mean the CRC-Evans Money Purchase Pension Plan, as in effect immediately prior to a Change of Control. (h) "Exempted Person" shall mean any of Shamrock Holdings of California, Inc., a Delaware corporation 3 ("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees from any Exempted Person except where such transferees are Affiliates or Associates of Shamrock or Shamrock Holdings. (i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect immediately prior to a Change of Control. (j) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (k) "Person" shall mean any individual, firm, corporation, partnership or other entity. (l) "Stock Plan" shall mean the Company's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (m) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (n) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date specified therein, as the case may be. (o) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (p) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of six consecutive months, (y) for "cause," which shall mean misappropriation of funds, habitual insobriety, substance abuse, conviction of a crime involving moral turpitude, or gross negligence in the performance of his duties, which gross negligence has had a material adverse effect on the business, operations, assets, properties or financial condition of the Company and its Subsidiaries taken as a whole, or (z) by reason of the occurrence of the Normal Retirement Date; or 4 (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re- elect the Employee to the officer positions with the Company and its Subsidiaries held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) revocation or any modification (except as may be required in the normal course of business in light of any requirement of or change in federal law or regulations) of the Bonus Plan, 401(k) Plan or CRC-Evans Plan, or any action taken pursuant to the terms of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of equivalent amounts received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the Board to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business 5 immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the provisions of Section 10 hereof and to adjustment as provided in paragraph (b) below and Section 9(a), in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within fifteen days after the Termination Date (or as soon as possible thereafter in the event that the procedures set forth in Section 10(b) hereof cannot be completed within 15 days), an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) The Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) The average of the annual bonuses earned by the Employee under the Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to twenty-four months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 6 4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall: (a) pay to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given-rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; 7 (c) for vesting purposes only, in the event of a Termination upon a Change of Control occurring prior to the Normal Retirement Date, credit the Employee with the lesser of (i) two additional "years of service" (as defined in the Company's 401(k) Plan) or (ii) the period of time from the Termination Date to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC- Evans Plan, in addition to the years of service that would have otherwise been calculated by reference solely to the Termination Date, it being understood that benefits in respect of the two additional years of service shall be paid to the Employee under the Company's 401(k) Plan or CRC-Evans Plan, and that the Company shall, to the extent necessary to provide the Employee the additional benefits intended hereby, amend the 401(k) Plan or CRC-Evans Plan or pay such additional benefits outside the plan as may be necessary; and (d) permit the Employee to continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefore. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, and subject to the provisions of Section 10 hereof, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee, pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable federal and state securities laws. 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. 8 (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The severance plan or policy, if any, applicable to employees of Enterra or the Subsidiary which employs the Employee, and any other severance payments required by applicable statutes or provided under government programs may provide compensation and benefits to Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such agreements, plans, policies, statues or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not the Company or any Subsidiary, shall be responsible for the payment of all 9 federal, state and local taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. CERTAIN REDUCTION OF PAYMENTS. (a) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined as set forth herein that any payment or distribution by the Company to or for the benefit or the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the taxation-of excess parachute payments under Section 4999 of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the taxation under Section 4999 of the Code. For purposes of this Section 10, present value shall be determined in accordance with Section 280G(d)(4) of the Code. (b) All determinations to be made under this Section 10 shall be made by Peat Marwick Main & Co., or the Company's independent public accountant immediately prior to the Change of Control if other than Peat Marwick Main & Co. (the "Accounting Firm"), which firm shall use its best efforts to provide its determinations and any supporting calculations both to the Company and the Employee within 10 days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Employee. The Company shall in its sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 10. Within five days after the Company's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement. (c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments, as the case may be, will have been made by the Company which should not have been made 10 ("Overpayment") or that additional Agreement Payments which have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. Within two years after the Termination of Employment, the Accounting Firm shall review the determination made by it pursuant to the preceding paragraph. In the event that the Accounting Firm determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Employee which the Employee shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f) (2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount shall be payable by the Employee to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the Federal Rate. (d) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses of any nature resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. 11. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of 11 competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 12. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) the date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any reason other than a Termination Upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 13. SUCCESSOR COMPANY. The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of.the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any such successor or successors to its business and/or assets, jointly and severally. 14. NOTICE. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 2707 North Loop West Suite 1050 Houston, TX 77008 12 Attention: The Chairman With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103 Attention: David R. King, Esq. If to the Employee, to: Edward C. Grimes 123 Varsity Estates Grove, NW Calgary, Alberta T3B4C8 or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service. 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PROVISIONS. 16. CONTENTS OF AGREEMENT. AMENDMENT AND ASSIGNMENT. (a) This Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by the Employee and approved by the board and executed on the Company's behalf by a duly authorized officer. The provisions of this Agreement may provide for payments to the Employee under certain compensation or bonus plans (including without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the CRC-Evans Plan) under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by the Company or the Board. 13 (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its Subsidiaries. (c) The Employee acknowledges that from time to time, the Company and its subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives of the Company or its Subsidiaries may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of the Company or its Subsidiaries (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 17. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(p) (ii) of this Agreement. 19. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which is an original. It shall not be 14 necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. Attest: ENTERRA CORPORATION /s/ Steven W. Krablin By: /s/ Thomas S. McIntosh - ------------------------------ -------------------------------- Secretary Thomas S. McIntosh President and Chief Executive Officer /s/ S. Waddell /s/ E. C. Grimes - ------------------------------ -------------------------------- Witness Edward C. Grimes 15 SEVERANCE AGREEMENT Agreement made as of February 8, 1990 between Enterra Corporation, a Delaware corporation (the "Company"), and Steven W. Krablin (the "Employee"). WHEREAS, the Employee is presently employed by the Company as its Vice President, Controller and Treasurer; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and its Subsidiaries, and, in this regard, the board of directors of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company; WHEREAS, the board of directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Company, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with the Company is terminated subsequent to a "Change of Control" (as defined in Section 1 hereof) of the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: 1. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, including any compensation the payment of which has been deferred pursuant to a salary reduction or deferral plan (including a 401(k) plan, other than company matching contributions) or agreement, but exclusive of any cash payments made to him under the Company's Bonus Plan, or any contributions made for his benefit to the Company's 401(k) Plan or CRC-Evans Plan. (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by 2 such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except, pursuant to a revocable proxy as described in the proviso to subsection (ii) above or the May 2, 1986 option agreement between Shamrock Holdings, Inc. and the shareholders known as the "SGS Group" or their successors) or disposing of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the board of directors of the Company. (e) "Bonus Plan" shall mean the Company's Management Incentive Bonus Plan, as in effect immediately prior to a Change of Control. (f) "Change of Control" shall be deemed to have taken place if (i) any Person (except the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan, or an Exempted Person), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d)(2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of the Company then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act. (g) "CRC-Evans Plan" shall mean the CRC-Evans Money Purchase Pension Plan, as in effect immediately prior to a Change of Control. (h) "Exempted Person" shall mean any of Shamrock Holdings of California, Inc., a Delaware corporation ("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock Holdings"), or any Affiliate or 3 Associate of Shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees from any Exempted Person except where such transferees are Affiliates or Associates of Shamrock or Shamrock Holdings. (i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect immediately prior to a Change of Control. (j) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (k) "Person" shall mean any individual, firm, corporation, Partnership or other entity. (l) "Stock Plan" shall mean the Company's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (m) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (n) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date Specified therein, as the case may be. (o) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (p) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of six consecutive months, (y) for "cause," which shall mean misappropriation of funds, habitual insobriety, substance abuse, conviction of a crime involving moral turpitude, or gross negligence in the performance of his duties, which gross negligence has had a material adverse effect on the business, operations, assets, properties or financial condition of the Company and its Subsidiaries taken as a whole, or (z) by reason of the occurrence of the Normal Retirement Date; or (ii) initiated by the Employee following one or more of the following occurrences: 4 (A) a significant reduction by the Company or its Subsidiaries of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re- elect the Employee to the officer positions with the Company and its Subsidiaries held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) revocation or any modification (except as may be required in the normal course of business in light of any requirement of or change in federal law or regulations) of the Bonus Plan, 401(k) Plan or CRC-Evans Plan, or any action taken pursuant to the terms of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of equivalent amounts received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the Board to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business immediately preceding the Change of Control may be located, or which is otherwise an 5 unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the provisions of Section 10 hereof and to adjustment as provided in paragraph (b) below and Section 9(a), in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within fifteen days after the Termination Date (or as soon as possible thereafter in the event that the procedures set forth in Section 10(b) hereof cannot be completed within 15 days), an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) The Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) The average of the annual bonuses earned by the Employee under the Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to twenty-four months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 6 4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall: (a) pay to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; 7 (c) for vesting purposes only, in the event of a Termination upon a Change of Control occurring prior to the Normal Retirement Date, credit the Employee with the lesser of (i) two additional "years of service" (as defined in the Company's 401(k) Plan) or (ii) the period of time from the Termination Date to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC- Evans Plan, in addition to the years of service that would have otherwise been calculated by reference solely to the Termination Date, it being understood that benefits in respect of the two additional years of service shall be paid to the Employee under the Company's 401(k) Plan or CRC-Evans Plan, and that the Company shall, to the extent necessary to provide the Employee the additional benefits intended hereby, amend the 401(k) Plan or CRC-Evans Plan or pay such additional benefits outside the plan as may be necessary; and (d) permit the Employee to continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefore. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, and subject to the provisions of Section 10 hereof, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee, pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable federal and state securities laws. 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. 8 (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The severance plan or policy, if any, applicable to employees of Enterra or the Subsidiary which employs the Employee, and any other severance payments required by applicable statutes or provided under government programs may provide compensation and benefits to Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such agreements, plans, policies, statues or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not the Company or any Subsidiary, shall be responsible for the payment of all 9 federal, state and local taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. CERTAIN REDUCTION OF PAYMENTS. (a) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined as set forth herein that any payment or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the taxation of excess parachute payments under Section 4999 of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the taxation under Section 4999 of the Code. For purposes of this Section 10, present value shall be determined in accordance with Section 280G(d)(4) of the Code. (b) All determinations to be made under this Section 10 shall be made by Peat Marwick Main & Co., or the Company's independent public accountant immediately prior to the Change of Control if other than Peat Marwick Main & Co. (the "Accounting Firm"), which firm shall use its best efforts to provide its determinations and any supporting calculations both to the Company and the Employee within 10 days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Employee. The Company shall in its sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 10. Within five days after the Company's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement. (c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is 10 possible that Agreement Payments, as the case may be, will have been made by the Company which should not have been made ("Overpayment") or that additional Agreement Payments which have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. Within two years after the Termination of Employment, the Accounting Firm shall review the determination made by it pursuant to the preceding paragraph. In the event that the Accounting Firm determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Employee which the Employee shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f) (2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount shall be payable by the Employee to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the Federal Rate. (d) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses of any nature resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. 11. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and 11 nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 12. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) the date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any reason other than a Termination Upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 13. SUCCESSOR COMPANY. The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any such successor or successors to its business and/or assets, jointly and severally. 14. NOTICE. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 2707 North Loop West 12 Suite 1050 Houston, TX 77008 Attention: The Chairman With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103 Attention: David R. King, Esq. If to the Employee, to: Steven W. Krablin 5611 Theall Road Houston, TX 77066 or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service. 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PROVISIONS. 16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. (a) This Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by the Employee and approved by the board and executed on the Company's behalf by a duly authorized officer. The provisions of this Agreement may provide for payments to the Employee under certain compensation or bonus plans (including without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the CRC-Evans Plan) under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this 13 Agreement without further action by the Company or the Board. (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its Subsidiaries. (c) The Employee acknowledges that from time to time, the Company and its subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives of the Company or its Subsidiaries may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of the Company or its Subsidiaries (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 17. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(p) (ii) of this Agreement. 14 19. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. Attest: ENTERRA CORPORATION /s/ Steven C. Grant By: /s/ Thomas S. McIntosh - ------------------------------ ------------------------------ Secretary Thomas S. McIntosh President and Chief Executive Officer /s/ Gay Mather /s/ Steven W. Krablin - ------------------------------ --------------------------------- Witness Steven W. Krablin 15 SEVERANCE AGREEMENT Agreement made as of November 10, 1993 between Enterra Corporation, a Delaware corporation (the "Company"), and Windell D. Norris, Jr. (the "Employee"). WHEREAS, the Employee is presently employed by CRC-Evans Pipeline International, Inc., a "Subsidiary" (as defined in Section 1 hereof), as its Executive Vice President; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and its Subsidiaries, and, in this regard, the board of directors of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company; WHEREAS, the board of directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Subsidiary, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with the Company is terminated subsequent to a "Change of Control" (as defined in Section l hereof) of the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: l. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, including any compensation the payment of which has been deferred pursuant to a salary reduction or deferral plan (including a 401(k) plan, other than company matching contributions) or agreement, but exclusive of any cash payments made to him under the Company's Bonus Plan, or any contributions made for his benefit to the Company's 401(k) Plan or CRC-Evans Plan. (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable 2 proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except, pursuant to a revocable proxy as described in the proviso to subsection (ii) above or disposing of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the board of directors of the Company. (e) "Bonus Plan" shall mean the Company's Management Incentive Bonus Plan, as in effect immediately prior to a Change of Control. (f) "Change of Control" shall be deemed to have taken place if any Person (except the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any subsidiary of the Company, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan, or an Exempted Person), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of the Company then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act. (g) "CRC-Evans Plan" shall mean the CRC-Evans Money Purchase Pension Plan, as in effect immediately prior to a Change of Control. (h) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect immediately prior to a Change of Control. 3 (i) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (j) "Person" shall mean any individual, firm, corporation, partnership or other entity. (k) "Stock Plan" shall mean the Company's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (l) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (m) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date specified therein, as the case may be. (n) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (o) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of six consecutive months, (y) for "cause," which shall mean misappropriation of funds, habitual insobriety, substance abuse, conviction of a crime involving moral turpitude, or gross negligence in the performance of his duties, which gross negligence has had a material adverse effect on the business, operations, assets, properties or financial condition of the Company and its Subsidiaries taken as a whole, or (z) by reason of the occurrence of the Normal Retirement Date; or (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re-elect the Employee to the 4 officer positions with the Company and its Subsidiaries held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) revocation or any modification (except as may be required in the normal course of business in light of any requirement of or change in federal law or regulations) of the Bonus Plan, 401(k) Plan or CRC-Evans Plan, or any action taken pursuant to the terms of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of equivalent amounts received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the Board to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer (other than a transfer to the metropolitan Tulsa, Oklahoma area as contemplated by Section 1.3 of that Employment Agreement dated as of January 1, 1993 between the Employee and CRC-Evans Pipeline International, Inc.) of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 5 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the provisions of Section 10 hereof and to adjustment as provided in paragraph (b) below and Section 9(a), in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within fifteen days after the Termination Date (or as soon as possible thereafter in the event that the procedures set forth in Section 10(b) hereof cannot be completed within 15 days), an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) The Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) The average of the annual bonuses earned by the Employee under the Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to twenty-four months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall: (a) pay to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such 6 options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. Upon such payment, such options or rights shall terminate. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; (c) for vesting purposes only, in the event of a Termination upon a Change of Control occurring prior to the Normal Retirement Date, credit the Employee with the lesser of (i) two additional "years of service" (as defined in the Company's 401(k) Plan) or (ii) the period of time from the 7 Termination Date to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC-Evans Plan, in addition to the years of service that would have otherwise been calculated by reference solely to the Termination Date, it being understood that benefits in respect of the two additional years of service shall be paid to the Employee under the Company's 401(k) Plan or CRC-Evans Plan, and that the Company shall, to the extent necessary to provide the Employee the additional benefits intended hereby, amend the 401(k) Plan or CRC-Evans Plan or pay such additional benefits outside the plan as may be necessary; and (d) permit the Employee to receive any car allowance or continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefor. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, and subject to the provisions of Section 10 hereof, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee, pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable federal and state securities laws. 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by 8 arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The severance plan or policy, if any, applicable to employees of Enterra or the Subsidiary which employs the Employee, and any other severance payments required by employment agreements or applicable statutes or provided under government programs may provide compensation and benefits to Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such agreements, plans, policies, statues or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not the Company or any Subsidiary, shall be responsible for the payment of all federal, state and local taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. CERTAIN REDUCTION OF PAYMENTS. 9 (a) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined as set forth herein that any payment or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the taxation of excess parachute payments under Section 4999 of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the taxation under Section 4999 of the Code. For purposes of this Section 10, present value shall be determined in accordance with Section 280G(d) (4) of the Code. (b) All determinations to be made under this Section 10 shall be made by KPMG Peat Marwick, or the Company's independent public accountant immediately prior to the Change of Control if other than KPMG Peat Marwick (the "Accounting Firm"), which firm shall use its best efforts to provide its determinations and any supporting calculations both to the Company and the Employee within 10 days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Employee. The Company shall in its sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 10. Within five days after the Company's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement. (c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments, as the case may be, will have been made by the Company which should not have been made ("Overpayment") or that additional Agreement Payments which have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. Within two years after the Termination of Employment, the Accounting Firm shall review the determination made by it pursuant to the 10 preceding paragraph. In the event that the Accounting Firm determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Employee which the Employee shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount shall be payable by the Employee to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the Federal Rate. (d) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses of any nature resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. 11. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. 11 (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 12. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) the date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any reason other than a Termination Upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 13. SUCCESSOR COMPANY. The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any such successor or successors to its business and/or assets, jointly and severally. 14. NOTICE. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 13100 Northwest Freeway Sixth Floor Houston, TX 77040 Attention: The Chairman With a required copy to: Morgan, Lewis & Bockius 2000 One Logan square 12 Philadelphia, PA 19103 Attention: David R. King, Esq. If to the Employee, to: Windell D. Norris, Jr. 806 West Forest Houston, TX 77079 or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the base of registered or certified mail, or on the next business day in the case of overnight express courier service. 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PROVISIONS. 16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. (a) This Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by the Employee and approved by the board and executed on the Company's behalf by a duly authorized officer. The provisions of this Agreement may provide for payments to the Employee under certain compensation or bonus plans (including without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the CRC-Evans Plan) under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by the Company or the Board. (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its Subsidiaries. (c) The Employee acknowledges that from time to time, the Company and its subsidiaries may establish, maintain and distribute employee manuals or handbooks or 13 personnel policy manuals, and officers or other representatives of the Company or its Subsidiaries may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of the Company or its Subsidiaries (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 17. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(o)(ii) of this Agreement. 19. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. 14 IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. Attest: ENTERRA CORPORATION /s/ M. Gay Mather /s/ D. Dale Wood - ----------------------------- By: ------------------------------ Secretary D. Dale Wood Chairman, President and Chief Executive Officer /s/ Shirley Brandt /s/ Windell D. Norris, Jr. - ----------------------------- By: ------------------------------ Witness Windell D. Norris, Jr. 15 SEVERANCE AGREEMENT Agreement made as of February 21, 1991 between Enterra Corporation, a Delaware corporation (the "Company"), and J. Joseph Percle (the "Employee"). WHEREAS, the Employee is presently employed by Enterra Oil Field Services, Ltd., a "Subsidiary" (as defined in Section 1 hereof), as its President; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and its Subsidiaries, and, in this regard, the board of directors of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company; WHEREAS, the board of directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Subsidiary, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with the Company is terminated subsequent to a "Change of Control" (as defined in Section 1 hereof) of the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: l. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, including any compensation the payment of which has been deferred pursuant to a salary reduction or deferral plan (including a 401(k) plan, other than company matching contributions) or agreement, but exclusive of any cash payments made to him under the Company's Bonus Plan, or any contributions made for his benefit to the Company's 401(k) Plan or CRC-Evans Plan. (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (a) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of 2 the General Rules and Regulations under the Exchange Act, and (b) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except, pursuant to a revocable proxy as described in the proviso to subsection (ii) above or the May 2, 1986 option agreement between Shamrock Holdings, Inc. and the shareholders known as the "SGS Group" or their successors) or disposing of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the board of directors of the Company. (e) "Bonus Plan" shall mean the Company's Management Incentive Bonus Plan, as in effect immediately prior to a Change of Control. (f) "Change of Control" shall be deemed to have taken place if (i) any Person (except the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of- the Company, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan, or an Exempted Person), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of the Company then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act. (g) "CRC-Evans Plan" shall mean the CRC-Evans Money Purchase Pension Plan, as in effect immediately prior to a Change of Control. (h) "Exempted Person" shall mean any of Shamrock Holdings of California, Inc., a Delaware corporation 3 ("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees from any Exempted Person except where such transferees are Affiliates or Associates of Shamrock or Shamrock Holdings. (i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect immediately prior to a Change of Control. (j) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (k) "Person" shall mean any individual, firm, corporation, partnership or other entity. (l) "Stock Plan" shall mean the Company's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (m) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (n) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date specified therein, as the case may be. (o) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (p) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of six consecutive months, (y) for "cause," which shall mean misappropriation of funds, habitual insobriety, substance abuse, conviction of a crime involving moral turpitude, or gross negligence in the performance of his duties, which gross negligence has had a material adverse effect on the business, operations, assets, properties or financial condition of the Company and its Subsidiaries taken as a whole, or (z) by reason of the occurrence of the Normal Retirement Date; or 4 (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re-elect the Employee to the officer positions with the Company and its Subsidiaries held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) revocation or any modification (except as may be required in the normal course of business in light of any requirement of or change in federal law or regulations) of the Bonus Plan, 401(k) Plan or CRC-Evans Plan, or any action taken pursuant to the terms of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of equivalent amounts received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the Board to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business 5 immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the provisions of Section 10 hereof and to adjustment as provided in paragraph (b) below and Section 9(a), in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within fifteen days after the Termination Date (or as soon as possible thereafter in the event that the procedures set forth in Section 10(b) hereof cannot be completed within 15 days), an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) The Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) The average of the annual bonuses earned by the Employee under the Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to twenty-four months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 6 4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall: (a) pay to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; 7 (c) for vesting purposes only, in the event of a Termination upon a Change of Control occurring prior to the Normal Retirement Date, credit the Employee with the lesser of (i) two additional "years of service" (as defined in the Company's 401(k) Plan) or (ii) the period of time from the Termination Date to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC-Evans Plan, in addition to the years of service that would have otherwise been calculated by reference solely to the Termination Date, it being understood that benefits in respect of the two additional years of service shall be paid to the Employee under the Company's 401(k) Plan or CRC-Evans Plan, and that the Company shall, to the extent necessary to provide the Employee the additional benefits intended hereby, amend the 401(k) Plan or CRC-Evans Plan or pay such additional benefits outside the plan as may be necessary; and (d) permit the Employee to continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefore. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, and subject to the provisions of Section 10 hereof, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee, pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable federal and state securities laws. 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. 8 (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The severance plan or policy, if any, applicable to employees of Enterra or the Subsidiary which employs the Employee, and any other severance payments required by applicable statutes or provided under government programs may provide compensation and benefits to Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such agreements, plans, policies, statues or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not the Company or any Subsidiary, shall be responsible for the payment of all 9 federal, state and local taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. CERTAIN REDUCTION OF PAYMENTS. (a) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined as set forth herein that any payment or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the taxation of excess parachute payments under Section 4999 of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the taxation under Section 4999 of the Code. For purposes of this Section 10, present value shall be determined in accordance with Section 280G(d) (4) of the Code. (b) All determinations to be made under this Section 10 shall be made by Peat Marwick Main & Co., or the Company's independent public accountant immediately prior to the Change of Control if other than Peat Marwick Main & Co. (the "Accounting Firm"), which firm shall use its best efforts to provide its determinations and any supporting calculations both to the Company and the Employee within 10 days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Employee. The Company shall in its sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 10. Within five days after the Company's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement. (c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments, as the case may be, will have been made by the Company which should not have been made 10 ("Overpayment") or that additional Agreement Payments which have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. Within two years after the Termination of Employment, the Accounting Firm shall review the determination made by it pursuant to the preceding paragraph. In the event that the Accounting Firm determines that an overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Employee which the Employee shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount shall be payable by the Employee to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the Federal Rate. (d) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses of any nature resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. 11. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be-settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of 11 competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 12. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) the date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any reason other than a Termination Upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 13. SUCCESSOR COMPANY. The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any such successor or successors to its business and/or assets, jointly and severally. 14. NOTICE. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 2707 North Loop West Suite 1050 Houston, TX 77008 12 Attention: The Chairman With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103 Attention: David R. King, Esq. If to the Employee, to: J. Joseph Percle c/o Enterra Oil Field Services, Ltd. P. O. Box 2357 Defense Roundabout #109 Rashid Building Dubai, U.A.E. or to such other names or address as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service. 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PROVISIONS. 16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. (a) This Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by the Employee and approved by the board and executed on the Company's behalf by a duly authorized officer. The provisions of this Agreement may provide for payments to the Employee under certain compensation or bonus plans (including without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the CRC-Evans Plan) under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this 13 Agreement without further action by the Company or the Board. (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its Subsidiaries. (c) The Employee acknowledges that from time to time, the Company and its subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives of the Company or its Subsidiaries may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of the Company or its Subsidiaries (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 17. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(p)(ii) of this Agreement. 14 19. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. Attest: ENTERRA CORPORATION /s/ M. Gay Mather By: /s/ Steven C. Grant - ------------------------------ --------------------------------- Secretary Steven C. Grant Sr. Vice President and Chief Financial Officer /s/ Steven W. Krablin /s/ J. Joseph Percle - ------------------------------ ------------------------------------- Witness Joseph Percle 15 SEVERANCE AGREEMENT Agreement made as of April 1, 1993 between Pipeline Induction Heat Limited (the "Company") and Michael Peter Smith (the "Employee"). WHEREAS, the Employee is presently employed by the Company as its Managing Director; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and, in this regard, the directors of the Company recognize that, as is the case with many publicly held corporations, the possibility of a change in control of Enterra Corporation ("Enterra"), the parent of the Company, may exist and that such possibility, and the uncertainty and questions which it may raise among management of the Company, may result in the departure or distraction of key management personnel to the detriment of the Company; WHEREAS, the directors of the Company, with the concurrence of Enterra, have determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of Enterra or the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Company, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with the Company is terminated subsequent to a "Change of Control" (as defined in Section 1 hereof) of Enterra or the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: l. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, if any, but exclusive of any cash payments made to him under the Company's Bonus Plan, if any, or under any type of deferred compensation or retirement plan; (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or 2 (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting or disposing of any voting securities of Enterra; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Bonus Plan" shall mean any Company or Enterra bonus plan in which the Employee participates, as in effect immediately prior to a Change of Control. (e) "Change of Control" shall be deemed to have taken place if (i) any Person (except Enterra, any Subsidiary of Enterra, any employee benefit plan of Enterra or of any Subsidiary of Enterra, or any Person or entity organized, appointed or established by Enterra for or pursuant to the terms of any such employee benefit plan), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d)(2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of Enterra then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act, or (ii) the Company ceases to be controlled, directly or indirectly, by Enterra, or if it sells all or substantially all of its assets to a company not so controlled by Enterra. (f) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (g) "Person" shall mean any individual, firm, corporation, partnership or other entity. (h) "Stock Plan" shall mean Enterra's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (i) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (j) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 3 hereof or any later date specified therein, as the case may be. (k) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (l) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company or Enterra for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of six consecutive months, (y) for "cause," which shall mean misappropriation of funds, habitual insobriety, substance abuse, conviction of a crime involving moral turpitude, or gross negligence in the performance of his duties, which gross negligence has had a material adverse effect on the business, operations, assets, properties or financial condition of the Company and its Subsidiaries, if any, taken as a whole, or (z) by reason of the occurrence of the Normal Retirement Date; or (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries, if any, of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re-elect the Employee to the officer positions with the Company and its Subsidiaries, if any, held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) any revocation or material modification (except as may be required in the 4 normal course of business in light of any requirement of or change in applicable law or regulations) of any Bonus Plan or deferred compensation or retirement plan, or any action taken pursuant to the terms of any of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of amounts equivalent to those received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the directors of the Company or of Enterra to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 12 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 5 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the adjustments provided in paragraph (b) below and Section 9(a) hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within 15 days after the Termination Date, an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) the Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) the average of the annual bonuses earned by the Employee under any Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to 24 months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall also: (a) pay to the Employee within 15 days after the Termination Date, unless the Employee has exercised such options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of Enterra's Common Stock subject to all stock options and stock appreciation rights outstanding arid unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. Upon such payment, the options or rights shall terminate. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of Enterra's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), and (z) in respect of a Change of Control under 6 Section 1(e) (i) hereof, the highest per share price of Enterra's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of Enterra has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; and (c) permit the Employee to receive any car allowance or continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefor. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable U.S. federal and state securities laws. 7 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by Enterra, the Company or any of the Company's Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The severance plan or policy, if any, applicable to employees of the Company or any Subsidiary which employs the Employee, and any other severance payments required by employment contracts or statutes or provided under government programs may provide compensation and benefits to the Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such 8 agreements, plans, policies, statues or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not Enterra, the Company or any Subsidiary, shall be responsible for the payment of all taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, one of whom shall be selected by the Company, one of whom shall be selected by the Employee and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 11. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) March 31, 1998 or such earlier date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any 9 reason other than a Termination Upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 12. NOTICES. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and may be delivered personally or mailed by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 2707 North Loop West Suite 1050 Houston, TX 77008 USA Attention: The Chairman With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103 USA Attention: David R. King, Esq. If to the Employee, to: Michael Peter Smith Tudor House Forest Lane Carr Hall Road Barrowford Nr. Nelson Lancashire BB9 5QL England or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, on the next business day in the case of overnight express courier service or when actually received if sent in any other fashion. 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF 10 DELAWARE, UNITED STATES OF AMERICA, WITHOUT GIVING EFFECT TO SUCH STATE'S CONFLICT OF LAWS PROVISIONS. 14. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. (a) This Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by (i) the Employee and (ii) after approval by the directors of the Company and, in writing, by the chief executive officer of Enterra, by a duly authorized director of the Company other than the Employee. The provisions of this Agreement may provide for payments to the Employee under certain compensation, bonus or stock option plans under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by the Company or Enterra. (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of Enterra, the Company or any Subsidiary of either. (c) The Employee acknowledges that from time to time, Enterra, the Company and their Subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives thereof may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of Enterra, the Company or any Subsidiary of either (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 15. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or 11 unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 16. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(l)(ii) of this Agreement. 17. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which shall be an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. The COMMON SEAL of ) PIPELINE INDUCTION HEAT ) LIMITED was hereunto ) affixed in the presence ) of:- ) /s/ Charles Evans Director Secretary SIGNED SEALED and DELIVERED ) by the said MICHAEL PETER )/s/ M. Smith SMITH in the presence of:- ) /s/ P. L. Morgan 12 SEVERANCE AGREEMENT Agreement made as of February 21, 1991 between Enterra Corporation, a Delaware corporation (the "Company"), and Michael L. Stansberry (the "Employee"). WHEREAS, the Employee is presently employed by Oil Field Rental Service Company, a "Subsidiary" (as defined in Section 1 hereof), as its President; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and its Subsidiaries, and, in this regard, the board of directors of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company; WHEREAS, the board of directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Subsidiary, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with the Company is terminated subsequent to a "Change of Control" (as defined in Section 1 hereof) of the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: 1. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the company and its Subsidiaries, including any compensation the payment of which has been deferred pursuant to a salary reduction or deferral plan (including a 401(k) plan, other than company matching contributions) or agreement, but exclusive of any cash payments made to him under the company's Bonus Plan, or any contributions made for his benefit to the Company's 401(k) Plan or CRC-Evans Plan. (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (a) arises solely from a revocable proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of 2 the General Rules and Regulations under the Exchange Act, and (b) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly Or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except, pursuant to a revocable proxy as described in the proviso to subsection (ii) above or the May 2, 1986 option agreement between Shamrock Holdings, Inc. and the shareholders known as the "SGS Group" or their successors) or disposing of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the board of directors of the Company. (e) "Bonus Plan" shall mean the Company's Management Incentive Bonus Plan, as in effect immediately prior to a Change of Control. (f) "Change of control" shall be deemed to have taken place if (i) any Person (except the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan, or an Exempted Person), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of the Company then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act. (g) "CRC-Evans Plan" shall mean the CRC-Evans Money Purchase Pension Plan, as in effect immediately prior to a Change of Control. (h) "Exempted Person" shall mean any of Shamrock Holdings of California, Inc., a Delaware corporation 3 ("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees from any Exempted Person except where such transferees are Affiliates or Associates of Shamrock or Shamrock Holdings. (i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect immediately prior to a Change of Control. (j) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (k) "Person" shall mean any individual, firm, corporation, partnership or other entity. (l) "Stock Plan" shall mean the Company's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (m) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (n) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date specified therein, as the case may be. (o) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (p) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of six consecutive months, (y) for "cause," which shall mean misappropriation of funds, habitual insobriety, substance abuse, conviction of a crime involving moral turpitude, or gross negligence in the performance of his duties, which gross negligence has had a material adverse effect on the business, operations, assets, properties or financial condition of the Company and its Subsidiaries taken as a whole, or (z) by reason of the occurrence of the Normal Retirement Date; or 4 (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries of the authority, duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re-elect the Employee to the officer positions with the Company and its Subsidiaries held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) revocation or any modification (except as may be required in the normal course of business in light of any requirement of or change in federal law or regulations) of the Bonus Plan, 401(k) Plan or CRC-Evans Plan, or any action taken pursuant to the terms of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of equivalent amounts received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the Board to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business 5 immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the provisions of Section 10 hereof and to adjustment as provided in paragraph (b) below and Section 9(a), in the event of the Employee's Termination upon a Change of Control, the Company shall pay to the Employee, within fifteen days after the Termination Date (or as soon as possible thereafter in the event that the procedures set forth in Section 10(b) hereof cannot be completed within 15 days), an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) The Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) The average of the annual bonuses earned by the Employee under the Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to twenty-four months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 6 4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall: (a) pay to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; 7 (c) for vesting purposes only, in the event of a Termination upon a Change of Control occurring prior to the Normal Retirement Date, credit the Employee with the lesser of (i) two additional "years of service" (as defined in the Company's 401(k) Plan) or (ii) the period of time from the Termination Date to the Normal Retirement Date under each of the Company's 401(k) Plan and CRC-Evans Plan, in addition to the years of service that would have otherwise been calculated by reference solely to the Termination Date, it being understood that benefits in respect of the two additional years of service shall be paid to the Employee under the Company's 401(k) Plan or CRC-Evans Plan, and that the Company shall, to the extent necessary to provide the Employee the additional benefits intended hereby, amend the 401(k) Plan or CRC-Evans Plan or pay such additional benefits outside the plan as may be necessary; and (d) permit the Employee to continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefore. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, and subject to the provisions of Section 10 hereof, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee, pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable federal and state securities laws. 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. 8 (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The severance plan or policy, if any, applicable to employees of Enterra or the Subsidiary which employs the Employee, and any other severance payments required by applicable statutes or provided under government programs may provide compensation and benefits to Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such agreements, plans, policies, statues or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not the Company or any Subsidiary, shall be responsible for the payment of all 9 federal, state and local taxes in respect of the payments to be made and benefits to be provided under this Agreement. 10. CERTAIN REDUCTION OF PAYMENTS. (a) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined as set forth herein that any payment or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 28OG of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the taxation of excess parachute payments under Section 4999 of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the taxation under Section 4999 of the Code. For purposes of this Section 10, present value shall be determined in accordance with Section 280G(d)(4) of the Code. (b) All determinations to be made under this Section 10 shall be made by Peat Marwick Main & Co., or the Company's independent public accountant immediately prior to the Change of Control if other than Peat Marwick Main & Co. (the "Accounting Firm"), which firm shall use its best efforts to provide its determinations and any supporting calculations both to the Company and the Employee within 10 days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Employee. The Company shall in its sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 10. Within five days after the Company's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement. (c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments, as the case may be, will have been made by the Company which should not have been made 10 ("Overpayment") or that additional Agreement Payments which have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the calculations required to be made hereunder. Within two years after the Termination of Employment, the Accounting Firm shall review the determination made by it pursuant to the preceding paragraph. In the event that the Accounting Firm determines that an Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Employee which the Employee shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount shall be payable by the Employee to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the Federal Rate. (d) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses of any nature resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. Il. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of 11 competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 12. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) the date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any reason other than a Termination Upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 13. SUCCESSOR COMPANY. The company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any such successor or successors to its business and/or assets, jointly and severally. 14. NOTICE. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 2707 North Loop West Suite 1050 Houston, TX 77008 12 Attention: The Chairman With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103 Attention: David R. King, Esq. If to the Employee, to: Michael L. Stansberry c/o Oil Field Rental Service Company P. O. Box 1331 Houston, TX 77251-1331 or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service. 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PROVISIONS. 16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. (a) This Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by the Employee and approved by the board and executed on the Company's behalf by a duly authorized officer. The provisions of this Agreement may provide for payments to the Employee under certain compensation or bonus plans (including without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the CRC-Evans Plan) under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this 13 Agreement without further action by the Company or the Board. (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its Subsidiaries. (c) The Employee acknowledges that from time to time, the Company and its subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives of the Company or its Subsidiaries may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of the Company or its Subsidiaries (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 17. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(p)(ii) of this Agreement. 14 19. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. Attest: ENTERRA CORPORATION /s/ M. Gay Mather By: /s/ Steven C. Grant - ------------------------------ --------------------------------------- Secretary Steven C. Grant Sr. Vice President and Chief Financial Officer /s/ Steven W. Krablin /s/ Michael L. Stansberry - ------------------------------ ------------------------------------- Witness Michael L. Stansberry 15 SEVERANCE AGREEMENT Agreement made as of March 5, 1991 between Enterra Corporation, a Delaware corporation (the "Company"), and D. Dale Wood (the "Employee"). WHEREAS, the Employee has previously been employed by CRC-Evans Pipeline International, Inc., a "Subsidiary" (as defined in Section 1 hereof); and WHEREAS, on the date of this Agreement the Employee shall become employed by the Company as its President and Chief Executive Officer; WHEREAS, the Company considers it essential to foster the employment of well qualified key management personnel for the Company and its Subsidiaries, and, in this regard, the board of directors of the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control of the Company may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of key management personnel to the detriment of the Company; WHEREAS, the board of directors of the Company has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of key members of the management of the Company and its Subsidiaries to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a change in control of the Company, although no such change is now contemplated; and WHEREAS, in order to induce the Employee to remain in the employ of the Company, the Company agrees that the Employee shall receive the compensation and benefits set forth in this Agreement in the event his employment with the Company is terminated subsequent to a "Change of Control" (as defined in Section 1 hereof) of the Company as a cushion against the financial and career impact on the Employee of any such Change of Control; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto agree as follows: 1. DEFINITIONS. For all purposes of this Agreement, the following terms shall have the meanings specified in this Section unless the context clearly otherwise requires: (a) "Affiliate" and "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). (b) "Base Salary" shall mean the total cash remuneration earned by the Employee on an annualized basis in all capacities with the Company and its Subsidiaries, including any compensation the payment of which has been deferred pursuant to a salary reduction or deferral plan (including a 401(k) plan, other than company matching contributions) or agreement, but exclusive of any cash payments made to him under the Company's Bonus Plan, or any contributions made for his benefit to the Company's 401(k) Plan or CRC-Evans Plan. (c) A Person shall be deemed the "Beneficial Owner" of any securities: (i) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of securities tendered pursuant to a tender or exchange offer made by such Person or any of such Person's Affiliates or Associates until such tendered securities are accepted for payment, purchase or exchange; (ii) that such Person or any of such Person's Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has "beneficial ownership" of (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including without limitation pursuant to any agreement, arrangement or understanding, whether or not in writing; PROVIDED, HOWEVER, that a Person shall not be deemed the "Beneficial Owner" of any security under this subsection (ii) as a result of an oral or written agreement, arrangement or understanding to vote such security if such agreement, arrangement or understanding (A) arises solely from a revocable 2 proxy given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, and (B) is not then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or (iii) that are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person's Affiliates or Associates) has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except, pursuant to a revocable proxy as described in the proviso to subsection (ii) above) or disposing of any voting securities of the Company; PROVIDED, HOWEVER, that nothing in this Section 1(c) shall cause a Person engaged in business as an underwriter of securities to be the "Beneficial Owner" of any securities acquired through such Person's participation in good faith in a firm commitment underwriting until the expiration of forty days after the date of such acquisition. (d) "Board" shall mean the board of directors of the Company. (e) "Bonus Plan" shall mean the Company's Management Incentive Bonus Plan, as in effect immediately prior to a Change of Control. (f) "Change of Control" shall be deemed to have taken place if (i) any Person (except the Company, any Subsidiary of the Company, any employee benefit plan of the Company or of any Subsidiary of the Company, any Person or entity organized, appointed or established by the Company for or pursuant to the terms of any such employee benefit plan, or an Exempted Person), together with all Affiliates and Associates of such Person acting in concert as described in Section 14(d) (2) of the Exchange Act, shall become the Beneficial Owner in the aggregate of 30% or more of the Common Stock of the Company then outstanding within the meaning of Rule 13d-3 promulgated under the Exchange Act. (g) "CRC-Evans Plan" shall mean the CRC-Evans Money Purchase Pension Plan, as in effect immediately prior to a Change of Control. (h) "Exempted Person" shall mean any of Shamrock Holdings of California, Inc., a Delaware corporation 3 ("Shamrock"), Shamrock Holdings, Inc., a Delaware corporation ("Shamrock Holdings"), or any Affiliate or Associate of Shamrock or Shamrock Holdings. "Exempted Person" shall not include transferees from any Exempted Person except where such transferees are Affiliates or Associates of Shamrock or Shamrock Holdings. (i) "401(k) Plan" shall mean the Company's 401(k) Plan, as in effect immediately prior to a Change of Control. (j) "Normal Retirement Date" shall mean the first day of the calendar month coincident with or next following the Employee's 65th birthday. (k) "Person" shall mean any individual, firm, corporation, partnership or other entity. (l) "Stock Plan" shall mean the Company's Stock Option Plan or any successor plan thereto, as in effect immediately prior to a Change of Control. (m) "Subsidiary" shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act. (n) "Termination Date" shall mean the date of receipt of the Notice of Termination described in Section 2 hereof or any later date specified therein, as the case may be. (o) "Termination of Employment" shall mean the termination of the Employee's actual employment relationship with the Company. (p) "Termination upon a Change of Control" shall mean a Termination of Employment upon or within two years after a Change of Control either: (i) initiated by the Company for any reason other than (x) the Employee's continuous illness, injury or incapacity for a period of twenty-six consecutive weeks, (y) for "cause," as defined in Section 8.3 of the Employment Agreement between the Company and the Employee of even date herewith (the "Employment Agreement"), or (z) by reason of the occurrence of the Normal Retirement Date; or (ii) initiated by the Employee following one or more of the following occurrences: (A) a significant reduction by the Company or its Subsidiaries of the authority, 4 duties or responsibilities of the Employee immediately prior to the Change of Control; (B) any removal of the Employee from or any failure to re- elect the Employee to the officer positions with the Company and its Subsidiaries held by him immediately prior to the Change of Control, except in connection with promotions to higher office or in connection with consolidations among the Company's Subsidiaries where the Employee is elected to similar positions in the successor company or companies; (C) a reduction by the Company in the Employee's Base Salary as in effect immediately prior to the Change of Control; (D) revocation or any modification (except as may be required in the normal course of business in light of any requirement of or change in federal law or regulations) of the Bonus Plan, 401(k) Plan or CRC-Evans Plan, or any action taken pursuant to the terms of such plans, which materially (x) reduces the opportunity to receive compensation under any of such plans of equivalent amounts received by the Employee during the two fiscal years immediately preceding the Change of Control, subject to the right of the Board to establish in a manner consistent with past practice prior to the Change of Control reasonable goals under such plans, (y) reduces the compensation payable to the Employee under any of such plans but which does not effect comparable reductions in the compensation payable to the other participants in such plans, or (z) increases the compensation payable to other participants in any of such plans but which does not effect corresponding increases in the amount of compensation payable to the Employee; or (E) a transfer of the Employee, without his express written consent, to a location which is outside the general metropolitan area in which his principal place of business immediately preceding the Change of Control may be located, or which is otherwise an unreasonable commuting distance from the Employee's principal residence at the date of the Change of Control. 5 2. NOTICE OF TERMINATION. Any Termination upon a Change of Control shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 14 hereof. For purposes of this Agreement, a "Notice of Termination" means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) briefly summarizes the facts and circumstances deemed to provide a basis for termination of the Employee's employment under the provision so indicated, and (iii) if the termination date is other than the date of receipt of such notice, specifies the termination date (which date shall not be more than 15 days after the giving of such notice). 3. SEVERANCE COMPENSATION UPON TERMINATION. (a) Subject to the provisions of Section 10 hereof and to adjustment as provided in paragraph (b) below and Section 9(a), in the event of the Employee's Termination upon a "Change of Control, the Company shall pay to the Employee, within fifteen days after the Termination Date (or as soon as possible thereafter in the event that the procedures set forth in Section 10(b) hereof cannot be completed within 15 days), an amount in cash equal to two times the sum of paragraphs (i) and (ii) below: (i) The Employee's Base Salary in effect either immediately prior to the Termination of Employment or immediately prior to the Change of Control, whichever is higher; and (ii) The average of the annual bonuses earned by the Employee under the Bonus Plan in the two fiscal years immediately prior to such Termination of Employment. (b) In the event the Employee's Normal Retirement Date would occur prior to twenty-four months after the Termination Date, the aggregate cash amount determined as set forth in (a) above shall be reduced by multiplying it by a fraction, the numerator of which shall be the number of days from the Termination Date to the Employee's Normal Retirement Date and the denominator of which shall be 730. No payments shall be due Employee in the event that the Normal Retirement Date has been reached prior to the Termination Date. 4. OTHER PAYMENTS. Subject to the provisions of Section 10 hereof, in the event of the Employee's Termination upon a Change of Control, the Company shall: (a) pay to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such 6 options and rights, an amount equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control; (b) to the extent permitted by applicable law, continue or cause to be continued until 24 months after the Termination Date, on the cost-sharing basis (if any) in effect immediately prior to the Change of Control, medical, dental and life insurance benefits (and, at the option of the Employee, disability insurance benefits) substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; PROVIDED, HOWEVER, that if the Employee's Normal Retirement Date would have occurred prior to 24 months after the Termination Date, the obligation of the Company to provide such benefits shall cease at the Employee's Normal Retirement Date; and PROVIDED FURTHER, HOWEVER, that the obligation of the Company to provide such benefits shall cease at such time as the Employee is employed on a full time basis by a corporation not owned or controlled by the Employee that provides the Employee, on substantially the same cost-sharing basis (if any) between the Company and the Employee in effect immediately prior to the Change of Control, with medical, dental, life and disability insurance benefits substantially equivalent in all material respects to those furnished by the Company and its Subsidiaries to the Employee immediately prior to the Change of Control; (c) for vesting purposes only, in the event of a Termination upon a Change of Control occurring prior to the Normal Retirement Date, credit the Employee with the lesser of (i) two additional "years of service" (as defined in the Company's 401(k) Plan) or (ii) the period of time from the Termination Date to the Normal Retirement Date under each of 7 the Company's 401(k) Plan and CRC-Evans Plan, in addition to the years of service that would have otherwise been calculated by reference solely to the Termination Date, it being understood that benefits in respect of the two additional years of service shall to the extent permitted by applicable law be paid to the Employee under the Company's 401(k) Plan or CRC-Evans Plan,, and that the Company shall, to the extent necessary to provide the Employee the additional benefits intended hereby, amend the 401(k) Plan or CRC-Evans Plan or pay such additional benefits outside the plan as may be necessary; and (d) permit the Employee to continue the use of his Company car, if any, without any cost for a period of six months thereafter. Thereafter, the Employee shall return the car to the Company unless, in the case of a car owned by the Company, the Employee elects to purchase the car from the Company at the net book value thereof at the date of the purchase or, in the case of a car leased by the Company, the Employee pays the Company, as such amounts become due and payable, all rental payments charged to the Company for the use of such car for the remainder of the lease therefore. 5. VESTING AND ACCELERATION OF CERTAIN BENEFITS. In the event of a Termination upon a Change of Control, and subject to the provisions of Section 10 hereof, all restrictions remaining on the Termination Date on the restricted shares, if any, received by the Employee, pursuant to the Stock Plan shall lapse, and said shares shall thereupon be owned by the Employee free and clear of all restrictions of any nature whatsoever, except those, if any, under applicable federal and state securities laws. 6. ENFORCEMENT. (a) In the event that the Company shall fail or refuse to make payment of any amounts due the Employee under Sections 3, 4 and 5 hereof within the respective time periods provided therein, the Company shall pay to the Employee, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required under Section 3, 4 or 5, as appropriate, until paid to the Employee, at the rate from time to time announced by Wells Fargo Bank, N.A. as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. (b) It is the intent of the parties that the Employee not be required to incur any expenses associated with the enforcement of his rights under this Agreement by arbitration, litigation or other legal action because the 8 cost and expense thereof would substantially detract from the benefits intended to be extended to the Employee hereunder. Accordingly, the Company shall pay the Employee on demand the amount necessary to reimburse the Employee in full for all expenses (including all attorneys' fees and legal expenses) incurred by the Employee in enforcing any of the obligations of the Company under this Agreement. 7. NO MITIGATION. The Employee shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise. 8. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit the Employee's continuing or future participation in or rights under any benefit, bonus, incentive or other plan or program provided by the Company or any of its Subsidiaries or Affiliates and for which the Employee may qualify. 9. COORDINATION OF BENEFITS; NO SET-OFF; TAXES. (a) The Employment Agreement, the severance plan or policy, if any, applicable to employees of the Company or the Subsidiary which employs the Employee, and any other severance payments required by applicable statutes or provided under government programs may provide compensation and benefits to Employee upon events which also constitute a Termination upon a Change of Control as defined in this Agreement. In such event, Employee shall be entitled only to the largest cash compensation provided for under any of such agreements, plans, policies, statutes or programs and the maximum benefit continuance provided for under any of such agreements, plans, policies, statutes or programs, and the payments referred to in Section 3 hereof shall be reduced to the extent necessary to effect such coordination of benefits. (b) Except as specifically set forth in (a) above, the Company's obligation to make the payments provided for in this Agreement and otherwise to' perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Employee or others. (c) Employee alone, and not the Company or any Subsidiary, shall be responsible for the payment of all federal, state and local taxes in respect of the payments to be made and benefits to be provided under this Agreement. 9 10. CERTAIN REDUCTION OF PAYMENTS. (a) Anything in this Agreement to the contrary notwithstanding, in the event that it shall be determined as set forth herein that any payment or distribution by the Company to or for the benefit of the Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (a "Payment"), would constitute an "excess parachute payment" within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and that it would be economically advantageous to the Company to reduce the Payment to avoid or reduce the taxation of excels parachute payments under Section 4999 of the Code, the aggregate present value of amounts payable or distributable to or for the benefit of the Employee pursuant to this Agreement (such payments or distributions pursuant to this Agreement are hereinafter referred to as "Agreement Payments") shall be reduced (but not below zero) to the Reduced Amount. The "Reduced Amount" shall be an amount expressed in present value which maximizes the aggregate present value of Agreement Payments without causing any Payment to be subject to the taxation under Section 4999 of the Code. For purposes of this Section 10, present value shall be determined in accordance with Section 280G(d) (4) of the Code. (b) All determinations to be made under this Section 10 shall be made by KPMG Peat Marwick, or the Company's independent public accountant immediately prior to the Change of Control if other than KPMG Peat Marwick (the "Accounting Firm"), which firm shall use its best efforts to provide its determinations and any supporting calculations both to the Company and the Employee within 10 days of the Termination Date. Any such determination by the Accounting Firm shall be binding upon the Company and the Employee. The Company shall in its sole discretion determine which and how much of the Agreement Payments shall be eliminated or reduced consistent with the requirements of this Section 10. Within five days after the Company's determination, the Company shall pay (or cause to be paid) or distribute (or cause to be distributed) to or for the benefit of the Employee such amounts as are then due to the Employee under this Agreement. (c) As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Agreement Payments, as the case may be, will have been made by the Company which should not have been made ("Overpayment") or that additional Agreement Payments which have not been made by the Company could have been made ("Underpayment"), in each case, consistent with the 10 calculations required to be made hereunder. Within two years after the Termination of Employment, the Accounting Firm shall-review the determination made by it pursuant to the preceding paragraph. In the event that the Accounting Firm determines that an overpayment has been made, any such overpayment shall be treated for all purposes as a loan to the Employee which the Employee shall repay to the Company together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code (the "Federal Rate"); PROVIDED, HOWEVER, that no amount shall be payable by the Employee to the Company if and to the extent such payment would not reduce the amount which is subject to taxation under Section 4999 of the Code. In the event that the Accounting Firm determines that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee together with interest at the Federal Rate. (d) All of the fees and expenses of the Accounting Firm in performing the determinations referred to in subsections (b) and (c) above shall be borne solely by the Company. The Company agrees to indemnify and hold harmless the Accounting Firm of and from any and all claims, damages and expenses of any nature resulting from or relating to its determinations pursuant to subsections (b) and (c) above, except for claims, damages or expenses resulting from the gross negligence or willful misconduct of the Accounting Firm. 11. SETTLEMENT OF ALL DISPUTES. (a) Any dispute, controversy or claim arising out of or relating to any provision of this Agreement or the Employee's Termination upon a Change of Control shall be settled by arbitration in the City of Houston, Texas, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, two of whom shall be selected by the Company and the Employee, respectively, and the third of whom shall be selected by the other two arbitrators. Each arbitrator selected as provided herein is required to be or have been a director or an executive officer of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange or the American Stock Exchange or quoted on the National Association of Securities Dealers Automated Quotations System. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The fees of the American Arbitration Association and the arbitrators and any expenses 11 relating to the conduct of the arbitration shall be paid by the Company. (b) The party or parties challenging the right of the Employee to the benefits of this Agreement shall in all circumstances have the burden of proof. 12. TERM OF AGREEMENT. This Agreement shall commence as of the date first written above and shall continue in effect until the earlier of (i) the date upon which the Employee ceases to be in the employ of the Company or any Subsidiary thereof for any reason other than a Termination upon a Change of Control, or (ii) 24 months after a Change of Control has occurred, PROVIDED, HOWEVER, that all of the obligations of the parties hereunder arising after a Change of Control shall continue in effect until such obligations are satisfied or have expired. 13. SUCCESSOR COMPANY. The Company shall require any successor or successors (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, to acknowledge expressly that this Agreement is binding upon and enforceable against the Company in accordance with the terms hereof, and to become jointly and severally obligated with the Company to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession or successions had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used in this Agreement, the Company shall mean the Company as hereinbefore defined and any such successor or successors to its business and/or assets, jointly and severally. 14. NOTICE. All notices and other communications required or permitted hereunder or necessary or convenient in connection herewith shall be in writing and shall be delivered personally or mailed by registered or certified mail, return receipt requested, or by overnight express courier service, as follows: If to the Company, to: Enterra Corporation 2707 North Loop West Suite 1050 Houston, TX 77008 Attention: Chairman of the Board 12 With a required copy to: Morgan, Lewis & Bockius 2000 One Logan Square Philadelphia, PA 19103-6993 Attention: David R. King, Esq. If to the Employee, to: D. Dale Wood 9015 Tranquil Park Spring, TX 77379 With a required copy to: Sheinfeld, Maley & Kay 3700 First City Tower Houston, TX 77002-4618 Attention: John B. Connolly III or to such other names or addresses as the Company or the Employee, as the case may be, shall designate by notice to the other party hereto in the manner specified in this Section. Any such notice shall be deemed delivered and effective when received in the case of personal delivery, five days after deposit, postage prepaid, with the U.S. Postal Service in the case of registered or certified mail, or on the next business day in the case of overnight express courier service. 15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF DELAWARE WITHOUT GIVING EFFECT TO SUCH STATE'S CONFLICT OF LAWS PROVISIONS. 16. CONTENTS OF AGREEMENT, AMENDMENT AND ASSIGNMENT. (a) This Agreement is intended to be in addition to the provisions of the Employment Agreement; provided, however, that in the event of a Termination upon a Change of Control, (i) Sections 5 and 6 of the Employment Agreement, (ii) Sections 5 and 6 of that employment agreement dated as of February 1, 1988 among the Company, the Employee and Connect Corporation (the "Prior Employment Agreement"), and (iii) any similar provisions contained in any agreements entered into by Employee with CRC-Evans Pipeline International, Inc., a Texas corporation, or its predecessor by merger, shall terminate and be of no further force and effect. Subject to the foregoing, this Agreement supersedes all prior agreements and sets forth the entire understanding between the parties hereto with respect to the subject matter 13 hereof and cannot be changed, modified, extended or terminated except upon written amendment executed by the Employee and approved by the board and executed on the Company's behalf by a duly authorized officer. The provisions of this Agreement may provide for payments to the Employee under certain compensation or bonus plans (including without limitation the Stock Plan, the Bonus Plan, the 401(k) Plan and the CRC-Evans Plan) under circumstances where such plans would not provide for payment thereof. It is the specific intention of the parties that the provisions of this Agreement shall supersede any provisions to the contrary in such plans, and such plans shall be deemed to have been amended to correspond with this Agreement without further action by the Company or the Board. (b) Nothing in this Agreement shall be construed as giving the Employee any right to be retained in the employ of the Company or any of its Subsidiaries. (c) The Employee acknowledges that from time to time, the Company and its subsidiaries may establish, maintain and distribute employee manuals or handbooks or personnel policy manuals, and officers or other representatives of the Company or its Subsidiaries may make written or oral statements relating to personnel policies and procedures. Such manuals, handbooks and statements are intended only for general guidance. No policies, procedures or statements of any nature by or on behalf of the Company or its Subsidiaries (whether written or oral, and whether or not contained in any employee manual or handbook or personnel policy manual), and no acts or practices of any nature, shall be construed to modify this Agreement. (d) All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of the Employee and the Company hereunder shall not be assignable in whole or in part by the Company. 17. SEVERABILITY. If any provision of this Agreement or application thereof to anyone or under any circumstances shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions or applications of this Agreement which can be given effect without the invalid or unenforceable provision or application. 18. REMEDIES CUMULATIVE - NO WAIVER. No right conferred upon the Employee by this Agreement is intended to be exclusive of any other right or remedy, and each and every such right or remedy shall be cumulative and shall be in 14 addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity. No delay or omission by the Employee in exercising any right, remedy or power hereunder or existing at law or in equity shall be construed as a waiver thereof, including without limitation any delay by the Employee in delivering a Notice of Termination pursuant to Section 2 hereof after an event has occurred which would, if the Employee had resigned, have constituted a Termination upon a Change of Control pursuant to Section 1(p)(ii) of this Agreement. 19. MISCELLANEOUS. All section headings are for convenience only. This Agreement may be executed in several counterparts, each of which is an original. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. IN WITNESS WHEREOF, the undersigned, intending to be legally bound, have executed this Agreement as of the date first above written. Attest: ENTERRA CORPORATION /s/ M. Gay Mather By: /s/ Stanley P. Gold - ------------------------------ ------------------------------- Secretary Stanley P. Gold Chairman of the Board /s/ Steven W. Krablin /s/ D. Dale Wood - ------------------------------ ------------------------------- Witness D. Dale Wood 15 EX-4.7 7 EXHIBIT 4.7 AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Enterra Corporation, a Delaware corporation ("Enterra"), and M. TIMOTHY CAREY (the "Employee"). WHEREAS, on FEBRUARY 20, 1992 , Enterra and the Employee entered into a Severance Agreement, dated as of FEBRUARY 20, 1992 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1(p)(ii) of the Agreement is hereby amended by adding thereto a new last paragraph, to read as follows: "Notwithstanding anything to the contrary under this Section 1(p)(ii), any resignation by the Employee at any time from the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and the Company (the "Merger Agreement"), through August 12, 1996 shall constitute a 'Termination upon Change of Control' under this Agreement." 2. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Merger Agreement, any reference in this Agreement to the 'Company' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 3. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of the Company's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control. The Company shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 4. Section 10 of the Agreement is deleted and the following is -2- substituted therefor: "10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company (whether by Enterra Corporation or Weatherford or by any affiliate of, or plan maintained by, either) to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Merger Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm -3- hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim -4- in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 5. The remainder of the Agreement shall remain in full force and effect as written. 6. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. -5- ENTERRA CORPORATION By: /s/ Steven W. Krablin -------------------------- Steven W. Krablin Vice President and Chief Financial Officer /s/ M. Timothy Carey ------------------------------- M. Timothy Carey AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Enterra Corporation, a Delaware corporation ("Enterra"), and C. PAUL EVANS (the "Employee"). WHEREAS, on February 20, 1992, Enterra and the Employee entered into a Severance Agreement, dated as of February 20, 1992 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and the Company, any reference in this Agreement to the 'Company' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 2. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of the Company's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control. The Company shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 3. Section 10 of the Agreement is deleted and the following is substituted therefor: "10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company (whether by Enterra Corporation or Weatherford or by any affiliate of, or plan maintained by, either) to or -2- for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Merger Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. -3- (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or -4- with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 4. The remainder of the Agreement shall remain in full force and effect as written. 5. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. ENTERRA CORPORATION By: /s/ Steven W. Krablin --------------------------- Steven W. Krablin Vice President and Chief Financial Officer /s/ C. Paul Evans -------------------------------- C. Paul Evans -5- AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Pipeline Induction Heat Limited ("PIH") and BRIAN CHARLES GOFF (the "Employee"). WHEREAS, Enterra Corporation, a Delaware Corporation ("Enterra"), is the ultimate parent company of PIH; WHEREAS, on April 1, 1993, PIH and the Employee entered into a Severance Agreement, dated as of April 1, 1993 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and Enterra, any reference in this Agreement to 'Enterra' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 2. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of Enterra's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of Enterra's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of Enterra's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of Enterra's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of Enterra has given rise to a Change of Control. Enterra shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 3. The remainder of the Agreement shall remain in full force and effect as written. 4. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. -2- IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. ENTERRA CORPORATION By: /s/ Steven W. Krablin -------------------------- Steven W. Krablin Vice President and Chief Financial Officer PIPELINE INDUCTION HEAT LIMITED By: /s/ C. Paul Evans --------------------------- C. Paul Evans Director /s/ Brian Charles Goff --------------------------- Brian Charles Goff -3- AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Enterra Corporation, a Delaware corporation ("Enterra"), and STEVEN C. GRANT (the "Employee"). WHEREAS, on FEBRUARY 8, 1990, Enterra and the Employee entered into a Severance Agreement, dated as of FEBRUARY 8, 1990 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1(p)(ii) of the Agreement is hereby amended by adding thereto a new last paragraph, to read as follows: "Notwithstanding anything to the contrary under this Section 1(p)(ii), any resignation by the Employee at any time from the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and the Company (the "Merger Agreement"), through August 12, 1996 shall constitute a 'Termination upon Change of Control' under this Agreement." 2. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Merger Agreement, any reference in this Agreement to the 'Company' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 3. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of the Company's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control. The Company shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 4. Section 10 of the Agreement is deleted and the following is -2- substituted therefor: "10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company (whether by Enterra Corporation or Weatherford or by any affiliate of, or plan maintained by, either) to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Merger Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm -3- hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim -4- in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 5. The remainder of the Agreement shall remain in full force and effect as written. 6. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. -5- ENTERRA CORPORATION By: /s/ Steven W. Krablin -------------------------- Steven W. Krablin Vice President and Chief Financial Officer /s/ Steven C. Grant ------------------------------- Steven C. Grant -6- AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Enterra Corporation, a Delaware corporation ("Enterra"), and EDWARD C. GRIMES (the "Employee"). WHEREAS, on FEBRUARY 8, 1990, Enterra and the Employee entered into a Severance Agreement, dated as of FEBRUARY 8, 1990 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1(p)(ii) of the Agreement is hereby amended by adding thereto a new last paragraph, to read as follows: "Notwithstanding anything to the contrary under this Section 1(p)(ii), any resignation by the Employee at any time from the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and the Company (the "Merger Agreement"), through August 12, 1996 shall constitute a 'Termination upon Change of Control' under this Agreement." 2. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Merger Agreement, any reference in this Agreement to the 'Company' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 3. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of the Company's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control. The Company shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 4. Section 10 of the Agreement is deleted and the following is -2- substituted therefor: "10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company (whether by Enterra Corporation or Weatherford or by any affiliate of, or plan maintained by, either) to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Merger Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm -3- hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim -4- in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 5. The remainder of the Agreement shall remain in full force and effect as written. 6. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. -5- ENTERRA CORPORATION By: /s/ Steven W. Krablin -------------------------- Steven W. Krablin Vice President and Chief Financial Officer /s/ Edward C. Grimes ------------------------------ Edward C. Grimes -6- AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Enterra Corporation, a Delaware corporation ("Enterra"), and STEVEN W. KRABLIN (the "Employee"). WHEREAS, on FEBRUARY 8, 1990, Enterra and the Employee entered into a Severance Agreement, dated as of FEBRUARY 8, 1990 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1(p)(ii) of the Agreement is hereby amended by adding thereto a new last paragraph, to read as follows: "Notwithstanding anything to the contrary under this Section 1(p)(ii), any resignation by the Employee at any time from the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and the Company (the "Merger Agreement"), through August 12, 1996 shall constitute a 'Termination upon Change of Control' under this Agreement." 2. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Merger Agreement, any reference in this Agreement to the 'Company' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 3. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of the Company's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control. The Company shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 4. Section 10 of the Agreement is deleted and the following is -2- substituted therefor: "10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company (whether by Enterra Corporation or Weatherford or by any affiliate of, or plan maintained by, either) to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Merger Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm -3- hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim -4- in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 5. The remainder of the Agreement shall remain in full force and effect as written. 6. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. -5- ENTERRA CORPORATION By: /s/ M. Gay Mather ------------------------------- M. Gay Mather Secretary /s/ Steven W. Krablin ------------------------------- Steven W. Krablin -6- AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Enterra Corporation, a Delaware corporation ("Enterra"), and WINDELL D. NORRIS, JR. (the "Employee"). WHEREAS, on NOVEMBER 10, 1993, Enterra and the Employee entered into a Severance Agreement, dated as of NOVEMBER 10, 1993 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and the Company, any reference in this Agreement to the 'Company' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 2. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of the Company's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control. The Company shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 3. Section 10 of the Agreement is deleted and the following is substituted therefor: "10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company (whether by Enterra Corporation or Weatherford or by any affiliate of, or plan maintained by, either) to or -2- for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Merger Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. -3- (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or -4- with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 4. The remainder of the Agreement shall remain in full force and effect as written. 5. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. ENTERRA CORPORATION By: /s/ Steven W. Krablin -------------------------- Steven W. Krablin Vice President and Chief Financial Officer /s/ Windell D. Norris, Jr. ------------------------------- Windell D. Norris, Jr. -5- AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Enterra Corporation, a Delaware corporation ("Enterra"), and J. JOSEPH PERCLE (the "Employee"). WHEREAS, on FEBRUARY 21, 1991, Enterra and the Employee entered into a Severance Agreement, dated as of FEBRUARY 21, 1991 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1(p)(ii) of the Agreement is hereby amended by adding thereto a new last paragraph, to read as follows: "Notwithstanding anything to the contrary under this Section 1(p)(ii), any resignation by the Employee at any time from the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and the Company (the "Merger Agreement"), through August 12, 1996 shall constitute a 'Termination upon Change of Control' under this Agreement." 2. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Merger Agreement, any reference in this Agreement to the 'Company' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 3. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of the Company's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control. The Company shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 4. Section 10 of the Agreement is deleted and the following is -2- substituted therefor: "10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company (whether by Enterra Corporation or Weatherford or by any affiliate of, or plan maintained by, either) to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Merger Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm -3- hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim -4- in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 5. The remainder of the Agreement shall remain in full force and effect as written. 6. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. -5- ENTERRA CORPORATION By: /s/ Steven W. Krablin ---------------------------- Steven W. Krablin Vice President and Chief Financial Officer /s/ J. Joseph Percle --------------------------------- J. Joseph Percle -6- AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Pipeline Induction Heat Limited ("PIH") and MICHAEL PETER SMITH (the "Employee"). WHEREAS, Enterra Corporation, a Delaware corporation ("Enterra"), is the ultimate parent company of PIH; WHEREAS, on APRIL 1, 1993, PIH and the Employee entered into a Severance Agreement, dated as of APRIL 1, 1993 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and Enterra, any reference in this Agreement to 'Enterra' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 2. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of Enterra's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of Enterra's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of Enterra's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of Enterra's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of Enterra has given rise to a Change of Control. Enterra shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 3. The remainder of the Agreement shall remain in full force and effect as written. 4. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. -2- IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. ENTERRA CORPORATION By: /s/ Steven W. Krablin --------------------------- Steven W. Krablin Vice President and Chief Financial Officer PIPELINE INDUCTION HEAT LIMITED By: /s/ C. Paul Evans --------------------------- C. Paul Evans Director /s/ Michael Peter Smith ------------------------------- Michael Peter Smith -3- AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Enterra Corporation, a Delaware corporation ("Enterra"), and MICHAEL L. STANSBERRY (the "Employee"). WHEREAS, on FEBRUARY 21, 1991, Enterra and the Employee entered into a Severance Agreement, dated as of FEBRUARY 21, 1991 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1(p)(ii) of the Agreement is hereby amended by adding thereto a new last paragraph, to read as follows: "Notwithstanding anything to the contrary under this Section 1(p)(ii), any resignation by the Employee at any time from the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and the Company (the "Merger Agreement"), through August 12, 1996 shall constitute a 'Termination upon Change of Control' under this Agreement." 2. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Merger Agreement, any reference in this Agreement to the 'Company' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 3. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of the Company's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control. The Company shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 4. Section 10 of the Agreement is deleted and the following is -2- substituted therefor: "10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company (whether by Enterra Corporation or Weatherford or by any affiliate of, or plan maintained by, either) to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Merger Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm -3- hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim -4- in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 5. The remainder of the Agreement shall remain in full force and effect as written. 6. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. -5- ENTERRA CORPORATION By: /s/ Steven W. Krablin -------------------------- Steven W. Krablin Vice President and Chief Financial Officer /s/ Michael L. Stansberry ------------------------------- Michael L. Stansberry -6- AMENDMENT 1995-1 TO SEVERANCE AGREEMENT This Amendment 1995-1 to Severance Agreement (the "Amendment"), dated as of AUGUST 31, 1995, is between Enterra Corporation, a Delaware corporation ("Enterra"), and D. DALE WOOD (the "Employee"). WHEREAS, on MARCH 5, 1991, Enterra and the Employee entered into a Severance Agreement, dated as of MARCH 5, 1991 (the "Agreement"); WHEREAS, the parties hereto desire to amend certain provisions of the Agreement regarding the severance compensation upon termination of employment in connection with a Change of Control; WHEREAS, the parties hereto desire to condition the effectiveness of this Amendment upon the consummation of the merger between Enterra and Weatherford International Incorporated ("Weatherford") pursuant to the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford and Enterra (the "Merger Agreement"); and WHEREAS, capitalized terms used herein that are not defined herein shall have the meanings ascribed thereto in the Agreement; NOW, THEREFORE, effective as of the Effective Time, as that term is defined in the Merger Agreement, the parties hereto, intending to be legally bound, agree as follows: 1. Section 1(p)(ii) of the Agreement is hereby amended by adding thereto a new last paragraph, to read as follows: "Notwithstanding anything to the contrary under this Section 1(p)(ii), any resignation by the Employee at any time from the Effective Time, as that term is defined in the Agreement and Plan of Merger, dated as of June 23, 1995, as amended as of August 28, 1995, between Weatherford International Incorporated ("Weatherford") and the Company (the "Merger Agreement"), through August 12, 1996 shall constitute a 'Termination upon Change of Control' under this Agreement." 2. Section 1 of the Agreement is hereby amended by adding thereto a new sentence at the end thereof, to read as follows: "With respect to all periods from and after the Effective Time, as that term is defined in the Merger Agreement, any reference in this Agreement to the 'Company' or the 'Common Stock' shall be deemed to be a reference to Weatherford or the common stock, par value $.10 per share, of Weatherford." 3. Section 4 of the Agreement is hereby amended by deleting therefrom the introductory provision and subsection (a) thereof and substituting the following therefor: "4. OTHER PAYMENTS. In the event of the Employee's Termination upon a Change of Control, the Company shall: (a) deliver to the Employee within fifteen days after the Termination Date, unless the Employee has exercised such options and rights, such number of shares of the Company's Common Stock the total fair market value of which will be equal to the excess, if any, of the aggregate fair market value of the shares of the Company's Common Stock subject to all stock options and stock appreciation rights outstanding and unexercised immediately prior to the Termination Date, whether vested or unvested, granted to the Employee under the Stock Plan, over the aggregate exercise price of all such stock options. For purposes of this paragraph, fair market value shall mean the highest of (x) the closing price of the Company's Common Stock on the business day immediately preceding the Termination Date, if such Common Stock is publicly traded at such date, (y) if such Common Stock is not publicly traded at the Termination Date, the value determined by an independent appraiser, such appraiser to be selected by the Employee and to be reasonably satisfactory to the Company (the fees and expenses of such appraiser to be borne by the Company), or (z) the highest per share price of the Company's Common Stock paid (in connection with the Change of Control or at any time thereafter) by the Person or group whose acquisition of shares of Common Stock of the Company has given rise to a Change of Control. The Company shall take all corporate action necessary (i) to reserve for issuance a sufficient number of shares of the Common Stock for delivery pursuant to this section and (ii) to ensure that all shares of the Common Stock issued pursuant to this section are registered under the Securities Act of 1933, as amended, listed on the New York Stock Exchange and may be freely transferred by the holders thereof;" 4. Section 10 of the Agreement is deleted and the following is -2- substituted therefor: "10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company (whether by Enterra Corporation or Weatherford or by any affiliate of, or plan maintained by, either) to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, the Merger Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made under this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination shall be made by Arthur Andersen LLP or, as provided below, such other certified public accounting firm as may be designated by the Employee (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days after the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Employee shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days after the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm -3- hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Employee is informed in writing of such claim, and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which he gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claims; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such costs and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim -4- in any permissible manner, and the Employee agrees to prosecute such contest to determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issues raised by the Internal Revenue Service or any other taxing authority. (d) If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 5. The remainder of the Agreement shall remain in full force and effect as written. 6. This Amendment shall be conditioned upon the consummation of the merger between Enterra and Weatherford pursuant to the Merger Agreement, and in the event such merger is not so consummated, the Agreement shall remain in full force and effect without regard to the changes contemplated by this Amendment. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the day and year first above written. -5- ENTERRA CORPORATION By: /s/ Steven W. Krablin -------------------------- Steven W. Krablin Vice President and Chief Financial Officer /s/ D. Dale Wood ------------------------------- D. Dale Wood -6- EX-5.1 8 EXHIBIT 5.1 October 5, 1995 Weatherford Enterra, Inc. 1360 Post Oak Boulevard, Suite 1000 Houston, Texas 77056 RE: REGISTRATION STATEMENT ON FORM S-8 (THE "REGISTRATION STATEMENT")-- WEATHERFORD ENTERRA, INC. 1991 STOCK OPTION PLAN WEATHERFORD ENTERRA, INC. RESTRICTED STOCK INCENTIVE PLAN D. DALE WOOD STOCK OPTION AGREEMENT ENTERRA CORPORATION SEVERANCE AGREEMENTS/WEATHERFORD INTERNATIONAL INCORPORATED CHANGE OF CONTROL AGREEMENTS Dear Sirs: I am Senior Vice President, Secretary and General Counsel for Weatherford Enterra, Inc., a Delaware corporation (the "Company"), and have acted as legal counsel in connection with the authorization of an aggregate of 1,959,500 shares (the "Shares") of the common stock, $.10 par value, of the Company ("Common Stock") that may be issued (i) upon the exercise of options granted pursuant to and subject to the terms and conditions of the Weatherford Enterra, Inc. 1991 Stock Option Plan (the "1991 Option Plan"); (ii) upon the grant of shares pursuant to and subject to the terms and conditions of the Weatherford Enterra, Inc. Restricted Stock Incentive Plan (the "RSIP"); (iii) upon the exercise of options granted pursuant to the D. Dale Wood Stock Option Agreement between D. Dale Wood and the Company (the "Wood Agreement"); and (iv) upon the cancellation of previously granted options in accordance with the terms of the Enterra Corporation Severance Agreements and the Weatherford International Incorporated Change of Control Agreements (collectively, the "Agreements"). In connection with rendering the opinions hereinafter expressed, I have examined, among other things, the 1991 Option Plan, the RSIP, the Wood Agreement and the Agreements, the Restated Certificate of Incorporation and By-Laws of the Company, both as amended to date, the corporate proceedings with respect to the 1991 Option Plan, the RSIP, the Wood Agreement and the Agreements and such other corporate documents as I have deemed appropriate. Weatherford International Incorporated October 5, 1995 Page 2 Based on the foregoing, and having due regard for such legal considerations as I have deemed relevant, I am of the opinion that the Shares have been duly authorized for issuance and, when issued in accordance with the respective terms of the 1991 Option Plan, the RSIP, the Wood Agreement and the Agreements, the Shares will be validly issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement on Form S-8 registering the Shares and to the reference to me under the heading "Interests of Named Experts and Counsel" in said Registration Statement. The opinions expressed herein are limited exclusively to the General Corporation Law of the State of Delaware and the Federal securities law of the United States of America. This opinion is provided at your request and solely in connection with the Registration Statement. This opinion may be relied upon only by you and may not be quoted from or referred to or copies delivered to any other person without my prior written consent, except as provided herein. As of the date hereof, I own beneficially 37,221 shares of Common Stock and hold options to purchase an additional 28,000 shares of Common Stock, of which 16,166 options are immediately exercisable (all such numbers reflect the one-for-two reverse stock split effected by the Company on October 5, 1995). Very truly yours, /s/ H. Suzanne Thomas --------------------------- H. Suzanne Thomas HST:cl EX-23.1 9 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our reports dated March 10, 1995, included in the Form 10-K of Weatherford International Incorporated (now known as Weatherford Enterra, Inc.), for the year ended December 31, 1994 and to all references to our firm included in this Registration Statement. ARTHUR ANDERSEN LLP Houston, Texas October 5, 1995 -----END PRIVACY-ENHANCED MESSAGE-----