<PAGE> 1
CONFORMED
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
---------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to
--------------------- ---------------------------
Commission file number 1-9245
------------------------
NABORS INDUSTRIES, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 93-0711613
- ------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
515 W. Greens Road, Suite 1200, Houston, Texas 77067
- -------------------------------------------------------------------------------
(Address of principal executive offices, zip code)
281-874-0035
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if change
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: The number of
shares of Common Stock, par value $.10 per share, outstanding as of April 30,
1997 was 96,320,006.
<PAGE> 2
NABORS INDUSTRIES, INC.
INDEX
Page No.
Part I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
March 31, 1997 and September 30, 1996 2
Condensed Consolidated Statements of
Income and Retained Earnings for the Three
Months and Six Months Ended March 31, 1997 and 3
1996
Condensed Consolidated Statements of Cash
Flows for the Six Months Ended March
31, 1997 and 1996 4
Notes to Condensed Consolidated
Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8
Part II Other Information
Item 2. Changes in Securities 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
----------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 68,093 $ 95,867
Marketable securities 5,952 8,160
Accounts receivable, net 201,887 172,720
Inventory and supplies 20,000 18,528
Prepaid expenses and other current assets 27,760 33,259
----------- ---------
Total current assets 323,692 328,534
Property, plant and equipment, net 639,311 511,203
Marketable securities 19,446 11,839
Other long-term assets 24,262 19,698
----------- ---------
Total assets $ 1,006,711 $ 871,274
----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term obligations $ 2,290 $ 7,738
Short-term borrowings 10,919 10,235
Trade accounts payable and accrued liabilities 144,214 129,018
Income taxes payable 9,221 9,452
----------- ---------
Total current liabilities 166,644 156,443
Long-term obligations 230,497 229,504
Other long-term liabilities 13,751 9,139
Deferred income taxes 22,098 18,366
----------- ---------
Total liabilities 432,990 413,452
----------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.10 per share:
Authorized 10,000 shares; none issued or outstanding -- --
Capital stock, par value $.10 per share:
Authorized common shares 200,000;
issued 96,798 and 87,470 9,680 8,747
Authorized Class B shares 8,000; none issued or outstanding -- --
Capital in excess of par value 326,906 250,995
Cumulative translation adjustment (2,306) (2,692)
Net unrealized gain on marketable securities 6,175 3,728
Retained earnings since May 1, 1988 236,430 200,208
Less treasury stock, at cost, 489 common shares (3,164) (3,164)
----------- ---------
Total stockholders' equity 573,721 457,822
----------- ---------
Total liabilities and stockholders' equity $ 1,006,711 $ 871,274
----------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
2
<PAGE> 4
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND RETAINED EARNINGS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended March 31, Six months ended March 31,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 238,683 $ 163,319 $ 455,760 $ 327,657
--------- --------- --------- ---------
Operating expenses:
Direct costs 177,466 120,020 340,104 244,479
General and administrative expenses 17,278 14,117 31,996 26,655
Depreciation and amortization 15,737 10,993 30,091 21,002
Merger expenses -- -- 1,755 --
--------- --------- --------- ---------
Operating expenses 210,481 145,130 403,946 292,136
--------- --------- --------- ---------
Operating income 28,202 18,189 51,814 35,521
--------- --------- --------- ---------
Other income (expense):
Interest expense (3,156) (2,147) (7,332) (4,114)
Interest income 1,077 191 2,656 441
Other income, net 6,823 3,142 21,371 4,747
--------- --------- --------- ---------
Other income 4,744 1,186 16,695 1,074
--------- --------- --------- ---------
Income before income taxes 32,946 19,375 68,509 36,595
--------- --------- --------- ---------
Income taxes:
Current 3,964 2,264 5,253 3,781
Deferred 7,541 289 21,700 730
--------- --------- --------- ---------
Income taxes 11,505 2,553 26,953 4,511
--------- --------- --------- ---------
Net income 21,441 16,822 41,556 32,084
Reclassification of pre-quasi-
reorganization tax benefit (1,843) (1,100) (2,572) (4,700)
Adcor retained deficit at September 30, 1996 -- -- (2,762) --
Retained earnings, beginning of period 216,832 149,753 200,208 138,091
--------- --------- --------- ---------
Retained earnings, end of period $ 236,430 $ 165,475 $ 236,430 $ 165,475
--------- --------- --------- ---------
Earnings per share:
Primary $ .21 $ .18 $ .42 $ .35
--------- --------- --------- ---------
Fully diluted $ .21 $ .18 $ .40 $ .34
--------- --------- --------- ---------
Weighted average number of shares outstanding:
Primary 101,258 92,463 100,132 91,460
--------- --------- --------- ---------
Fully diluted 111,002 93,692 110,075 93,465
--------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
3
<PAGE> 5
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six months ended March 31,
1997 1996
---------- -----------
<S> <C> <C>
Net cash provided by operating activities $ 38,727 $ 27,986
-------- --------
Cash flows from investing activities:
Purchases of marketable securities, trading -- (6,585)
Sales of marketable securities, trading 3,653 2,808
Purchases of marketable securities, available-for-sale (4,803) --
Sales of marketable securities, available-for-sale 3,220 1,699
(Increase) decrease in notes receivable, net (655) 7
Cash paid for acquisitions, net (62,500) (5,768)
Capital expenditures (72,602) (54,013)
Cash received from disposition of assets and insurance claims 49,491 8,267
Investment in affiliates (502) --
-------- --------
Net cash used for investing activities (84,698) (53,585)
-------- --------
Cash flows from financing activities:
(Increase) decrease in restricted cash (9) 889
(Decrease) increase in long-term borrowings, net (14,361) 9,177
(Decrease) increase in short-term borrowings, net (330) 4,216
Common and treasury stock transactions 32,379 2,259
-------- --------
Net cash provided by financing activities 17,679 16,541
-------- --------
Net decrease in cash and cash equivalents (28,292) (9,058)
Cash and cash equivalents, beginning of period 95,867 12,038
Adjustment for Adcor cash at September 30, 1996 518 --
-------- --------
Cash and cash equivalents, end of period $ 68,093 $ 2,980
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
4
<PAGE> 6
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies
Interim Financial Information
The unaudited condensed consolidated financial statements of
Nabors Industries, Inc. (the "Company") are prepared in conformity with
generally accepted accounting principles, but do not purport to be a complete
presentation inasmuch as all note disclosures required are not included.
Reference is made to the Company's 1996 Annual Report on Form 10-K for
additional note disclosures.
In the opinion of management, the condensed consolidated
financial statements contain all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial position of
the Company as of March 31, 1997 and the results of its operations and its cash
flows for the respective periods ended March 31, 1997 and 1996. Interim results
for the six months ended March 31, 1997 are not necessarily indicative of
results which will be realized for the full year ending September 30, 1997.
Property, Plant and Equipment
In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 121 ("SFAS 121"),
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of. The Company's adoption of SFAS 121 at the beginning of 1997 did
not have a material effect on the financial statements.
Earnings Per Share
Primary earnings per share equals net income divided by the
weighted average number of common shares outstanding, after giving effect to
dilutive stock options and warrants. Fully diluted earnings per share for the
three months and six months ended March 31, 1997 equals net income plus $1.4
million and $2.8 million, respectively, of after tax interest incurred on the
$172.5 million 5% Convertible Subordinated Notes, issued on May 28, 1996 (the
"5% Notes"), divided by weighted average common shares outstanding after giving
effect to dilutive stock options and warrants and 9.5 million shares assumed to
be issued on conversion of the 5% Notes. The 5% Notes are not included in the
fully diluted earnings per share calculation for the three months and six
months ended March 31, 1996 because they had not been issued at that time.
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128 ("SFAS 128"),
Earnings Per Share. SFAS 128, which is effective for periods ending after
December 15, 1997, is designed to improve the earnings per share ("EPS")
information provided in the financial statements by simplifying the existing
computational guidelines as prescribed by APB Opinion No. 15, Earnings Per
Share, revising the disclosure requirements, and increasing the comparability
of EPS data on an international basis. SFAS 128 requires restatement of all
prior-period EPS data presented after the effective date and early application
is not permitted. The Company will adopt the provisions of SFAS 128 at the
beginning of fiscal 1998.
5
<PAGE> 7
Note 2 Acquisitions and Dispositions
During November 1996, the Company completed the sale of its
wholly owned subsidiary Nabors Drilling & Energy Services UK Ltd. to a wholly
owned subsidiary of Abbot Group plc, a diversified holding company listed on
the London stock exchange. The Company received approximately $36.0 million
plus the value of working capital in cash, as well as 10.8 million four-year
warrants to acquire stock in Abbot Group plc. The Company exercised 4.0 million
of such warrants during February 1997 and sold the underlying shares for net
proceeds of $3.2 million.
During December 1996, the Company purchased 47 land drilling
rigs from Noble Drilling Corporation and certain of its subsidiaries for $60.0
million in cash. The fleet of rigs consists of 19 operating rigs and 28 stacked
rigs in various stages of completeness; 38 of the rigs are located in the
United States and nine are located in Canada. The acquisition was accounted for
under the purchase method of accounting; accordingly, the total purchase price
was allocated to net assets based on estimated fair values. The results of
operations associated with the purchased rigs have been included in the
condensed consolidated financial statements of the Company commencing on the
effective date of the acquisition.
During January 1997, the Company completed the acquisition of
Adcor-Nicklos Drilling Company ("Adcor") through a merger of a wholly owned
subsidiary with and into Adcor. In the merger, all of the stock of Adcor was
exchanged for 3,354,175 shares of Nabors common stock. The Adcor fleet consists
of 30 active and six stacked land rigs located in the United States. The assets
also include drill pipe, spare drilling equipment, yards, vehicles and other
support equipment. The transaction was accounted for as a pooling-of-interests.
The results of operations of Adcor were included in the Company's fiscal 1997
results commencing January 1997. The historical consolidated financial
statements of the Company were retroactively restated to include the results of
operations, financial position and cash flows of Adcor commencing on October 1,
1996. The historical consolidated financial statements of the Company prior to
fiscal year 1997 were not restated as the effect in those years was not
significant. Accordingly, an adjustment was made to the Company's retained
earnings on October 1, 1996 to record the cumulative retained deficit of Adcor
as of September 30, 1996.
Note 3 Capital Stock
During the six month period ended March 31, 1997, 4,455,175
options were exercised at prices ranging from $0.75 to $10.375 per share. In
addition, 19,268 common shares were issued upon vesting under a stock award
plan.
During January 1997, the Company completed its merger with
Adcor whereby the Company acquired all the outstanding shares of Adcor in
exchange for 3,354,175 newly issued shares of the Company's common stock
(Note 2).
During January 1997, warrants to acquire 1,500,000 shares of
the Company's common stock were exercised at a price of $5.50 per share. The
warrants had originally been issued to a financial institution and were
exercisable until January 31, 1997.
6
<PAGE> 8
Note 4 Income taxes
During 1997, the Company began recording non-cash US federal
deferred income taxes based on the relationship between the amount of the
Company's unused US federal net operating loss carryforwards ("US NOL") and the
temporary differences between the book basis and tax basis in the Company's
assets. The temporary differences primarily arise from using accelerated
depreciation for tax return purposes as compared to a lower depreciation amount
for financial statement purposes. Additionally, the Company recorded higher UK
taxes during the year as a result of the sale of the UK operation, resulting in
an effective tax rate of 39% for the six months ended March 31, 1997, as
compared to an effective tax rate of 12% for the prior year comparable period.
The effective tax rate for the remaining quarters of 1997 should approximate
the 35% US federal statutory rate. Non-cash US federal deferred taxes should
represent the majority of this amount until that point in time when the US NOL
has been fully utilized or expires.
Note 5 Commitments and Contingencies
Capital Expenditures
As of March 31, 1997, the Company had capital expenditure
purchase commitments, including the acquisitions of Chesley Pruet Drilling
Company, Samson Rig Company and Rig Properties, Inc. (Note 6) of approximately
$150.0 million.
Contingencies
The Company is a defendant or otherwise involved in a number
of lawsuits. In the opinion of management, the Company's ultimate liability
with respect to these lawsuits is not expected to have a significant or
material adverse effect on the Company's consolidated financial position or
results of operations.
Note 6 Subsequent Events
During April 1997, the Company completed the purchase of
substantially all the assets of privately owned Chesley Pruet Drilling Company
and an affiliate for cash. The Chesley Pruet fleet consists of 10 active and
two stacked land rigs located in the United States. The purchase also included
drill pipe and component equipment. Also, during April 1997, the Company
completed the acquisition of Samson Rig Company and Rig Properties, Inc. from a
subsidiary of Samson Investment Company for $85.0 million in cash. The property
of the acquired companies consists of 25 stacked land rigs located in the
United States, and a large complement of component equipment. The acquisitions
will be accounted for under the purchase method of accounting.
7
<PAGE> 9
ITEM 2.
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Second Quarter and First Six Months of Fiscal 1997 Compared to Second Quarter
and First Six Months of Fiscal 1996
Company revenues for the second quarter of fiscal 1997
("Current Quarter") and the first six months of fiscal 1997 ("Current Period")
totaled $238.7 million and $455.8 million, respectively, representing a 46% and
39% increase over the prior year comparable period amounts. Operating income
during the Current Quarter and Current Period totaled $28.2 million and $51.8
million, respectively, compared to $18.2 million and $35.5 million in the prior
year, representing a 55% and 46% increase, respectively. Net income totaled
$21.4 million ($.21 per primary and fully diluted share) and $41.6 million
($.42 per primary share, $.40 per fully diluted share) during the Current
Quarter and Current Period, respectively, compared to $16.8 million ($.18 per
primary and fully diluted share) and $32.1 million ($.35 per primary share,
$.34 per fully diluted share) during the prior year comparable periods. The
significant improvement in operating results during the Current Quarter and
Current Period was due primarily to the improved results of the Company's
operations in the US Lower 48, the Gulf of Mexico, Canada and Saudi Arabia,
partially offset by lower operating results for the Company's UK North Sea
operation, which was sold during November 1996 (Note 2). Net income was also
positively affected during the Current Period by a gain on the sale of the
Company's UK North Sea Operation. However, an increase in the Company's
effective tax rate, resulting from non-cash US federal deferred income taxes
recorded in the Current Quarter and Current Period, as well as a higher tax
rate applicable on the sale of the UK operation during the Current Period,
reduced net income.
The following tables set forth financial information with
respect to the Company and its subsidiaries on a consolidated basis by
geographical area :
<TABLE>
<CAPTION>
Three months ended March, 31 Six months ended March 31,
1997 1996 Increase (Decrease) 1997 1996 Increase (Decrease)
--------- --------- ------------------- --------- --------- -------------------
(In thousands, except percentages)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
North America $ 199,140 $ 116,393 $ 82,747 71% $ 372,838 $ 239,592 $ 133,246 56%
International 39,543 46,926 (7,383) (16%) 82,922 88,065 (5,143) (6%)
--------- --------- -------- -- --------- --------- --------- --
Total revenues 238,683 163,319 75,364 46% 455,760 327,657 128,103 39%
--------- --------- -------- -- --------- --------- --------- --
Operating income:
North America 24,280 13,946 10,334 74% 46,039 28,001 18,038 64%
International 6,832 7,257 (425) (6%) 13,633 13,229 404 3%
Corporate expenses (2,910) (3,014) 104 3% (6,103) (5,709) (394) (7%)
Merger expenses (1) -- -- -- -- (1,755) -- (1,755) N/A
--------- --------- -------- -- --------- --------- --------- --
Total operating income $ 28,202 $ 18,189 $ 10,013 55% $ 51,814 $ 35,521 $ 16,293 46%
--------- --------- -------- -- --------- --------- --------- --
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1997 1996
----------------- ------------------ ------------------ -------------------
Rig Rig Rig Rig Rig Rig Rig Rig
Rig activity (2) : Years Utilization Years Utilization Years Utilization Years Utilization
----- ----------- ------ ----------- ------ ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
North America 223.9 63% 141.3 57% 213.4 62% 144.6 59%
International 31.1 59% 27.7 63% 30.0 59% 27.3 61%
----- -- ----- -- ----- -- ----- --
255.0 62% 169.0 58% 243.4 62% 171.9 59%
----- -- ----- -- ----- -- ----- --
</TABLE>
(1) Merger expenses relating to the Adcor merger.
(2) Excludes labor contracts and Gibson workover and well servicing rigs.
North America (including Canada) revenues totaled $199.1
million and $372.8 million during the Current Quarter and Current Period,
respectively, representing a 71% and 56% increase over the prior year
comparable periods. The increase was primarily attributable to a significant
increase in revenues for the Company's US Lower 48
8
<PAGE> 10
operations during the Current Quarter and Current Period, as a result of the
acquisition of Exeter Drilling Company and its subsidiary, JW Gibson Well
Service Company during April 1996, the December 1996 purchase of 47 land rigs
from Noble Drilling Corporation, 38 of which are located in the US Lower 48
(Note 2), and the merger with Adcor-Nicklos Drilling Company ("Adcor") during
January 1997, which was accounted for as a pooling-of-interests with Adcor
results included retroactive to October 1, 1996 (Note 2), and improved daywork
rates. Revenues for the Gulf of Mexico operations also increased significantly
during the Current Quarter and Current Period as a result of increased
equivalent rig years and higher dayrates for the Company's platform drilling
rigs and platform workover rigs, as well as higher dayrates for the Company's
jackup workover rigs as compared to the prior year comparable periods. Platform
drilling rig equivalent rig years increased in part as a result of the newly
constructed MASE(TM) rigs 802 and 803, which began working in June 1996 and
November 1996, respectively. Additionally, rig 269, an adapted land rig, began
working in the Gulf of Mexico in June 1996. Canada operation revenues increased
during the Current Quarter and Current Period primarily as a result of the
addition of 9 rigs purchased from Noble Drilling Corporation during December
1996, and an improvement in dayrates as compared to the prior year comparable
periods. Alaska operation revenues were flat during the Current Quarter and
Current Period as a result of reduced rig activity, which was offset by
increased activity for Peak Oilfield Services, the Company's Alaskan
construction and logistics joint venture. Equivalent North America rig years
during the Current Quarter and Current Period totaled 223.9 years and 213.4
years, respectively, as compared to 141.3 years and 144.6 years during the
prior year comparable periods.
International revenues totaled $39.5 million and $82.9
million during the Current Quarter and Current Period, respectively,
representing a 16% and 6% decrease from the prior year comparable periods.
Middle Eastern and CIS revenues increased significantly during the Current
Quarter and Current Period primarily as a result of new contracts in Saudi
Arabia for six rigs, three of which commenced operations during the third
quarter of 1996, and three of which commenced operations during the Current
Quarter. Additionally, CIS revenues increased as a result of a one rig contract
on Sakhalin Island, which operated from June 1996 to December 1996, as well as
two joint venture contracts in Kazakhstan, which commenced during the third
quarter of 1996. These increases were partially offset, however, by lower rig
activity in Yemen and Africa. Revenues for the Company's South and Central
America operations decreased during the Current Quarter and Current Period due
primarily to decreased activity in Venezuela, and the completion of two
contracts in Costa Rica during the prior year. These decreases were partially
offset, however, by MASE(TM) rig 801, which began operations in Trinidad during
January 1996. UK North Sea revenues decreased during the Current Quarter and
Current Period, as the Company completed the sale of its UK North Sea operation
during November 1996. Equivalent international rig years during the Current
Quarter and Current Period totaled 31.1 years and 30.0 years, respectively, as
compared with 27.7 years and 27.3 years in the prior year comparable periods.
The following table sets forth selected consolidated
financial information of the Company expressed as a percentage of total
operating revenues:
<TABLE>
<CAPTION>
Three months ended March 31, Six months ended March 31 ,
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
------ ------ ------ ------
Operating expenses:
Direct costs 74.4% 73.5% 74.6% 74.7%
General and administrative expenses 7.2% 8.7% 7.0% 8.1%
Depreciation and amortization 6.6% 6.7% 6.6% 6.4%
Merger expenses -- -- .4% --
------ ------ ------ ------
Operating expenses 88.2% 88.9% 88.6% 89.2%
------ ------ ------ ------
Operating income 11.8% 11.1% 11.4% 10.8%
Other income 2.0% .8% 3.6% .4%
------ ------ ------ ------
Income before income taxes 13.8% 11.9% 15.0% 11.2%
Income taxes 4.8% 1.6% 5.9% 1.4%
------ ------ ------ ------
Net income 9.0% 10.3% 9.1% 9.8%
------ ------ ------ ------
</TABLE>
Direct costs as a percentage of revenues increased during the
Current Quarter as compared to the prior year comparable quarter. The decrease
in gross margins during the Current Quarter is largely the result of an
increased
9
<PAGE> 11
percentage of the Company's total revenues being generated by the Company's US
Lower 48 operations, as these contracts are usually at a lower gross margin
percentage than the Gulf of Mexico, Alaskan and International contracts.
Additionally, the margins in the US Lower 48 were adversely impacted by a lower
contribution from turnkey and footage work, partially due to timing and some
adverse footage costs in one area. The decreased margins for the US Lower 48
operations during the Current Quarter, were partially offset by improved
margins in the Gulf of Mexico and Saudi Arabia. Selling, general and
administrative expenses as a percentage of revenues decreased during the
Current Quarter and Current Period due to the increase in revenues, as these
expenses were spread over a larger revenue base. Merger expenses of $1.8
million relating to the merger with Adcor (Note 2) were recorded during the
first quarter of 1997.
Interest expense increased during the Current Quarter and
Current Period as a result of the interest associated with the $172.5 million
5% Convertible Subordinated Notes issued on May 28, 1996 (the "5% Notes"),
partially offset by lower interest expense associated with short-term
borrowings that were substantially paid down with proceeds from the 5% Notes.
Interest income increased during the Current Quarter and Current Period due to
higher average cash and cash equivalent balances that resulted from the
remaining proceeds from the 5% Notes.
Other income increased during the Current Quarter and Current
Period. The increase during the Current Quarter relates primarily to increased
realized and unrealized gains on marketable securities as compared to the prior
year quarter. During the Current Period, the Company recognized a gain on the
sale of the Company's UK North Sea operation, in which the Company received
approximately $36.0 million plus the value of working capital in cash, as well
as 10.8 million four-year warrants to acquire stock in Abbot Group plc. Other
income during the prior year periods consisted primarily of realized and
unrealized gains on marketable securities.
During the Current Quarter and Current Period, the Company
began recording non-cash US federal deferred income taxes based on the
relationship between the amount of the Company's unused US federal net
operating loss carryforwards ("US NOL") and the temporary differences between
the book basis and tax basis in the Company's assets. The temporary differences
primarily arise from using accelerated depreciation for tax return purposes as
compared to a lower depreciation amount recorded for financial statement
purposes. Additionally, the Company recorded higher UK taxes during the Current
Period as a result of the sale of the UK operation, resulting in a Current
Period effective tax rate of 39% compared to an effective tax rate of 12% for
the prior year comparable period. The effective tax rate for financial
statement purposes during the Current Quarter was 35% and the effective tax
rate for the remaining quarters of 1997 should approximate the 35% US federal
statutory rate. Non-cash US federal deferred taxes should represent the
majority of this amount until that point in time when the US NOL has been fully
utilized or expires. The current and deferred income tax provisions for the
prior year periods relate primarily to foreign operations, including Canada, as
substantially all of the US taxable income and temporary differences between
the book basis and tax basis of the Company's assets were offset by available
US NOL.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $157.0 million as of March
31, 1997, representing a $15.0 million decrease from September 30, 1996. The
ratio of funded debt to funded debt plus shareholder's equity, commonly
referred to as debt to capital ratio, was 0.30:1 as of March 31, 1997 as
compared to 0.35:1 as of September 30, 1996. The improvement in the debt to
capital ratio is the result of a slight reduction in funded debt, as well as an
increase in shareholder's equity resulting from the Company's earnings, common
stock issued in connection with the Adcor merger and other common stock
transactions.
Cash and cash equivalents decreased by $28.3 million during
the Current Period as compared to a decrease of $9.1 million during the prior
year comparable period.
Net cash provided by operating activities totaled $38.7
million during the Current Period compared to $28.0 million during the prior
year comparable period. During the Current Period and prior year comparable
period, net income, as increased for non-cash items such as depreciation and
deferred taxes, was partially offset by non-cash items such as gains on sales
of assets and the negative impact on cash from changes in the Company's working
capital accounts.
Net cash used for investing activities totaled $84.7 million
during the Current Period compared to $53.6 million during the prior year
comparable period. Cash paid for the Noble land rigs and other acquisitions and
capital expenditures represented the primary uses of cash during the Current
Period, partially offset by cash provided from the sale
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<PAGE> 12
of the UK North Sea operation and other fixed assets. During the prior year
comparable period, capital expenditures, cash paid for acquisitions and the
purchases of marketable securities represented the primary uses of cash,
partially offset by cash provided from sales of fixed assets.
Financing activities provided cash totaling $17.7 million
during the Current Period compared to $16.5 million during the prior year
comparable period. During the Current Period cash was provided by common stock
transactions, partially offset by reductions in long-term borrowings. In the
prior year period, cash was provided by short-term and long-term borrowings, as
well as common stock transactions.
The Company's cash and cash equivalents and short-term
investments in marketable securities totaled $74.0 million as of March 31,
1997. In addition, the Company had long-term investments in marketable
securities of $19.4 million as of March 31, 1997. The Company has credit
facility arrangements with a number of banks totaling $109.4 million with
remaining availability, after borrowings on the facilities and outstanding
letters of credit, of approximately $90.2 million.
As of March 31, 1997, the Company had capital expenditure
purchase commitments, including the acquisitions of Chesley Pruet Drilling
Company and Samson Rig Company (Note 6), totaling approximately $150.0 million.
On April 15, 1997, the Company filed a universal shelf
registration statement on Form S-3 with the Securities and Exchange Commission
to allow for the Company to offer from time to time up to $300.0 million in
debt securities, preferred stock, common stock, depository shares, or warrants,
and for secondary sales of securities not involving the Company of up to $50.0
million. The registration statement was declared effective by the Securities
and Exchange Commission on May 2, 1997.
The current cash and cash equivalents, short-term
investments, credit facility position, and projected cash flow generated from
current operations are expected to adequately finance the Company's
non-discretionary capital and debt service requirements for the next twelve
months.
OTHER MATTERS
The Company's financial condition and results of operations
are dependent upon the level of spending by oil and gas companies for
exploration, development and production activities. Therefore, a sustained
increase or decrease in the price of oil or natural gas, which could have a
material impact on exploration, development and production activities, could
materially affect the Company's financial condition and results of operations.
11
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PART II OTHER INFORMATION
Item 2. Changes in Securities
On January 2, 1997, the Company completed a private placement of
3,354,175 shares of Common Stock to the holders of the outstanding
shares of common stock and options to purchase common stock of
Adcor-Nicklos Drilling Company in exchange for all of the outstanding
shares of stock and options of Adcor. Such private placement was made
to effect the acquisition of Adcor by the Company. The sale of the
shares of Common Stock was exempt from registration under the
Securities Act of 1933, as amended (the "Act"), by virtue of Section
4(2) of the Act because , among other things, offers and sales were
made to a limited number of persons and no general solicitation or
advertising was used. In addition, each purchaser was supplied with
information about the Company and each purchaser represented to the
Company that he was an "accredited investor," as that term is defined
in Regulation D promulgated under the Act, and/or such purchaser or
his purchaser representative was a sophisticated investor by virtue of
his education, training and/or numerous prior investments. The Company
has filed a registration statement on Form S-3 with the Securities and
Exchange Commission covering the resale of the shares sold in the
private placement and certain other shares of Common Stock previously
issued by the Company. The registration statement was declared
effective on February 28, 1997.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's 1997 Annual Meeting of Shareholders held on March 4,
1997, 80,225,199 shares of common stock were present in person or by
proxy, constituting 87.5% of the outstanding common stock of the
Company entitled to vote. The matters voted upon at the Annual Meeting
were as follows:
Election of Directors: Three Class III directors were elected to the
Board of Directors of the Company to serve for a three-year term,
expiring in 2000:
Gary T. Hurford
Votes cast in favor: 79,551,702 (99% of the shares present)
Votes withheld: 703,497 (1%)
Eugene M. Isenberg
Votes cast in favor: 79,521,953 (99%)
Votes withheld: 733,246 (1%)
Jack Wexler
Votes cast in favor: 79,673,102 (99%)
Votes withheld: 582,097 (1%)
Class I Directors, Messrs. Hans W. Schmidt and Richard A. Stratton,
continued as directors, with terms expiring in 1998.
Class II Directors, Messrs. Anthony G. Petrello, Myron M. Sheinfeld
and Martin J. Whitman, continued as directors, with terms expiring in
1999.
Item 5. Other Information
On April 15, 1997, Nabors filed a universal shelf registration
statement on Form S-3 with the Securities and Exchange Commission to
allow for the Company to offer from time to time up to $300.0 million
in debt securities, preferred stock, common stock, depository shares,
or warrants, and for secondary sales of securities not involving the
Company of up to $50.0 million. The
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<PAGE> 14
registration statement on Form S-3 was declared effective by the
Securities and Exchange Commission on May 2, 1997.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation of the Registrant
dated March 4, 1997
3.2 Restated By-Laws of the Registrant adopted March 4, 1997
4.1(1) Indenture for Subordinated Debt Securities dated May 28,
1996 between Marine Midland Bank, Trustee and Nabors
Industries, Inc. in connection with $172.5 million
aggregate principal amount of 5% Convertible Subordinated
Notes due 2006 (the "5% Notes")
4.2 (1) Supplemental Indenture, dated May 28, 1996 between Marine
Midland Bank, Trustee and Nabors Industries, Inc. in
connection with the 5% Notes
10.1 Employment agreement effective October 1, 1996 between
Nabors Industries, Inc. and Eugene M. Isenberg
10.2 Employment agreement effective October 1, 1996 between
Nabors Industries, Inc. and Anthony G. Petrello
11 Statement Re Computation of Per Share Earnings
27 Financial Data Schedule
- ------------
(1) Incorporated by Reference to Form 8-K, File No. 1-9245,
filed with the Commission on May 28, 1996.
(b) Reports on Form 8-K
Form 8-K dated January 31, 1997 and filed with the Securities and
Exchange Commission on March 3, 1997 under Item 5 (other events).
The financial statements filed in such Form 8-K was a report of
unaudited revenues and net income for the month ended January 31,
1997 of Nabors Industries, Inc., including the consolidated
financial results of Adcor-Nicklos Drilling Company, which was
acquired by Nabors Industries, Inc. on January 2, 1997.
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<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
NABORS INDUSTRIES, INC.
/s/ Anthony G. Petrello
-------------------------------------
Anthony G. Petrello
President and Chief Operating Officer
/s/ Bruce P. Koch
-------------------------------------
Bruce P. Koch
Vice President of Finance (principal
financial and accounting officer)
Dated: May 15, 1997
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1 Restated Certificate of Incorporation of the Registrant
dated March 4, 1997
3.2 Restated By-Laws of the Registrant adopted March 4, 1997
4.1(1) Indenture for Subordinated Debt Securities dated May 28,
1996 between Marine Midland Bank, Trustee and Nabors
Industries, Inc. in connection with $172.5 million
aggregate principal amount of 5% Convertible Subordinated
Notes due 2006 (the "5% Notes")
4.2 (1) Supplemental Indenture, dated May 28, 1996 between Marine
Midland Bank, Trustee and Nabors Industries, Inc. in
connection with the 5% Notes
10.1 Employment agreement effective October 1, 1996 between
Nabors Industries, Inc. and Eugene M. Isenberg
10.2 Employment agreement effective October 1, 1996 between
Nabors Industries, Inc. and Anthony G. Petrello
11 Statement Re Computation of Per Share Earnings
27 Financial Data Schedule
- ------------
(1) Incorporated by Reference to Form 8-K, File No. 1-9245,
filed with the Commission on May 28, 1996.
<PAGE> 1
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
NABORS INDUSTRIES, INC.
The present name of the corporation is Nabors Industries, Inc. (hereinafter
called the "Corporation"). The name under which the Corporation was originally
incorporated was Anglo Company, Inc. The original Certificate of Incorporation
was filed with the Secretary of State of Delaware on May 3, 1978. A Restated
Certificate of Incorporation was duly adopted by the then sole stockholder of
the Company on July 8, 1986 and filed with the Secretary of State of Delaware
on August 5, 1986. Pursuant to a Plan of Reorganization which was confirmed by
the United States Bankruptcy Court, Southern District of New York in an order
dated April 7, 1988, a Restated Certificate of Incorporation was filed with the
Secretary of State of Delaware on May 12, 1988.
This Restated Certificate of Incorporation was duly adopted in accordance with
Section 245(b) of the Delaware General Corporation Law. The Restated
Certificate of Incorporation restates and integrates and does not further amend
the provisions of the Restated Certificate of Incorporation, as amended, and
there is no discrepancy between those provisions and the provisions of the
Restated Certificate of Incorporation hereinafter set forth.
First: The name of the Corporation is Nabors Industries, Inc.
Second: The address of the Corporation's registered office in the
State of Delaware is 1013 Centre Rd., Wilmington, Delaware 19805,
County of New Castle. The name of the Corporation's registered agent
at such address is United States Corporation Company.
Third: The nature of the business of or purpose to be conducted or
promoted by the Corporation is:
To engage in any lawful act or activity for which corporations
may be organized under the General Corporation Law of
Delaware.
Fourth: (a) The total number of shares which the Corporation
shall have the authority to issue is Two-hundred and eighteen million
(218,000,000) shares, of which Two hundred eight million (208,000,000)
shares will consist of Capital Stock having a par value of ten cents
($.10) and ten million (10,000,000) shares will consist of Preferred
Stock having a par value of ten cents ($.10) per share. The Capital
Stock will consist of two-hundred million (200,000,000) shares of
Common Stock, and eight million (8,000,000) shares of Class B Stock.
All shares of capital stock will be identical and will entitle the
holders thereof to the same rights and
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<PAGE> 2
privileges except as otherwise provided in this Restated Certificate
of Incorporation.
(b) [Omitted.]
(c) For the purposes of this Article Fourth and Article
Eighth a person shall be deemed to be a Permitted Transferee of a
transferor (1) in the case of a transferor who is the holder of record
and beneficial owner of the Class B Stock, if such person (i) is the
spouse, children, parents or siblings of such transferor; (ii) is the
estate of such transferor; (iii) is a Trust established for the sole
benefit of such transferor and/or any persons in clause (i) and (ii)
above; or (iv) directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common
control with such transferor; (2) in the case of a transferor who is
the record (but not beneficial) owner of the Class B Stock, if such
person (i) is the beneficial owner or (ii) is a Permitted Transferee
of such beneficial owner determined pursuant to clause (1) hereof.
For the purposes of this Article Fourth, "control" of a person shall
be defined as at least 80% of the beneficial interest is such person.
(d) Shares of Class B Stock shall be identical to and
entitle the holders thereof to the same rights and privileges as
shares of Common Stock, except as otherwise provided in this Restated
Certificate of Incorporation:
(1) Voting. Except as set forth in this subparagraph or
as otherwise required by law, each outstanding share of Class
B Stock shall not be entitled to vote on any matter on which
the stockholders of the Corporation shall be entitled to vote,
and shares of Class B Stock shall not be included in
determining the number of shares voting or entitled to vote on
any such matters. On any matter on which the holders of
shares of Common Stock and Class B Stock are entitled to vote,
all classes of Capital Stock entitled to vote shall vote
together as a single class, and each holder of shares of Class
B Stock entitled to vote shall be entitled to one vote for
each share of such stock held by such holder; provided,
however, that notwithstanding the foregoing, holders of shares
of Class B Stock shall be entitled to vote as a separate class
on any amendment to this subparagraph (d)(1) and on any
amendment, repeal or modification of any provision of this
Restated Certificate of Incorporation that adversely affects
the powers, preferences or special rights of holders of the
Class B Stock or of Regulated Stockholders (as defined below).
(2) Dividends. The Board of Directors of the Corporation
may cause dividends to be paid to holders of shares of Capital
Stock out of funds legally available for the payment of
dividends. Any
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<PAGE> 3
dividend or distribution on the Capital Stock shall be payable
on shares of Common Stock and Class B Stock share and share
alike; provided, however, that in the case of dividends
payable to the holders of Class B Stock in shares of Capital
Stock, or options, warrants or rights to acquire shares of
such Capital Stock, or securities convertible into or
exchangeable for shares of such Capital Stock, the shares,
options, warrants, rights or securities so payable shall be
payable in shares of, or options, warrants or rights to
acquire or securities convertible into or exchangeable for,
Class B Stock.
(3) Conversion. Shares of Class B Stock may be converted
into shares of Common Stock at any time at the option of the
holder; provided, however, that no holder of shares of Class B
Stock shall be entitled to convert any shares to the extent
that as a result of such conversion such holder and its
Affiliates (as defined below), directly or indirectly, would
own, control or have the power to vote a greater number of
shares of Common Stock or other securities of any kind issued
by the Corporation than such a holder and its Affiliates shall
be permitted to own, control or have the power to vote under
any law, regulation, rule or other requirement of any
governmental authority at the time applicable to the holder or
its Affiliates. Upon the transfer of Class B Stock to any
person who is not a Permitted Transferee of the transferor,
such shares of Class B Stock so transferred will automatically
become shares of Common Stock. For purposes of this Article
Fourth [(d)](3), an "Affiliate" of any person shall mean any
other person, directly or indirectly, controlling, controlled
by or under common control with such person.
(4) Stock Splits; Adjustments. If the Corporation shall
in any manner subdivide (by stock split, stock dividend or
otherwise) or combine (by reverse stock split or otherwise)
the outstanding shares of the Common Stock or the Class B
Stock, the outstanding shares of each other class of Capital
Stock shall be subdivided or combined, as the case may be, to
the same extent, share and share alike, and effective
provisions shall be made for the protection of the conversion
rights hereunder.
In case of any reorganization, reclassification or
change of shares of the Capital Stock (other than a change in
par value or from par to no par value as a result of a
subdivision or combination), or in case of any consolidation
of the Corporation with one or more corporations or a merger
of the Corporation with another corporation, or in the case of
any sale, lease or other disposition of all or substantially
all of the assets of the Corporation, each holder of a share
of Class B Stock shall have the right at any
3
<PAGE> 4
time thereafter, so long as the conversion right hereunder
with respect to such share would exist had such event not
occurred, to convert such share into the kind and amount of
shares of stock and other securities and properties (including
cash) receivable upon such reorganization, reclassification,
change, consolidation, merger, sale, lease or other
disposition by a holder of the number of shares of Capital
Stock into which such shares of Class B Stock might have been
converted immediately prior to such reclassification, change,
consolidation, merger, sale, lease or other disposition. In
the event of such a reorganization, reclassification, change,
consolidation, merger, sale, lease or other disposition,
effective provision shall be made in the certificate of
incorporation of the resulting or surviving corporation or
otherwise for the protection of the conversion rights of the
shares of Class B Stock, as nearly as reasonably may be, to
any such other shares of stock and other securities and
property deliverable upon conversion of shares of Class B
Stock into which such Class B Stock might have been converted
immediately prior to such event. The Corporation shall not be
a party to any merger, consolidation or recapitalization
pursuant to which any Regulated Stockholder (as defined below)
would be required to take (i) any voting securities which
would cause such holder to violate any law, regulation or
other requirement of any governmental body applicable to such
holder, or (ii) any securities convertible into voting
securities which, if such conversion took place, would cause
such holder to violate any law, regulation or other
requirement of any governmental body applicable to such holder
other than securities which are specifically provided to be
convertible only in the event that such conversion may occur
without any such violation. For purposes of this paragraph
(d), the term "Regulated Stockholder" shall mean any
stockholder who acquires Class B Stock from the Corporation,
or any Permitted Transferee thereof, that is subject to the
provisions of Regulation Y of the Board of Governors of the
Federal Reserve System (12 C.F.R. Part 225) or any successor
to such regulation.
(e) The Board of Directors is expressly authorized to adopt, from
time to time, a resolution or resolutions providing for the issue of Preferred
Stock in one or more series, with such voting powers, full or limited, or
without voting powers, and with such designations, preferences and relative,
participating, optional or other special rights and qualifications, limitations
or restrictions thereof as shall be expressed in such resolution or
resolutions, including, without limiting the generality of the foregoing, the
following:
(1) the designation and number of shares or series;
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<PAGE> 5
(2) the dividend rate of such series, the conditions and
dates upon which such dividends shall be payable, the
preference or relation of such dividends to dividends
payable on any other class or classes of Capital Stock
of the Corporation, and whether such dividends shall be
cumulative or noncumulative;
(3) whether the shares of such series shall be subject to
redemption by the Corporation, and, if made subject to
such redemption, the times, prices, rates, adjustments
and other terms and conditions of such redemption;
(4) the terms and amount of any sinking or similar fund
provided for the purpose or redemption of the shares of
such series;
(5) whether the shares of such series shall be convertible
into or exchangeable for shares of Capital Stock or
other securities of the Corporation or of any other
corporation, and, if provision be made for conversion
or exchange, the times, prices, rates, adjustments and
other terms and conditions of such conversion or
exchange;
(6) the extent, if any, to which the holders of the shares
of such series shall be entitled to vote as a class or
otherwise with respect to the election of directors or
otherwise;
(7) the restrictions and conditions, if any, upon the issue
or reissue of any additional Preferred Stock ranking on
a parity with or prior to such shares as to dividends
or upon dissolution;
(8) the rights of the holders of the shares of such series
upon the dissolution of, or upon the distribution of
assets of, the Corporation, which rights may be
different in the case of voluntary dissolution than the
case of involuntary dissolution; and
(9) any other relative rights, preferences or limitations
of shares of such series consistent with this Article
Fourth (e) and applicable law.
Fifth: (a) The Chairman, Vice Chairman, President, any Vice
President or the Secretary shall call a special meeting of the stockholders at
the written request of the holders of record of not less than fifty percent
(50%) of the total number of shares of stock then issued and outstanding and
entitled to vote. Such written request shall state the purpose or purposes of
the meeting and be delivered to the Chairman, Vice Chairman, President, and
Vice President or the Secretary of the Corporation. In the event such request
has been made and the
5
<PAGE> 6
Chairman, Vice Chairman, President, any Vice President or the Secretary shall
not have mailed the notice of such meeting within sixty (60) days after receipt
of such request, then the holders of shares that made such request may
designate in writing one of their members to call such meeting, and such person
so designated may determine the time and the place in the Borough of Manhattan,
the City of New York for such meeting and may call such meeting at the expense
of the Corporation by mailing notice thereof in the manner required for special
meetings of the stockholders as provided in the By-Laws. Any such person so
designated shall have access to the stock books of the Corporation for the
purpose of causing such meeting to be called pursuant to these provisions.
Notwithstanding the provisions of this paragraph (a) of this Article Fifth,
unless called by the Board of Directors, no such special meeting shall be held
during the ninety (90) day period preceding the date fixed for the annual
meeting of stockholders.
(b) Any action required or permitted to be taken at any annual or
special meeting of stockholders may be taken without a meeting, without prior
notice and without a vote, if a written consent, setting forth the action so
taken, shall be signed by each holder of stock entitled to vote on the matter,
and a copy of such written consent shall be filed in the minute book of the
Corporation.
Sixth: (a) (1) The business and affairs of the Corporation
shall be managed by or under the direction of the
Board of Directors initially consisting of six (6)
directors. The number of directors may be increased
or decreased (but to no more than eleven (11) nor
fewer than five (5) directors) from time to time by
resolution adopted by the affirmative vote of a
majority of the Board of Directors then in office,
provided that a quorum is present. In no case will a
decrease in the number of directors shorten the term
of any incumbent director.
(2) Except as otherwise provided in this Article
Sixth or by law, the directors shall be elected at
the annual meeting of stockholders. The election of
directors of the Corporation shall be by a plurality
of the votes cast, but need not be by written ballot.
(3) Effective as of the Annual Meeting of
Stockholders in 1994, the Board of Directors shall be
divided into three classes, designated Class I, Class
II and Class III, as nearly equal in number as
possible. The term of one class shall expire at each
annual meeting of stockholders, and in all cases each
director shall serve until his or her successor shall
be elected and shall qualify, subject, however to
prior death, resignation, retirement,
disqualification or removal from office. The initial
term of office for directors of Class I
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<PAGE> 7
shall expire in one year, at the Annual Meeting of
Stockholders in 1995, that of Class II shall expire
in two years at the Annual Meeting of Stockholders in
1996 and that of Class III shall expire in three
years, at the Annual Meeting of Stockholders in 1997.
Additional directorships resulting from an increase
in the number of directors shall be apportioned among
the classes as equally as possible. At each Annual
Meeting of Stockholders, the number of directors
equal to the number of directors of the class whose
term expires at the time of such meeting (or, if
less, the number of directors properly nominated and
qualified for election) shall be elected to hold
office until the third succeeding Annual Meeting of
Stockholders after their election. Any vacancy on
the Board of Directors or newly created directorships
that result from an increase in the authorized number
of directors may be filled by a majority of directors
then in office, even if less that a quorum, or by a
sole director so elected. Any director elected to
fill a vacancy not resulting from an increase in the
number of directors shall have the same term of the
class of his or her predecessor.
(b) No director of the Corporation shall be 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, or (iv) for any transaction from which the director derived an
improper personal benefit.
Seventh: (a) Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter collectively referred to as a "proceeding"), by reason of the fact
that he or she, or a person of whom he or she is the legal representative, is
or was a director or officer of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA
7
<PAGE> 8
excise taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators.
(b) The right to indemnification conferred in this Section shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in advance of the final
disposition of a proceeding, shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
(c) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition
conferred in this Section shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, By-laws, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability
or loss under the Delaware General Corporation Law.
(e) Any repeal or modification of this Section directly or
indirectly, such as by adoption of an inconsistent provision of this
Certificate of Incorporation, shall not apply to or have any effect on the
rights of any officer and director to indemnification and advancement of
expenses with respect to any acts or omissions occurring prior to such repeal
or modification.
(f) If this Section or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Corporation shall
nevertheless indemnify each director and officer of the Corporation as to
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid or to be paid in settlement) with
respect to any proceeding to the full extent permitted by any applicable
portion of this Section that shall not have been invalidated and to the full
extent permitted by applicable law.
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Eighth: (a) [Omitted.]
(b) [Omitted.]
(c) Nothing contained in this Article Eighth shall be construed to
relieve any Interested Shareholder from any fiduciary obligation imposed by
law.
(d) For the purpose of this Article Eighth:
(1) The term "Capital Stock" shall mean all capital stock
of the Corporation authorized to be issued from time to time
under Article Fourth of this Restated Certificate of
Incorporation. The term "Voting Stock" shall mean Common
Stock which by its terms may be voted on all matters submitted
to stockholders of the Corporation generally but shall not
mean Class B Stock which has no voting privileges.
(2) The term "person" shall mean any individual, firm,
corporation or other entity.
(3) The term "Special Transaction" means any merger or
consolidation, sale of all or substantially all of the assets
of the Corporation, liquidation or Interested Shareholder
Transaction but does not include any merger if (i) the
Corporation is the surviving entity, (ii) such merger calls
for the issuance of Common Stock equal to less than 18 1/2% of
the Common Stock to be outstanding after the merger, unless
the approval of the Shareholders is required for such merger,
and (iii) the rights of the holders of Stock and Class A Stock
shall not be otherwise affected by such merger.
(4) The term "Interested Shareholder" shall mean (a) any
person (other than the Corporation or any Subsidiary, or any
pension, profit sharing, employee stock ownership or other
employee benefit plan of the Corporation or any Subsidiary or
any trustee of or fiduciary with respect to any such plan when
acting in such capacity) who is the beneficial owner of Voting
Stock and who is alone or together with others in control (as
such term is defined in Rule 12b-2 adopted under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any successor provision), of the Corporation or (b)
any person who is either a director or an officer of the
Corporation.
(5) An "Interested Shareholder Transaction" shall mean
any going-private transaction (as defined below) or merger,
sale of all or substantially all assets of the Corporation or
any other form of corporate reorganization involving the
Corporation, if as a result thereof any Interested Shareholder
retains or obtains an interest in
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the Corporation, the surviving entity or the purchaser of the
assets which is different from the interest retained or
obtained by other holders of the Corporation's Capital Stock
or which is disproportionate to the interest retained or
obtained by such holders. For purposes of this subparagraph
(5) a "going private transaction" shall have the meaning given
a "Rule 13e-3 transaction" in Rule 13e-3 adopted under the
Exchange Act, or any successor provision.
(6) The term "Subsidiary" means any corporation of which
a majority of any class of equity security is beneficially
owned by the Corporation, as well as any Permitted Transferee
of the Corporation which is controlled by the Corporation.
(7) A person shall be a "beneficial owner" of any Capital
Stock (a) which such person or any of its Permitted
Transferees beneficially owns, directly or indirectly; (b)
which such person or any of its Permitted Transferees has,
directly or indirectly, (i) the right to acquire (whether such
right is exercisable immediately or only after the passage of
time) pursuant to an agreement, arrangement or understanding
or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
for the election of directors 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 Permitted Transferees has any
agreement, arrangement or understanding, directly or
indirectly, for the purpose of acquiring, holding, voting or
disposing of any shares of Capital Stock.
(e) [Omitted.]
Ninth: A majority of Directors shall have the power and duty to
determine for the purposes of Article Fourth and Article Eighth, on the basis
of information known to them after reasonable inquiry, all questions arising
under Article Fourth and Article Eighth, including, without limitation (i)
whether a person is an Interested Shareholder, (ii) the number of shares of
Capital Stock or other securities beneficially owned by any person, and (iii)
whether a person is a Permitted Transferee of another.
Tenth: The duration of the Corporation shall be perpetual.
Eleventh: The Board of Directors of the Corporation shall have
the power, without the assent or vote of the stockholders, to make By-Laws for
the Corporation, and to amend, alter or repeal the same.
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IN WITNESS WHEREOF, NABORS INDUSTRIES, INC. has caused this Restated
Certificate of Incorporation to be signed by Anthony G. Petrello, its
President, this 4th day of March , 1997.
--------- -----------
/s/ Anthony G. Petrello
- ----------------------------------
Anthony G. Petrello, President
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<PAGE> 1
EXHIBIT 3.2
[Adopted March 4, 1997]
RESTATED
BY-LAWS
OF
NABORS INDUSTRIES, INC.
(the "Corporation")
------------------------------
ARTICLE I
OFFICES
SECTION 1. Principal Office.
The principal office of the Corporation shall be at such place as the Board of
Directors may from time to time determine, but until a change is effected, such
principal office shall be at 515 West Greens Road, Suite 1200, Houston, Texas
77067.
SECTION 2. Other Offices.
The Corporation may also have other offices at such places, within or without
the State of Delaware, as the Board of Directors may from time to time
determine or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. Time and Place of Meetings.
A meeting of stockholders for any purpose may be held at such time and place,
within or without the State of Delaware, as shall be stated on the notice
thereof or in a duly executed waiver of notice thereof.
SECTION 2. Annual Meeting.
The annual meeting of the stockholders of the Corporation shall be held on the
first Tuesday of March in each year if not a legal holiday, and if a legal
holiday, then on the next succeeding day which is not a legal holiday at such
place, either within or without the State of Delaware, and at such time and as
set forth in the notice of the meeting or in a duly executed waiver of notice
thereof, for the election of the Board of Directors and for the transaction of
such other business as may properly be brought before the meeting. In the
event the annual meeting is not held on the date above provided, the Board of
Directors shall cause the meeting to be held as soon thereafter as may be
convenient. Such subsequent meeting shall be called in the same manner as
hereinafter provided for special meetings of stockholders.
<PAGE> 2
SECTION 3. Special Meetings.
Special meetings of the stockholders, unless otherwise prescribed by statute,
may be called at any time for any purpose or purposes by the Board and shall be
held at such place, either within or without the State of Delaware, and at such
hour as may be designated by the Board in the notice of the meeting; provided,
however, that the time so fixed shall permit the giving of notice as provided
in Section 4 of this Article II, unless such notice is waived as provided by
law or by these Restated By-Laws. At a special meeting only such matters as
may be specified in the notice thereof shall be considered. Special meetings
shall also be called and held in such cases and in such manner as may be
specifically required by law or by the Restated Certificate of Incorporation.
SECTION 4. Notice of Meetings.
Written notice of each meeting of the stockholders, which shall state the
place, date and hour of the meeting and, in the case of a special meeting or
where otherwise required by law, the purpose or purposes for which it is
called, shall be given, unless a different period is required by law, not less
than 10 nor more than 60 days before the date of such meeting, by or at the
direction of the person calling the meeting, to each stockholder entitled to
vote at such meeting. If mailed, the notice of a meeting of stockholders shall
be deemed to be given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation. No business other than that stated in the notice
shall be transacted at any meeting without the unanimous consent of all the
stockholders entitled to vote thereat. Any such notice for any meeting other
than the annual meeting shall, if issued at the direction of the Board, so
indicate. When a meeting is adjourned to another time or place, notice need
not be given if the time and place thereof are announced at the meeting at
which the adjournment is taken. If the adjournment is for more than 30 days
after the date of the original meeting, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
SECTION 5. Quorum.
Except as otherwise required by law, the Restated Certificate of Incorporation
or these By-Laws, at all meetings of the stockholders, the holders of a
majority of the shares issued and outstanding and entitled to vote shall be
present in person or represented by proxy in order to constitute a quorum for
the transaction of any business. The holders of a plurality of the shares
present in person or represented by proxy and entitled to vote thereat, whether
or not a quorum shall be present, may adjourn the meeting from time to time, to
a specified date or place. At any such adjourned meeting at which a quorum may
be present, the Corporation may transact any business which might have been
transacted at the original meeting.
As to any matter with respect to which a separate class vote is required by the
Restated Certificate of Incorporation, the holders of one-third of the shares
of such class which are then outstanding and entitled to vote shall be present
in person or represented by proxy in order to constitute a quorum for the
purpose of any separate vote required by such class.
The absence from any meeting of the number of shares required by law, the
Restated Certificate of Incorporation or these Restated By-Laws for action upon
one matter shall not prevent action at such meeting upon any other matter or
matters which may properly come before the meeting, if the number of shares
required in respect of such other matters shall be present.
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<PAGE> 3
SECTION 6. Organization.
At each meeting of the stockholders, the Chairman of the Board or, in his
absence or inability to act, the most senior present Vice Chairman or, in the
absence or inability to act of any Vice Chairman, the President or, in his
absence or inability to act, a Vice President or, in his absence or inability
to act, any person as may be designated by the Board of Directors or, in the
absence of such designation, a chairman to be chosen at the meeting by the
majority of those stockholders present in person or represented by proxy shall
act as chairman of the meeting. The Secretary or, in his absence or inability
to act, an Assistant Secretary, or in his absence or inability to act, any
person as may be designated from time to time by the Board of Directors shall
act as secretary of each meeting of stockholders and keep the minutes thereof;
if no such person is present or has been chosen, the holders of record of a
majority of shares of stock present in person or represented by proxy and
entitled to vote at the meeting shall choose any person present to act as
secretary of the meeting.
SECTION 7. Order of Business.
The order of business at all meetings of the stockholders shall be as
determined by the chairman of the meeting.
SECTION 8. Voting and Required Vote.
At each meeting of stockholders, each stockholder shall be entitled to one vote
for each share of capital stock held by such stockholder except as otherwise
provided in the Restated Certificate of Incorporation. Except as otherwise
provided in the Restated Certificate of Incorporation, and subject to statute,
at each meeting of stockholders if there shall be a quorum, the affirmative
vote of the holders of a majority of shares present in person or represented by
proxy and entitled to vote thereat, shall decide all matters brought before
such meeting.
SECTION 9. Proxies.
Each stockholder entitled to vote at any meeting of stockholders or to express
consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by proxy. Any such proxy
shall be delivered to the secretary of such meeting at or prior to the time
designated in the order of business for so delivering such proxies. Each such
proxy shall be in writing and executed by the stockholder or his duly
authorized attorney-in- fact, but no such proxy shall be voted after three
years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock
itself or an interest in the Corporation generally.
SECTION 10. List of Stockholders.
A complete list of the stockholders entitled to vote at any meeting, arranged
in alphabetical order, with the address of each, and the number of shares held
by each, shall be prepared, or shall be caused to be prepared, by the Secretary
and shall be open to examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city in which the meeting is
to be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. The stock
ledger shall be the only evidence as to the stockholders entitled to examine
the stock ledger, the list required by these Restated By-Laws or the books of
the Corporation, or to vote in person or by proxy at any meeting of the
stockholders.
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<PAGE> 4
SECTION 11. Voting by Fiduciaries, Pledgors and Joint Owners.
Persons holding stock in a fiduciary capacity shall be entitled to vote the
shares so held. Persons whose stock is pledged shall be entitled to vote,
unless in the transfer by the pledgor on the books of the Corporation he has
expressly empowered the pledgee to vote thereon, in which case only the
pledgee, or his proxy, may represent such stock and vote thereon.
If shares or other securities having voting power stand of record in the names
of two or more persons, whether fiduciaries, members of a partnership, joint
tenants, tenants-in-common, tenants by the entirety or otherwise, or if two or
more persons have the same fiduciary relationship respecting the same shares,
unless the Secretary is given written notice to the contrary and is furnished
with a copy of the instrument or order appointing them or creating the
relationship wherein it is so provided, their acts with respect to voting shall
have the following effect:
(a) if only one votes, his act binds all;
(b) if more than one votes, the act of the majority so voting
binds all;
(c) if more than one votes, but the vote is evenly split on any
particular matter, each faction may vote the securities in
question proportionally, or any person voting the shares, or a
beneficiary, if any, may apply to the Court of Chancery or
such other court as may have jurisdiction to appoint an
additional person to act with the persons so voting the
shares, which shall then be voted as determined by a majority
of such persons and the person appointed by the Court. If the
instrument so filed shows that any such tenancy is held in
unequal interest, a majority or even-split for the purpose of
this paragraph shall be a majority or even-split in interest.
SECTION 12. Consent of Stockholders in Lieu of Meeting.
Unless otherwise provided by the Restated Certificate of Incorporation, any
action required or permitted to be taken at any annual or special meeting of
stockholders of the Corporation may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by all of the holders of outstanding stock.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. General Powers.
The business and affairs of the Corporation shall be managed by or under the
direction of a Board of Directors, which may exercise all such authority and
powers of the Corporation and do all such lawful acts and things as are not by
statute, by the Restated Certificate of Incorporation or by these Restated
By-Laws directed or required to be exercised or done by the stockholders or
such other persons as provided therein.
SECTION 2. Number of Directors.
The number of Directors shall be determined from time to time by resolution of
the Board of Directors in accordance with the terms of the Restated Certificate
of Incorporation.
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SECTION 3. Resignations.
Any Director may resign at any time upon written notice to the Board of
Directors, the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt thereof
by the Board of Directors or by any such officer.
SECTION 4. Annual Meetings.
The annual meeting of the Board of Directors for the purpose of organizing the
Board, appointing officers and members of committees and transacting other
business, shall be held immediately following the annual meeting of the
stockholders at the same place where such meeting of stockholders shall be
held. No notice shall be required for any such meeting if held immediately
after the adjournment, and at the site, of the meeting of the stockholders. If
not so held, notice shall be given in the same manner as required for special
meetings of the Board of Directors.
SECTION 5. Regular Meetings.
Additional regular meetings of the Board may be held without notice at such
time and place (within or without the State of Delaware) as shall from time to
time be determined by the Board of Directors.
SECTION 6. Special Meetings.
Special meetings of the Board may be called at any time by the Chairman of the
Board, the Vice Chairman, the President or any Vice President or by two or more
Directors and shall be held at such time and place (within or without the State
of Delaware) as may be fixed by the person or persons calling the meeting;
provided, however, that the time so fixed shall permit the giving of notice as
provided in Section 7 of this Article III.
SECTION 7. Notice of Special Meetings.
Notice of the time and place of each special meeting of the Board of Directors
shall be mailed, postage prepaid to each director, addressed to him at his
address as it appears on the records of the Corporation, by first-class mail,
at least three days before the day on which such meeting is to be held, or
shall be sent addressed to him at such place by telegraph, telex, cable or
wireless, or be delivered to him personally or by telephone, no later than the
day before the day on which the meeting is to be held, and the method used for
notice of such special meeting need not be the same for each Director being
notified. Except as otherwise required by law, the Restated Certificate of
Incorporation or these Restated By-Laws, such notice need not state the purpose
or purposes of such meeting thereof.
SECTION 8. Organization.
The Chairman of the Board shall preside over all meetings of the Board of
Directors at which he is present. In his absence or inability to act, the most
senior Vice Chairman present at the meeting shall preside. In the absence or
inability to act of the Chairman or any Vice Chairmen, the Board of Directors
shall select a chairman of the meeting from among the Directors present. The
Secretary or, in his absence or inability to act, an Assistant Secretary, or in
his absence or inability to act, another Director selected by the Board shall
act as secretary of the meeting and keep the minutes
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<PAGE> 6
SECTION 9. Quorum.
At all meetings of the Board of Directors the presence in person of one-third
of the total number of Directors constituting the entire Board of Directors,
whether then in office or not, shall be necessary and sufficient to constitute
a quorum for the transaction of any business by the Board of Directors at such
meeting, except as otherwise provided by law, the Restated Certificate of
Incorporation or these Restated By-Laws. At any meeting of the Board of
Directors, no action shall be taken (except adjournment, in the manner provided
below) until after a quorum has been established, except as otherwise provided
by law, the Restated Certificate of Incorporation or these Restated By-Laws.
Except as otherwise provided by law, the Restated Certificate of Incorporation
or these Restated By-Laws, the act of a majority of Directors who are present
at a meeting at which a quorum previously has been established (or at any
adjournment of such meeting, provided that a quorum shall have previously been
established at such adjourned meeting) shall be the act of the Board of
Directors, regardless of whether or not a quorum is present at the time such
action is taken. In determining the number of directors who are present at the
time any such action is taken, any Director who is in attendance at such
meeting but who, for just cause, is disqualified to vote on such matter, shall
not be considered as being present at the time of such action for the purpose
of establishing the number of votes required to take action on any matter
submitted to the Board of Directors, but shall be considered as being present
for purposes of determining the existence of a quorum.
In the event a quorum cannot be established at the beginning of a meeting, a
majority of the Directors present at the meeting, or the Secretary of the
Corporation, if there be no Director present, may adjourn the meeting from time
to time until a quorum be present. Only such notice of such adjournment need
be given as the Board of Directors may from time to time prescribe.
SECTION 10. Regulations.
The Board of Directors may adopt such rules and regulations for the conduct of
its meetings and for the management of the business and affairs of the
Corporation as it may deem proper and not inconsistent with law, the Restated
Certificate of Incorporation and these Restated By-Laws.
SECTION 11. Written Consent in Lieu of Meeting.
Any action required or permitted to be taken at any meeting of the Board of
Directors may be taken without a meeting if all members of the Board then in
office consent thereto in writing, provided that the number of such members is
sufficient to constitute a quorum for such action, and the writing or writings
are filed with the minutes of proceedings of the Board of Directors.
SECTION 12. Telephonic Participation.
Any and all members of the Board of Directors may participate in a meeting of
the Board by means of a conference telephone or similar communications
equipment by means of which all persons participating in such meeting shall
hear each other; participation in a meeting pursuant to this Section shall
constitute presence in person at such meeting.
SECTION 13. Compensation.
Directors shall be entitled to such compensation for their services as
Directors and to such reimbursement for any reasonable expense incurred in
attending meetings of the Board of Directors as may from time to time be fixed
by the Board of Directors. The compensation of Directors may be on such basis
as is determined by the Board of Directors. Any Director may waive
compensation for any meeting. Any Director receiving compensation under these
provisions shall not be barred from serving the Corporation in any other
capacity and receiving compensation and reimbursement for reasonable expenses
for such other services.
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ARTICLE IV
COMMITTEES
SECTION 1. Executive Committee.
The Board of Directors may appoint an Executive Committee consisting of one or
more Directors, one of whom shall be designated as Chairman of the Executive
Committee. Each member of the Executive Committee shall continue as a member
thereof until the expiration of his term as a Director or his earlier
resignation or removal as a member of the Executive Committee or as a Director
or until his death.
SECTION 2. Powers.
The Executive Committee shall have and may exercise all the powers and
authority of the Board of Directors in the management of the business and
affairs of the Corporation, and may authorize the seal of the Corporation to be
affixed to all papers which may require it; but shall not have power or
authority in reference to the following matters: (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly required by
the Delaware General Corporation Law to be submitted to stockholders for
approval or (ii) adopting, amending or repealing any by-law of the Corporation.
SECTION 3. Procedure and Meetings.
The Executive Committee shall fix its own rules of procedure and shall meet at
such times and at such place or places as may be provided by such rules or as
the members of the Executive Committee shall fix. The Executive Committee
shall keep minutes of its meetings, which it shall deliver to the Board of
Directors from time to time. The Chairman of the Executive Committee or, in
his absence, a member of the Executive Committee chosen by a majority of the
members present shall preside at meetings of the Executive Committee, and the
Secretary, or in his absence, an Assistant Secretary, or in his absence another
member of the Executive Committee chosen by the Executive Committee, shall act
as secretary of the Executive Committee.
SECTION 4. Quorum.
A majority of the Executive Committee shall constitute a quorum for the
transaction of business, and the affirmative vote of a majority of the members
present at any meeting at which there is a quorum shall be required for any
action of the Executive Committee; provided, however, that when an Executive
Committee of one member is authorized under the provisions of Section 1 of this
Article, that one member shall constitute a quorum.
SECTION 5. Other Committees.
The Board of Directors may appoint such other committee or committees as it
shall deem advisable and with such rights, powers, and authority as it shall
prescribe. Each such committee shall consist of one or more Directors. Unless
otherwise provided by the Board of Directors, a majority of the members of each
such other committee shall constitute a quorum, and the acts of a majority of
the members present at a meeting at which a quorum is present shall be the act
of such committee.
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SECTION 6. Vacancies; Committee Changes.
In the absence or disqualification of a member of any committee, 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.
The Board of Directors shall have the power at any time to fill vacancies in,
to change the membership of, and to discharge, any committee or any member of
any committee.
SECTION 7. Compensation.
Members of any committee shall be entitled to such compensation for their
services as members of the committee and to such reimbursement for any
reasonable expenses incurred in attending committee meetings as may from time
to time be fixed by the Board of Directors. Any committee member may waive
compensation for any meeting. Any committee member receiving compensation
under these provisions shall not be barred from serving the Corporation in any
other capacity and from receiving compensation and reimbursement of reasonable
expenses for such other services.
SECTION 8. Telephonic Participation.
Any and all members of any committee designated by the Board of Directors may
participate in a meeting of such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
such meeting can hear each other, and participation in such a meeting pursuant
to this Section shall constitute presence in person at such meeting.
SECTION 9. Action by Consent.
Any action required or permitted to be taken at any meeting of any committee of
the Board of Directors may be taken without a meeting if a written consent
thereto shall be signed by all members of the committee then in office,
provided that the number of such members is sufficient to constitute a quorum
for such action, if any, and such written consent is filed with the minutes of
its proceedings.
ARTICLE V
NOTICES
SECTION 1. Waiver of Notice.
Whenever any notice is required to be given by law, the Restated Certificate of
Incorporation or these Restated By-Laws, a written waiver thereof; signed by
the person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to such notice. Neither the
business to be transacted at, nor the purpose of any regular or special
meeting of stockholders, any meeting of other securityholders, the Board of
Directors, or any committee of the Board of Directors need be specified in any
written waiver of notice unless so required by law, the Certificate of
Incorporation or these Restated By-Laws.
SECTION 2. Attendance at Meeting.
Attendance of a person at any meeting, whether of stockholders or other
securityholders (in person or by proxy), or the Board of Directors or any
committee of the Board of Directors, shall constitute a waiver of notice of
such meeting, except when such person attends such meeting for the express
purpose of objecting, and objects, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting is not legally
called or convened.
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ARTICLE VI
OFFICERS
SECTION 1. Number and Qualifications.
The officers of the Corporation shall include the Chairman, one or more Vice
Chairmen, the President, one or more Vice Presidents, a Treasurer, and a
Secretary and such other officers as may be elected or appointed in accordance
with the provisions of Section 2 of this Article VI. Any number of offices,
except the offices of President and Secretary, may be held by the same person.
SECTION 2. Selection, Term of Office and Qualification.
The officers shall be elected from time to time by the Board of Directors at
its first regular meeting after each annual meeting of stockholders. Each
officer shall hold his office until his successor is elected and qualified or
until he shall resign in the manner provided in Section 3 of this Article VI,
or until he shall have been removed in the manner provided in Section 4 of this
Article VI, or until his death. Other officers, including without limitation
one or more Assistant Treasurers and one or more Assistant Secretaries shall be
chosen in such manner, hold office for such period, have such authority,
perform such duties and be subject to removal as may be prescribed by the Board
of Directors.
SECTION 3. Resignations.
Any officer may resign at any time upon written notice to the Board of
Directors, the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt thereof
by the Board of Directors or any such officer.
SECTION 4. Removal.
Any officer may be removed at any time, either with or without cause, by the
Board of Directors; and any officer not elected by the Board of Directors may
be removed in such manner as may be determined by the Board of Directors.
Removal from office however, shall not prejudice the contract rights, if any,
of the person removed except as provided in such contract.
SECTION 5. Vacancies.
Any vacancy occurring in any office of the Corporation which is required by
Section 2 of this Article VI to be elected by the Board of Directors, whether
by death, resignation, removal or otherwise, shall be filled for the unexpired
portion of the term by the Board of Directors. A vacancy in any other office
shall be filled in such manner as may be determined by the Board of Directors.
SECTION 6. Chairman.
The Chairman shall be the chief executive officer of the Corporation and,
subject to the direction of the Board of Directors, shall have general charge
of the business, affairs and property of the Corporation and general
supervision over its other officers and agents and shall see that all orders
and resolutions of the Board of Directors are carried into effect.
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SECTION 7. Vice Chairman.
The Vice Chairman or, in the event there be more than one, the Vice Chairmen in
the order designated, or in the absence of any designation, in the order of
their seniority, shall have such powers and perform such duties as may from
time to time be assigned to him by the Board of Directors and shall report to
the Chairman, subject to the control of the Board of Directors.
SECTION 8. The President.
The President shall be chief operating officer of the Corporation and shall
have, subject to the control of the Chairman and the Board of Directors,
general and active management of the business of the Corporation and the
general and active supervision and direction over the business operations and
affairs of the Corporation and over its several officers, agents and employees.
He shall, unless also a Director, be an ex officio member of all committees of
the Board. In general, he shall have such other powers and shall perform such
other duties as usually pertain to the office of President or as from time to
time may be assigned to him by the Board or these By-Laws.
SECTION 9. Vice President.
The Vice President or, in the event there be more than one, the Vice Presidents
in the order designated, or in the absence of any designation, in the order of
their seniority, shall have such powers and perform such duties as from time to
time may be assigned to him by the Board.
SECTION 10. The Treasurer and Assistant Treasurers.
The Treasurer shall:
(a) have charge and custody of, and be responsible for, all the
funds and securities of the Corporation;
(b) keep full and accurate accounts of receipts and disbursements
in books belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the
credit of the Corporation in such depositories as may be
designated by the Board of Directors;
(d) receive, and give receipts for moneys due and payable to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the
investment of its funds as ordered or authorized by the Board
of Directors, taking proper vouchers therefor;
(f) render to the President and the Board of Directors at the
regular meetings of the Board, or whenever they may request
it, an account of all his transactions as Treasurer and of the
financial condition of the Corporation; and
(g) in general, have all the powers and perform all the duties
incident to the office of Treasurer and such other duties as
from time to time may be assigned to him by the Board of
Directors or the President.
The Assistant Treasurer or Assistant Treasurers, if any, shall in the absence
or disability of the Treasurer or at his request, perform his duties and
exercise his powers and authority as may be assigned to him by the Board of
Directors or the President.
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SECTION 11. The Secretary and Assistant Secretaries.
The Secretary shall:
(a) attend all meetings of the Board of Directors, any committee
of the Board of Directors, stockholders and other
securityholders and record all votes and the proceedings of
such meetings in minute books to be kept by him for that
purpose;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation
and affix and attest the seal to all stock certificates of the
Corporation (unless the seal of the Corporation on such
certificates shall be a facsimile, as hereinafter provided)
and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and
other documents and records required by law to be kept and
filed are properly kept and filed; and
(e) in general, have all the powers and perform all the duties
incident to the office of Secretary and such other duties as
from time to time may be assigned to him by the Board of
Directors or the President.
The Assistant Secretary or Assistant Secretaries, if any, shall, in the absence
or disability of the Secretary or at his request, perform his duties and
exercise his powers and authority as may be assigned to him by the Board of
Directors or the President.
SECTION 12. Compensation.
The compensation of all officers of the Corporation shall be fixed from time to
time by the Board of Directors; no officer of the Corporation shall be
prevented from receiving compensation because he is also a Director of the
Corporation.
ARTICLE VII
CAPITAL STOCK AND DIVIDENDS
SECTION 1. Stock Certificates for Shares.
Certificates for shares of the capital stock of the Corporation shall be in
such form, not inconsistent with the Restated Certificate of Incorporation, as
shall be approved by the Board of Directors and shall be signed by or in the
name of the corporation by the Chairman or by the President or a Vice
President, and by the Treasurer or an Assistant Treasurer, or the Secretary or
an Assistant Secretary, provided that the signatures of any such officers
thereon may be facsimiles. The seal of the Corporation shall be impressed, by
original or by facsimile, printed or engraved, on all such certificates. A
certificate may also be signed by the transfer agent and a registrar as the
Board of Directors may determine, and in such case the signature of the
transfer agent or the registrar may also be facsimile, engraved or printed. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon such certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
nevertheless be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
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SECTION 2. Stock Records.
The Corporation shall keep at such place or places, within or without the State
of Delaware, as the Board of Directors may from time to time determine, the
stock record books in which shall be recorded the number of shares issued, the
names of the owners of the shares, the number owned by them respectively, and
the transfer of such shares with the date of transfer. Blank stock certificate
books shall be kept by the Secretary or by any officer or agent designated by
the Board.
SECTION 3. Registration of Transfers.
Registration of transfer of certificates representing shares of stock of the
Corporation shall he effected only on the books of the Corporation only upon
authorization by the registered holder thereof, or by his attorney authorized
by power of attorney duly executed and filed with the Secretary or with a
designated transfer agent or transfer clerk, and upon surrender to the
Corporation or any transfer agent of the Corporation of the certificate or
certificates being transferred, which certificate shall be properly endorsed or
accompanied by a duly executed stock transfer power and the payment of all
taxes thereon. Whenever a certificate is endorsed by or accompanied by a stock
power executed by someone other than the person or persons named in the
certificate, evidence of authority to transfer shall also be submitted with the
certificate. Whenever any transfers of shares shall be made for collateral
security and not absolutely, and both the transferor and transferee request the
Corporation to do so, such fact shall be stated in the entry of the transfer.
SECTION 4. Determination of Stockholders.
Except as otherwise provided by law, the Corporation shall be entitled to
recognize the exclusive right of a person in whose name any share or shares
stand on the record of stockholders as the owner of such share or shares for
all purposes, including, without limitation, the rights to receive dividends or
other distributions, and to vote as such owner, the Corporation may hold any
such stockholder of record liable for calls and assessments and the Corporation
shall not be bound to recognize any equitable or legal claim to or interest in
any such share or shares on the part of any other person whether or not it
shall have express or other notice thereof.
SECTION 5. Regulations Governing Issuance and Transfers of Shares.
The Board of Directors shall have the power and authority to make all such
rules and regulations, not inconsistent with these Restated By-Laws, as it may
deem expedient concerning the issue, transfer and registration of certificates
for shares of stock of the Corporation. It may appoint, or authorize any
officer or officers to appoint, one or more transfer agents or one or more
transfer clerks and one or more registrars and may require all certificates for
shares of stock to bear the signature or signatures of any of them.
SECTION 6. Fixing of Record Date.
In order that the Corporation may determine the stockholders of record entitled
to notice of, or to vote at, any meeting of stockholders or any adjournment
thereof, or entitled to express consent to corporate action in writing without
a meeting, or entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in respect of
any change, conversion or exchange of stock or for the purpose of any other
lawful action, the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days before the date of such
meeting, nor more than sixty days prior to any other action. Except as
otherwise provided by law, the Restated Certificate of Incorporation, these
Restated By-Laws or by resolution of the Board of Directors:
(1) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at
the close of business on the day next
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preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the
day on which the meeting is held;
(2) The record date for determining stockholders entitled to
express consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent
is expressed; and
(3) The record date for determining stockholders for any other
purpose shall be at the close of business on the day on which
the Board adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.
SECTION 7. Lost, Stolen or Destroyed Stock Certificates.
The holder of any certificates representing shares of stock of the Corporation
shall immediately notify the Corporation of any loss, theft, destruction or
mutilation of such certificate, and the Board of Directors may authorize the
issuance of a new certificate of stock in lieu thereof upon satisfactory proof
of such loss, theft or destruction upon the giving of an open penalty bond with
surety satisfactory to the Treasurer and the Corporation's counsel, to protect
the Corporation or any person injured on account of the alleged loss, theft or
destruction of any such certificate or the issuance of a new certificate from
any liability or expense which it or they may incur by reason of the original
certificates remaining outstanding and upon payment of the Corporation's
reasonable costs incident thereto.
SECTION 8. Dividends and Reserves.
Subject to the provisions of law or of the Restated Certificate of
Incorporation, the Board of Directors may, out of funds available therefor at
any regular or special meeting, declare dividends upon the capital stock of the
Corporation as and when they deem expedient. Before declaring any dividend
there may be set apart out of any funds of the Corporation available for
dividends, such sum or sums as the Board may from time to time in their
discretion deem proper as a reserve fund for working capital, to meet
contingencies, or for equalizing dividends, or for the purpose of repairing,
maintaining or increasing the property or business of the Corporation, or for
such other purposes as the Board shall deem to be in the best interests of the
Corporation. The Board may, in its discretion, modify or abolish any such
reserve at any time.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. Execution of Contracts, Papers and Documents.
Except as otherwise required by law, the Restated Certificate of Incorporation
or these Restated By-Laws, any contract or other instrument may be executed and
delivered in the name and on behalf of the Corporation by such officers or
employees of the Corporation as the Board may from time to time determine, or
in the absence of such determination, by the Chairman or the President. Such
authority may be general or confined to specific instances as the Board may
determine. Unless authorized by the Board or expressly permitted by these
Restated By-Laws, no officer or agent or employee shall have any power or
authority to bind the Corporation by any contract or engagement or to pledge
its credit or to incur a pecuniary liability for any purpose.
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SECTION 2. Voting Shares in Other Corporations.
The Corporation may vote any and all shares of stock and other securities
having voting rights which may at any time and from time to time be held by it
in any other corporation or corporations and such vote may be cast either in
person or by proxy by such officer of the Corporation as the Board of Directors
may appoint or, in the absence of such appointment, by the Chairman or
President.
SECTION 3. Checks, Drafts, etc.
All checks, drafts, bills of exchange or other orders for the payment of money
out of the funds of the Corporation, and all notes or other evidences of
indebtedness of the Corporation, shall be signed in the name and on behalf of
the Corporation by such persons and in such manner as shall from time to time
be authorized by the Board.
SECTION 4. Books, Accounts and Other Records.
Except as otherwise provided by law, the books, accounts and other records of
the Corporation shall be kept at such place or places, within or without the
State of Delaware, as the Board of Directors may from time to time designate.
SECTION 5. Corporate Seal.
The Board of Directors shall provide a suitable seal which shall bear the name
of the Corporation, the year of incorporation and shall include the words
"Corporate Seal, Delaware." Said seal shall be in the custody of the Secretary
of the Corporation, and may provide for one or more duplicates thereof to be
kept in the custody of such other officer or officers of the Corporation as the
Board may prescribe.
SECTION 6. Fiscal Year.
The fiscal year of the Corporation shall be a period of twelve (12) calendar
months beginning October 1 and ending on September 30 in the next succeeding
year.
ARTICLE IX
TRANSACTIONS WITH DIRECTORS AND OFFICERS
SECTION 1. Affiliated Transactions.
No contract or transaction between the Corporation and one or more of its
directors or officers. or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
Directors of officers are directors or officers or have a financial interest,
shall be void or voidable solely for this reason, or solely because the
Director or officer is present at or participates in the meeting of the Board
of Directors or committee thereof that authorizes the contract or transaction
or solely because his or their votes are counted for such purpose, if:
(a) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to
the Board of Directors or the committee, and the Board of
Directors or committee in good faith authorizes the contract
or transaction by the affirmative vote of a majority of the
disinterested Directors, even though the disinterested
Directors be less than a quorum; or
(b) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by the vote
of the stockholders; or
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(c) The contract or transaction is fair to the Corporation as of
the time it is authorized, approved, or ratified by the Board
of Directors, a committee thereof, or the stockholders.
SECTION 2. Determining Quorum.
Common or interested Directors may be counted in determining the presence of a
quorum at a meeting of the Board of Directors or of a committee thereof which
authorized the contract or transaction.
ARTICLE X
ANTITAKEOVER STATUTE
The Corporation hereby expressly elects not to be governed by Subchapter VI,
Chapter 1, Title 8, Section 203 of the Delaware Code relating to the General
Corporation Law of the State of Delaware, entitled "Business Combinations with
Interested Stockholders".
ARTICLE XI
AMENDMENT
The power to adopt, amend or repeal these Restated By-Laws shall be in the
stockholders entitled to vote and may be exercised by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat at
any annual meeting of the stockholders or at any special meeting thereof if
notice of the proposed amendment or repeal be contained in the notice of such
special meeting. Such power shall also be conferred upon the directors and may
be exercised by the affirmative vote of a majority of the Board at any regular
meeting of the Board or at any special meeting of the Board if notice of the
proposed amendment or repeal be contained in the notice of such special
meeting, but the fact that such power has been so conferred upon the directors
shall not divest the stockholders of the power, nor limit their power to adopt,
amend or repeal these By-Laws.
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, effective this 1st day of October, 1996 by and between
Nabors Industries, Inc., a Delaware Company (together with its successors and
assigns permitted under this Agreement, the "Company"), and Eugene M. Isenberg
(the "Executive").
W I T N E S S E T H
WHEREAS, Company and Executive entered into a certain employment
agreement, last amended October 1, 1994 (the "Amended Employment Agreement");
and
WHEREAS, Company and Executive desire to amend and restate the Amended
Employment Agreement to extend the term of employment so as to make available
to the Company the Executive's unique and special skills, and to reward the
Executive for his leadership of the Company as demonstrated by the Company's
growth and success.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a person
or other entity that directly or indirectly controls, is controlled by, or is
under common control, with the person or other entity specified. Fifty percent
of the Voting Stock or fifty percent of the equity ownership shall conclusively
establish control.
(b) "Annual Cash Bonus" shall mean the amount calculated as set
forth in Section 5(a).
(c) "Auditors" shall mean an independent nationally recognized
accounting firm jointly selected by Executive and the Company. The Auditors
shall not, during the two years preceding the date of its selection, have acted
in any way on behalf of the Company or any Affiliate thereof. If the Executive
and the Company cannot agree on the firm to serve as the Auditors, then the
Executive and the Company shall each select one accounting firm and those two
firms shall jointly select a single accounting firm to serve as the Auditors.
(d) "Average Stockholder's Equity" for any fiscal year shall be
defined as the average of the stockholders' equity on a consolidated basis of
the Company and its Affiliates (including all Affiliates of any
successor-in-interest to the Company in the event of a merger or consolidation
of the Company with another entity or a Change in Control) for each of the
thirteen (13) month ends, commencing with the month ending on the September
30th of the fiscal year prior to the fiscal year in question and ending with
the month ending on the
<PAGE> 2
September 30th of the fiscal year in question, as determined in accordance with
generally accepted accounting principles.
(e) "Base Salary" shall mean the salary provided for in Section
4 below or any increased salary granted to the Executive pursuant to Section 4.
(f) "Board" shall mean the Board of Directors of the Company.
(g) "Cash Flow" shall mean income or loss of the Company and its
Affiliates (including all Affiliates of any successor-in-interest to Company in
the event of a merger or consolidation of Company with another entity or a
Change in Control) on a consolidated basis determined in accordance with
generally accepted accounting principles before income taxes, plus each of the
following: depreciation, any non-cash amortization, deferred interest, any
asset write- downs and shall be adjusted for any non-cash charges or credits
which have been used in the calculation of net income. Equitable adjustments
shall be made to reflect properly the timing of transactions that take place at
or near the end of any fiscal year to assure that the cash flow resulting
therefrom is properly reflected in that appropriate fiscal year.
(h) "Cause" shall mean the Executive is convicted of a felony
involving moral turpitude, which conviction has become final and
non-appealable.
(i) A "Change in Control" shall mean the occurrence of any one
of the following events:
(i) any "person," as such term is used in Sections 3(a)(9),
13(d) and 14d(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), becomes a "beneficial owner," as such term is
used in Rule 13d-3 promulgated under the Exchange Act, of 20% or more
of the Voting Stock of the Company;
(ii) the Board of Directors or the shareholders of Company
adopt any plan or proposal which would result directly or indirectly
in the liquidation, transfer, sale or other disposal of all or
substantially all of the assets of the Company;;
(iii) all or substantially all of the assets or business of
the Company are disposed of pursuant to a merger, consolidation or
other transaction (unless the shareholders of the Company immediately
prior to such merger, consolidation or other transaction beneficially
own, directly or indirectly, in substantially the same proportion as
they owned the Voting Stock of the Company, all of the Voting Stock or
other ownership interests of the entity or entities, if any, that
succeed to the business of the Company);
(iv) the Company or a direct or indirect subsidiary of the
Company combines with another company (regardless of which entity is
the surviving one) or the Company or a direct or indirect subsidiary
of the Company acquires stock or assets in a corporate transaction,
but, in any of the preceding circumstances, immediately after the
transaction, the shareholders of the Company immediately
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prior to the combination hold, directly or indirectly, 66-2/3% or less
of the Voting Stock of the resulting company;
(v) a recapitalization of the Company occurs which results
in either a decrease by 33% or more in the aggregate percentage
ownership of Voting Securities held by Independent Shareholders (on a
primary basis or on a fully diluted basis after giving effect to the
exercise of stock options and warrants) or an increase in the
aggregate percentage ownership of Voting Securities held by
non-Independent Shareholders (on a primary basis or on a fully diluted
basis after giving effect to the exercise of stock options and
warrants) to greater than 50%. For purposes of this subsection, the
term "Independent Shareholder" shall mean any shareholder of the
Company except any executive officers or directors(s) of the Company
or any employee benefit plan(s) sponsored or maintained by the Company
or any subsidiary thereof;
(vi) a change in the composition of the Board such that the
"Continuing Directors" cease for any reason to constitute at least a
seventy percent (70%) majority of the Board. The "Continuing
Directors" shall mean those members of the Board who either: (x) were
directors at the Effective Date of this Agreement; or (y) were elected
by, or on the nomination or recommendation of, at least a
three-quarters (3/4) majority (consisting of at least four directors)
of the then existing Board; or
(vii) at any time an individual is elected to the Board who
was not nominated by the Board to stand for election;
(viii) an event that would be required to be reported in
response to Item 1 of Form 8-K, Current Report pursuant to Section 13
or 15(d) of the Exchange Act whether or not (i) such event is so
reported on such Form or (ii) the Company is then subject to such
reporting requirement.
(j) "Change in Control Price" shall mean the higher of (x) the
highest reported sales price of a share of Common Stock in any transaction
reported on the principal exchange on which such shares are listed during the
60 business day period prior to the Change in Control, or (y) the highest price
to be paid per share of common stock in any transaction or series of
transactions pursuant to which a Change in Control is effectuated. To the
extent that the consideration paid in any transaction described in (y) consists
of all or in part of securities or other non-cash consideration, the value of
such securities or non-cash consideration shall be determined by a mutually
agreed upon investment bank, or if no such investment bank can be agreed upon,
each party will choose an investment bank and the two investment banks chosen
shall select the investment bank.
(k) "Code" or "Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended, final regulations thereunder and any
subsequent Internal Revenue Code.
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(l) "Constructive Termination Without Cause" shall mean
termination of the Executive's employment at his election as provided in
Section 12 below following the occurrence, without the Executive's written
consent, of one or more of the following events:
(i) a reduction in the Executive's then current Base Salary
or the termination or material reduction of any Executive benefit or
perquisite enjoyed by him;
(ii) the failure to elect or reelect the Executive to any of
the positions described in Section 3 below or the removal of him from
any such position;
(iii) a diminution in the Executive's duties or the
assignment to the Executive of duties which are materially
inconsistent with his duties or which impair the Executive's ability
to function as the Chairman and Chief Executive Officer of the
Company;
(iv) the failure to continue the Executive's participation
in any incentive compensation plan unless a plan providing a
substantially similar compensation is substituted;
(v) the relocation of the Company's principal office to a
location more than 50 miles from Houston, Texas, or the relocation of
the Executive's own office location to a location other than as
determined by the Executive;
(vi) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor
(or, the ultimate parent of any successor where applicable) to all or
substantially all of the assets of the Company within 15 days after a
merger, consolidation, sale or similar transaction;
(vii) any act or failure to act by the Board of Directors of
the Company which would cause Executive (A) not to be reelected or to
be removed from the position of Chief Executive Officer or position of
the Chairman of the Board of Directors or (B) not to be elected or
reelected as a director by the shareholders of the Company at any
meeting held for that purpose or by written ballot of shareholders of
the Company;
(viii) upon written election by Executive, the failure of
the Company (or by any successor-in- interest) to perform or otherwise
breach any of its obligations under this Agreement. Such election may
be made by Executive at any time within six (6) months after the last
occurrence of the act or commission which Executive deems to be a
breach of this Agreement; or
(ix) upon written election by Executive within one year
after the date an event constituting a Change in Control shall have
occurred.
(m) "Disability" shall mean the Executive's physical or mental
inability to perform substantially his duties and responsibilities under this
Agreement for a period of 180
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consecutive days as determined by an approved medical doctor. For this purpose
an approved medical doctor shall mean a medical doctor selected by the Company
and the Executive. If the Parties cannot agree on a medical doctor, each Party
shall select a medical doctor and the two doctors shall select another medical
doctor who shall be the sole medical doctor for this purpose.
(n) "Stock" shall mean the Common Stock of the Company
(o) "Subsidiary" of the Company shall mean any corporation or
other entity of which the Company owns, directly or indirectly, 50% or more of
the Voting Stock.
(p) "Tax Counsel" for purposes of this subsection 12(d) shall
refer to an independent law firm that is nationally recognized and that is
selected by the Auditors.
(q) "Term of Employment" shall mean the period specified in
Section 2 below.
(r) "Trading Day" is a day on which the Stock is traded on the
American Stock Exchange or any successor principal national securities exchange
or the over the counter market on which the Company's shares are traded.
(s) "Voting Stock" shall mean capital stock of any class or
classes having the power to vote under ordinary circumstances, in the absence
of contingencies, in the election of directors.
2. Term of Employment.
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, for the period commencing October 1, 1996 and ending
at the close of business on September 30, 2001 (the "Expiration Date"),
provided that on each October 1st of every succeeding year after October 1,
1996, the then Expiration Date shall be extended automatically for an
additional one year term unless ten (10) days prior to such October 1st, a
notarized written notice of expiration is given by Company in writing to
Executive and delivered personally to him and by certified mail to his place of
notice set forth in Article 31 hereof. The term specified in the first
sentence of this Section 2 is subject to earlier termination in accordance with
Section 12 of this Agreement.
3. Position, Duties and Responsibilities.
(a) During the Term of Employment, the Executive shall be
employed as the Chairman of the Board of Directors and Chief Executive Officer
of the Company and be responsible for the general management of the affairs of
the Company. The Executive shall also be a member of the Executive Committee of
the Board of Directors. The Executive, in carrying out his duties under this
Agreement, shall report to the Board.
(b) The Executive shall devote such time as is, in his opinion,
reasonably necessary for the performance of his responsibilities and duties
hereunder. Anything herein to the contrary notwithstanding, nothing shall
preclude the Executive from (i) serving on the
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boards of directors of a reasonable number of other corporations or the boards
of a reasonable number of trade associations and/or charitable organizations,
(ii) engaging in charitable activities and community affairs, and (iii)
managing his personal investments and affairs.
(c) The Company acknowledges that, from the commencement of his
employment, Executive has maintained his principal residence in Palm Beach,
Florida, and maintains residences elsewhere. Executive, as a condition to his
employment, is entitled to perform his responsibilities and duties hereunder
from offices in or near his places of residence.
4. Base Salary.
The Executive shall be paid an annualized Base Salary, payable in
accordance with the regular payroll practices of the Company, of $325,000.00.
Effective October 1, 1997, the Base Salary shall be increased to $575,000.00.
The Base Salary shall be reviewed no less frequently than annually for increase
in the discretion of the Board and its Compensation Committee.
5. Annual Incentive Awards.
The Executive shall participate in all annual incentive award
programs, including, without limitation, the following:
(a) Annual Cash Bonus. The Company shall pay to Executive an
Annual Cash Bonus each fiscal year equal to the following: seven (7) percent
of the quantity which is the excess of the Cash Flow of the Company and its
Affiliates in that fiscal year above fifteen (15) percent of the Average
Stockholder's Equity in that fiscal year. For fiscal years commencing on and
after October 1, 1999, the term "seven (7) percent" in the preceding sentence
shall be replaced with "six (6) percent.". The Annual Cash Bonus shall be paid
no later than 135 calendar days following the end of the respective fiscal
year.
(b) Stock Options and Stock Grant Awards. The Company may award
stock options and stock grants from time to time as it deems appropriate.
(c) General. The Executive shall be eligible to participate in
other annual or long-term incentive programs of the Company on the same basis
as other senior-level executives of the Company.
(d) Special Bonus. The Company may from time to time provide a
special non-recurring cash or stock-based bonus for certain extraordinary
specific developments that materially enhance the value of the Company.
(e) Confirmation. The Company acknowledges that Executive has
previously been awarded stock options and stock grants that are fully vested as
identified in Schedule 5.1 and Company reaffirms herein its contractual
commitments in those agreements. The terms of the stock option agreements in
Schedule 5.1 shall continue to apply and be
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construed so as not to change or modify any rights of Executive set forth
therein. The Company acknowledges that Executive also has previously been
awarded stock options that are not fully vested as identified in Schedule 5.1
and Company reaffirms herein its contractual commitments in those agreements.
Notwithstanding any provision in any stock option agreement or plan to the
contrary, Company agrees that all outstanding stock options granted or to be
granted Executive may be assigned by Executive to any third party, subject only
to whatever requirements or restrictions that may be relevant under the
applicable securities laws. Company agrees to undertake all steps (including
registration with the SEC), if necessary to permit Executive to make such
assignments if so desired.
6. Executive Benefit Programs.
Executive shall be entitled to participate in all Executive pension
and welfare benefit plans and programs made available to the Company's senior
level executives or to its executives generally, as such plans or programs may
be in effect from time to time, including, without limitation, pension, profit
sharing, savings and other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection, travel accident insurance, and
any other pension or retirement plans or programs and any other Executive
welfare benefit plans or programs that may be sponsored by the Company from
time to time, including any plans that supplement the above-listed types of
plans or programs, whether funded or unfunded. The Executive shall be entitled
to participate in all such programs and plans on a basis that is no less
favorable than any other person. With respect to any post-retirement welfare
benefits, Executive shall be entitled to participate on a basis no less
favorable than that of any other person provided that for this purpose the
Executive's period of employment shall be deemed to be the period necessary to
obtain the maximum level of such benefits.
7. Life Insurance and Benefits.
The Company shall provide life insurance coverage for the benefit of
Executive as set forth in Schedule 7.1 hereto.
8. Disability Benefits
The Company shall provide disability insurance coverage for the
benefit of Executive as set forth in Schedule 8 hereto.
9. Reimbursement of Business and Other Expenses; Perquisites.
(a) The Executive is authorized to incur reasonable expenses as
determined in his judgment in carrying out his duties and responsibilities
under this Agreement and the Company shall promptly reimburse him for all
business expenses incurred in connection with carrying out the business of the
Company. All expenses reimbursed shall be subject to documentation and review
in accordance with the Company's policy; the Company shall have one (1) year
from the close of the fiscal year in which the expenses were reimbursed to
review such expenses and, thereafter, expenses reimbursed will be presumed
conclusively to
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be reimbursable. In no event will the review of expenses result in an
adjustment unless the aggregate amount of adjustment in a fiscal year exceeds
$15,000. Company's sole and exclusive remedy with respect to any act or
omission relating to the reimbursement of expenses shall be an accounting under
the provisions of this paragraph and in no way may Company seek any other
remedy (including, but not limited to, termination).
(b) Executive shall be entitled to participate in any of the
Company's executive fringe benefits in accordance with the terms and conditions
of such arrangements as are made available from time to time for the Company's
executives on a basis no less favorable than any other executive.
(c) Executive shall be entitled to establish Company paid
office(s) for his use at or near his principal residence, and/or at any other
residence maintained by him. Executive shall be entitled to employ at the
Company's expense such number of administrative assistants at appropriate
compensation levels as considered necessary by him.
(d) In all events, the Company shall:
(i) pay for any club membership fees (including any bond
requirement) and luncheon clubs as the Executive determines are
appropriate to his carrying out his duties hereunder;
(ii) provide the Executive with a car (including insurance,
repair and maintenance) and driver trained in security techniques if
needed for his use;
(iii) provide the Executive with personal financial
(including tax) counseling by a firm to be chosen by the Executive;
and
(iv) provide the Executive with a security system or
security coverage at the job location, at his residence or otherwise
if reasonably requested by Executive.
(v) The Company shall, at Company expense, make available to
the Executive Company aircraft for business and personal use at his
discretion, such use to be subject to income imputation rules pursuant
to applicable Internal Revenue Service regulations. To the extent
applicable and not otherwise a qualified business expense, the Company
shall provide Executive with tax gross-up payments with respect to any
taxes incurred on any commutation between a business location and his
residences be so that all such taxes shall not be borne by Executive.
It is recognized that some of the Executive's travel by Company
aircraft may be required for security purposes and, as such, will
constitute business use of the aircraft.
(vi) The Company shall provide the Executive with a personal
Umbrella policy in the amount of $5,000,000.
(vii) Items (i) thru (vi) shall be reviewed annually with
the Chairman of the Compensation Committee
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(e) It is the intention of the Company that the Executive shall,
after taking into account any taxes on reimbursements or other benefits under
this Section 9, be kept whole with respect to such reimbursement or other
benefit. Accordingly, to the extent the Executive is taxable on any such
reimbursements or benefits, the Company shall pay the Executive in connection
therewith an amount which after all taxes incurred by the Executive on such
amount shall equal the amount of the reimbursement or benefit being provided
10. Vacation.
The Executive shall be entitled to six weeks paid vacation per year.
Vacation shall be taken each fiscal year and, if not taken within six (6)
months after the end of the fiscal year, shall not be carried forward
thereafter without Board approval.
11. Life Insurance for Company's Benefit.
The Company in its discretion may apply for and procure as owner and
for its own benefit, insurance on the life of the Executive, in such amount and
in such forms as the Company may choose. The Executive shall have no interest
whatsoever in any such policy or policies, but, at the request of the Company,
shall submit to medical examinations and supply such information and execute
such documents as may reasonably be required by the insurance company or
companies to which the Company has applied for insurance.
12. Termination of Employment.
(a) This Agreement may be terminated prior to the Expiration
Date provided that the amounts and obligations set forth in this Section are
paid and performed by Company and only in the following events:
(i) Executive's death;
(ii) Executive's Disability;
(iii) By Company, for "Cause" as defined in Section 1 of
this Agreement;
(iv) By Executive, for Constructive Termination Without
Cause as defined in Section 1, or by Company for any reason other than
that specified in (iii) above; and
(v) By Executive, upon written voluntary resignation by a
notarized instrument signed personally by Executive to be delivered to
the President of the Company or the Chairman of the Compensation
Committee (or, his designate), provided thirty (30) day written notice
is given;
provided, however, that any termination shall not be effective unless the
amounts and obligations of Company are paid and performed as required by the
provisions of this Section 12.
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(b) In the event that Executive's employment is terminated on
the basis of events in Section 12(a)(i), (ii) or (iv), Executive (or his estate
or his beneficiaries as the case may be) shall be entitled to receive within
thirty (30) days, upon occurrence of such event, the following:
(i) The greater of (x) all Base Salary which would have been
payable through the Expiration Date as if such date were the
termination date, or (y) three (3) times the then current Base Salary.
(ii) The greater of (w) all Annual Cash Bonus calculated
under Section 5(a) which would have been payable through the
Expiration Date as if such date were the termination date, or (x)
three (3) times the highest "bonus" paid during the last three fiscal
years prior to termination (for this purpose, "bonus" shall include
any Annual Cash Bonus and other cash bonus, and shall also include the
fair market value of any grants of stock awards or stock options
valued on a Black-Scholes basis at a 40% volatility without regard to
any vesting or other restrictions) or (y) three (3) times the highest
Annual Cash Bonus calculated under Section 5(a) for each of the three
previous fiscal years prior to termination, regardless of whether that
amount was in fact paid. For purposes of making the lump sum
calculation required in the preceding sentence, the future amounts of
the Annual Cash Bonus shall be based on the Annual Cash Bonus which
would have been payable based on the last fiscal year's results and
the amount due in the case of (w) under the preceding sentence shall
be adjusted each year to reflect the Annual Cash Bonus based on actual
results that would have been payable, all such calculations to be made
by the Auditors. Any additional amounts due in future years shall be
paid in cash within ninety (90) days of the respective fiscal
year-end.
(iii) Any restricted stock outstanding, whether or not
vested, shall become immediately and fully vested and transferable to
the full extent possible at the time of termination.
(iv) Any outstanding stock option (including any reload
rights contained therein) of any kind whatsoever shall become
immediately and fully vested and transferable to the full extent
possible at the time of termination without regard to any
contingencies or conditions specified therein, for the remainder of
the original term of the option.
(v) Any amounts earned, accrued or owing to Executive but
not yet paid, including any and all obligations to be performed
following termination under Sections 6-9. Executive, or his designee,
shall be entitled to continue to receive all the benefits set forth in
Section 6-9 through the later of: (1) Expiration Date as if no
termination occurred, or (2) three-years from the date of termination
(vi) Continued participation in medical, dental and life
insurance coverage until Executive receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such
coverage and benefits to be determined on a coverage-by-coverage or
benefit-by-benefit basis) or death of the later of Executive
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or his spouse; provided that (x) if the Executive is precluded from
continuing his participation in any Executive benefit plan or program
as provided in this clause (vi) of this Section 12(b), he shall be
provided with the after-tax economic equivalent of the benefits
provided under the plan or program in which he is unable to
participate for the period specified in this clause, (y) the economic
equivalent of any benefit foregone shall be deemed to be the lowest
cost that would be incurred by the Executive in obtaining such benefit
himself on an individual basis, and (z) payment of such after-tax
economic equivalent shall be made quarterly in advance;
(vii) Other or additional benefits in accordance with
applicable plans or programs of the Company.
(viii) In the event that the termination is related to a
Change in Control (or there is some other basis for termination as
well as a basis related to a Change in Control), then, in addition to
the items listed in (i) through (vii) above, Executive shall be
entitled, upon his election to terminate because of a Change in
Control, to receive in lieu of the exercise of any such number of
outstanding options as selected by Executive an amount of cash in
exchange therefor in an amount equal to (x) the excess of the Change
in Control Price over the exercise price of the options per share of
common stock, multiplied by (y) the number of options selected by
Executive. If Executive is entitled to reload options, his right to
reload options shall be preserved and the number of such reload
options in the continuing entity shall be adjusted to represent in the
continuing entity the same percentage of the total shares and options
of the Company outstanding immediately prior to the Change of Control.
In lieu of retaining all or a portion of any reload options, Executive
shall, upon his election to terminate because of a Change in Control,
be entitled to monetize such reload options as he selects and receive
in lieu thereof an amount of cash equal to the value of the selected
reload options computed on a Black Scholes basis using the following
assumptions: (i) a 40% volatility, (ii) a 10 year option term, (iii) a
stock price equal to the greater of the Change in Control Price or
the closing stock price on the date the election is made to terminate
because of a Change in Control and (iv) and no other restrictions on
exercise. Notwithstanding anything to the contrary, in addition,
Executive shall be entitled to an amount of cash equal to one dollar
less than the amount that would constitute an "excess parachute
payment" as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the "Section 280 Amount") in lieu of the amounts
that would be payable to Executive under 12(b)(i) and 12(b)(ii) of
this Section 12 if such Section 280 Amount is greater than the sum of
the amounts under 12(b)(i) and 12(b)(ii). In addition, Executive
shall be entitled to be granted additional options immediately
exercisable for five years to acquire a number of shares of common
stock equal to the highest number of options granted during any fiscal
year during the period comprising the then current fiscal year, and
the three fiscal years preceding such termination at an exercise price
per share equal to the average closing price per share of Stock during
the twenty trading days prior to the event which resulted in the
triggering of the Change in Control.
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(c) In the event Executive's employment is terminated on the
basis of events in Sections 12(a)(iii) or (v), Executive shall be entitled to
receive within (60) days, upon occurrence of such event, the following:
(i) Base Salary through the date of the termination.
(ii) All Annual Cash Bonus calculated under Section 5(a)
(and pro-rated for the relevant part of the fiscal year) which would
have been payable through the date of termination; such amount shall
be estimated based on the last fiscal year's results and adjusted
later based on actual results, all such calculations to be performed
by the Auditors. Any additional amounts to be paid shall be paid
within ninety (90) days of the end of the respective fiscal year-end.
(iii) All restricted stock that has vested on or prior to
the date of termination.
(iv) Any outstanding stock option (including any reload
rights contained therein) of any kind whatsoever vested on or prior to
the date of termination, for the remainder of the original term of the
option.
(v) Any amounts earned, accrued or owing to the Executive
but not yet paid, including any and all obligations to be performed
following termination under Sections 6-9.
(vi) Other or additional benefits in accordance with
applicable plans of programs of the Company.
(d) In the event that Executive becomes entitled to any payments
provided under Section 12 (the "Agreement Payments") and in the event that any
of the Agreement Payments are subject to the tax (the "Excise Tax") imposed by
Section 4999 of the Code (or any similar tax that may hereafter be imposed),
the Company shall pay or cause to be paid to Executive at the time specified in
this subsection an additional amount ( the "Gross-up Payment") such that the
net amount retained by Executive, after deduction of any Excise Tax on the
Total Payments (as hereinafter defined) and any federal, state and local income
tax and Excise Tax upon the Gross-up Payment provided for this subsection, but
before deduction for any federal, state or local income tax on the Agreement
Payments, shall be equal to the Total Payments. To the extent that the Excise
Tax is amended or modified, or any similar tax is hereinafter imposed, the
provisions of this subsection shall be applied mutatis mutandis to effect the
same desired result of providing Executive net of such additional taxes the
benefits of the payments in Section 12.
For purposes of determining whether any of the Agreement Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by Executive in connection with
a Change in Control of the Company or the Executive's termination of employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, or with any person whose actions result in a
Change in Control of the Company or any person affiliated
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with the Company or such person) (which, together with the Agreement Payments,
shall constitute the "Total Payments") shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax, unless in the opinion of Tax Counsel selected by
the Auditors such other payments or benefits (in whole or in part) do not
constitute parachute payments, or such excess parachute payments (in whole or
in part) represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the base
amount within the meaning of Section 280G(b)(3) of the Code or are otherwise
not subject to the Excise Tax, (ii) the amount of the Total Payments which
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Total Payments or (2) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (i), above), and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-up payment,
Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the Gross-up
Payment is to be made and the applicable state and local income taxes at the
highest marginal rate of taxation for the calendar year in which the Gross-up
Payment is to be made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. . In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made (including by reason
of any payment the existence or amount of which cannot be determined at the
time of the Gross-up Payment), the Company shall make or cause to be made an
additional Gross-up Payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
The Gross-up Payment or portion thereof provided for above shall be
paid not later than the thirtieth (30) day following payment of any amounts
under Section 12; provided, however, that if the amount of such Gross-up
payment or portion thereof cannot be finally determined on or before such day,
the Company shall pay or cause to be paid to Executive on such day an estimate,
as determined by the Auditors, of the minimum amount of such payments and shall
pay or cause to be paid the remainder of such payments (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined, but in no event later than the forty-fifth
day after payment of any amounts under Section 12. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan to Executive, repayable on
the fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
(e) No Mitigation: No Offset. In the event of any termination
of employment under this Section 12, the Executive shall be under no obligation
to seek other employment and there shall be no offset against amounts due the
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain except as specifically provided in
this Section 12.
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(f) Nature of Payments. Any amounts due under this Section 12
are in the nature of severance payments considered to be reasonable by the
Company and are not in the nature of a penalty.
13. Confidentiality.
(a) During the Term of Employment and thereafter, the Executive
shall not disclose to anyone or make use of any trade secret or proprietary or
confidential information of the Company, including such trade secret or
proprietary or confidential information of any customer or other entity to
which the Company owes an obligation not to disclose such information, which he
acquires during the Term of Employment, including but not limited to records
kept in the ordinary course of business, except (i) as such disclosure or use
may be required or appropriate in connection with his work as an Executive of
the Company or (ii) when required to do so by a court of law, by any
governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order him to divulge, disclose or make
accessible such information; provided, however, that no trade secret or
proprietary or confidential information shall be required to be treated as such
to the extent such portions of such information are or become generally
available to the public other than as a result of a disclosure by Executive or
other Company representative bound by an agreement or duty of confidentiality.
14. Indemnification.
(a) Defined Terms. For purposes of Sections 14 through 19
inclusive, the following terms shall have the meaning given here:
(i) "Corporate Status" shall mean the status of a person who
is or was a director, officer or fiduciary of the Company or of any
other corporation, partnership, joint venture, trust, executive
benefit plan or other enterprise which such person is or was serving
at the express written request of the Company.
(ii) "Disinterested Director" shall mean a director of the
Company who is not and was not a party to the Proceeding in respect of
which indemnification is sought by the Executive.
(iii) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, executive benefit plan
or other enterprise which the Executive is or was serving as a
director, officer or fiduciary at the express written request of the
Corporation.
(iv) "Expenses" shall include all reasonable attorneys' fees
and costs, retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and binding
costs, telephone charges, postage, delivery service fees, and all
other disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend,
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appealing, settling, investigating or being or preparing to be a
witness in a Proceeding.
(v) "Good Faith" shall mean the Executive's having acted in
good faith and in a manner the Executive reasonably believed to be in,
or not opposed to, the best interests of the Corporation, and, with
respect to any criminal Proceeding, having had no reasonable cause to
believe his conduct was unlawful.
(vi) "Independent Counsel" means a law firm, or a member of
a law firm, that is experienced in matters of corporate law and
neither presently is, and has not in the past five (5) years has been,
retained to represent: (i) the Company or Executive in any matter
material to either party, or (ii) any other party to the Proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing
either the Company or the Executive in an action to determine the
Executive's rights under this Agreement.
(vii) "Proceeding" includes any action, suit arbitration,
alternate dispute resolution mechanism, investigation, administrative
hearing or any other actual, threatened or completed proceeding,
whether civil, criminal, administrative or investigative, other than
one initiated by the Executive.
(b) In General. In connection with any Proceeding involving acts
or omissions occurring on or subsequent to January 6, 1987, the Company shall
indemnify and advance Expenses to the Executive as provided in this Agreement
to the fullest extent permitted by applicable law in effect on the Effective
Date and to such greater extent as applicable law may thereafter from time to
time permit.
(c) Proceedings Other Than Proceedings by or in the Right of
Company. If, by reason of the Executive's Corporate Status, the Executive is or
is threatened to be made a party to any Proceeding other than a Proceeding by
or in the right of the Company, the Company shall indemnify the Executive
against Expenses, judgments, penalties, fines and amounts paid in settlement or
actually and reasonably incurred by the Executive or on the Executive's behalf
in connection with such Proceeding or any claim, issue or matter therein if the
Executive acted in Good Faith.
(d) Proceedings by or in the Right of Company. If, by reason of
the Executive's Corporate Status, the Executive is, or is threatened to be made
a party to any Proceeding brought by or in the right of the Company to procure
a judgment in its favor, the Executive shall be indemnified against Expenses,
judgments, penalties, fines and amounts paid in settlement, or actually and
reasonably incurred by the Executive or on the Executive's behalf in connection
with such Proceeding or any claim, issue or matter therein if the Executive
acted in Good Faith. Notwithstanding the foregoing, no such indemnification
shall be made in respect of any claim, issue or matter in such Proceeding as to
which the Executive shall have been adjudged to be liable to the Company if
applicable law prohibits such indemnification; provided, however, that if
applicable law so permits, indemnification shall
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nevertheless be made by the Company in such event if and only to the extent
that the Court of Chancery of the State of Delaware or the court in which such
Proceeding shall have been brought or is pending shall determine.
(e) Indemnification of a Party who is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement, to the
extent that the Executive is, by reason of the Executive's Corporate Status, a
party to and is successful on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding the Company shall
indemnify the Executive against all Expenses, judgments, penalties, fines and
amounts paid in settlement, or actually and reasonably incurred by the
Executive or on the Executive's behalf in connection with each successfully
resolved claim, issue or matter, except as permitted by law. For purposes of
this paragraph (e) and without limitation, the termination of any claim, issue
or matter, in such a Proceeding by dismissal, with or without prejudice, shall
be deemed to be a successful result as to such claim, issue or matter, so long
as there has been no finding (either adjudicated or pursuant to this Section
14) that the Executive did not act in Good Faith.
(f) Indemnification for Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the extent that the Executive is, by
reason of the Executive's Corporate Status, a witness in any Proceeding, the
Executive shall be indemnified against all Expenses actually and reasonably
incurred by the Executive or on the Executive's behalf in connection therewith.
(g) Successors. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Agreement shall continue as to the
Executive and shall inure to the benefit of the heirs, executors and
administrators of the Executive.
15. Advancement of Expenses.
Notwithstanding any provision to the contrary in this Agreement, the
Company shall advance all reasonable Expenses, which, by reason of the
Executive's Corporate Status, were incurred by or on behalf of the Executive in
connection with any Proceeding, within twenty (20) days after the receipt by
the Company of a statement or statements from the Executive requesting such
advance or advances, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the
Expenses incurred by the Executive and shall include or be preceded or
accompanied by an undertaking by or on behalf of the Executive to repay any
Expenses if it shall ultimately be determined that the Executive is not
entitled to be indemnified against such Expenses. Any advance and undertakings
to repay pursuant to this Section 15 shall be unsecured and interest-free.
16. Procedures for Determination of Entitlement to Indemnification.
(a) Initial Request. To obtain indemnification under this
Agreement, the Executive shall submit to the Company a written request,
including therein or therewith such documentation and information as is
reasonably available to the Executive and which is reasonably necessary to
determine whether and to what extent the Executive is entitled to
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indemnification. The Secretary of the Company shall promptly advise the Board
in writing that the Executive has requested indemnification .
(b) Method of Determination. If required by applicable law, a
determination with respect to the Executive's entitlement to indemnification
shall be made as follows;
(i) if a Change in Control has occurred, unless the
Executive shall request in writing that such determination be made in
accordance with paragraph (b) (ii) of this Section 16, the
determination shall be made by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to the
Executive;
(ii) if a Change in Control has not occurred the
determination shall be made by the Board by a majority vote of a
quorum consisting of Disinterested Directors. In the event that a
quorum of the Board consisting of Disinterested Directors is not
obtainable or, even if obtainable, such quorum of Disinterested
Directors so directs, the determination shall be made by Independent
Counsel in a written opinion to the Board, a copy of which shall be
delivered to the Executive.
(c) Selection. Payment and Discharge of Independent Counsel. In
the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 16(b) of this Agreement, the
Independent Counsel shall be selected, paid and discharged in the following
manner:
(i) If a Change in Control has not occurred the Independent
Counsel shall be selected by the Board and the Company shall give
written notice to the Executive advising the Executive of the identity
of the Independent Counsel so selected.
(ii) If a Change in Control has occurred, the Independent
Counsel shall be selected by the Executive (unless the Executive shall
request that such selection be made by the Board, in which event
clause (i) of this Section shall apply), and the Executive shall give
written notice to the Company advising it of the identity of the
Independent Counsel so selected.
(iii) Following the initial selection described in clauses
(i) and (ii) of this Section 16(c), the Executive or the Corporation,
as the case may be, may, within seven (7) days after such written
notice of selection has been given, deliver to the other party a
written objection to such selection. Such objection may be asserted
only on the ground that the Independent Counsel so selected does not
meet the requirements of "Independent Counsel" and the objection shall
set forth with particularity the factual basis of such assertion.
Absent a proper and timely objection, the person so selected shall act
as Independent Counsel. If such written objection is made, the
Independent Counsel so selected may not serve as Independent Counsel
unless and until a court has determined that such objection is without
merit.
(iv) Either the Company or the Executive may petition the
Court of Chancery of the State of Delaware or other court of competent
jurisdiction if the parties have been unable to agree on the selection
of Independent Counsel within
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twenty (20) days after submission by the Executive of a written
request for indemnification pursuant to Section 16(a) of this
Agreement. Such petition may request a determination whether an
objection to the party's selection is without merit and/or seek the
appointment as Independent Counsel of a person selected by the Court
shall designate. A person so appointed shall act as Independent
Counsel under Section 16(b) of this Agreement.
(v) The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel
in connection with acting pursuant to this Agreement, and the Company
shall pay all reasonable fees and expenses incident to the procedures
of this Section 16(c), regardless of the manner in which such
Independent Counsel was selected or appointed.
(vi) Upon the due commencement of any judicial proceeding or
arbitration pursuant to Section 18(b) of this Agreement, Independent
Counsel shall be discharged and relieved of any further responsibility
in such capacity (subject to the applicable standards of professional
conduct then prevailing).
(d) Cooperation. The Executive shall cooperate with the person,
persons or entity making the determination with respect to the Executive's
entitlement to indemnification under this Agreement, including providing to
such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to the Executive and
reasonably necessary to, such determination. Any costs or expenses (including
attorneys' fees and disbursements) incurred by the Executive in so cooperating
with the person, persons or entity making such determination shall be borne by
the Company(irrespective of the determination as to the Executive's entitlement
to indemnification) and the Company hereby indemnifies and agrees to hold the
Executive harmless therefrom.
(e) Payment. If it is determined that the Executive is entitled
to indemnification, payment to the Executive shall be made within ten (10) days
after such determination.
17. Presumption and Effect of Certain Proceedings.
(a) Burden of Proof. In making a determination with respect to
entitlement of indemnification hereunder, the person or persons or entity
making such determination shall presume that the Executive is entitled to
indemnification under this Agreement if the Executive has submitted a request
for indemnification in accordance with Section 16(a) of this Agreement, and the
Company shall have the burden of proof to overcome that presumption in
connection with the making of any person, persons or entity of any
determination contrary to that presumption.
(b) Effect of Other Proceedings. The termination of any
Proceeding or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this
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Agreement) of itself adversely affect the right of the Executive to
indemnification or create a presumption that the Executive did not act in Good
Faith.
(c) Reliance as Safe Harbor. For purposes of any determination
of Good Faith, the Executive shall be deemed to have acted in Good Faith if the
Executive's action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to the
Executive by the officers of the Enterprise in the course of their duties, or
on information or records given or reports made to the Enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Enterprise. The provisions of this Section
17(c) shall not be deemed to be exclusive or to limit in any way the other
circumstances in which the Executive may be deemed to have met the applicable
standard of conduct set forth in this Agreement.
(d) Actions of Others. The knowledge and/or actions, or failure
to act, of any director, officer, agent or Executive of the Enterprise shall
not be imputed to the Executive for purposes of determining the right to
indemnification under this Agreement.
18. Remedies of the Executive.
(a) Application. This Section 18 shall apply in the event of a
dispute. For purposes of this Section, "Dispute" shall mean any of the
following events:
(i) a determination is made pursuant to Section 16 of this
Agreement that the Executive is not entitled to indemnification under
this Agreement;
(ii) advancement of Expenses is not timely made pursuant to
Section 15 of this Agreement;
(iii) the determination of entitlement to be made pursuant
to Section 16(b) of this Agreement has not been made within ninety
(90) days after receipt by the Company of the request for
indemnification;
(iv) payment of indemnification is not made pursuant to
Section 14(f) of this Agreement within ten (10) days after receipt by
the Company of a written request therefor; or
(v) payment of indemnification is not made within ten (10)
days after a determination has been made that the Executive is
entitled to indemnification or such determination is deemed to have
been made pursuant to Section 16 of this Agreement.
(b) Adjudication. In the event of a Dispute, the Executive shall
be entitled to an adjudication in an appropriate court of the State of
Delaware, or in any other court of competent jurisdiction, of the Executive's
entitlement to such indemnification or advancement of Expenses. Alternatively,
the Executive at the Executive's option, may seek an award in arbitration to be
conducted by a three person arbitration panel pursuant to the rules then
obtaining of the American Arbitration Association. The Executive shall commence
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such proceeding seeking an adjudication or an award in arbitration within one
hundred eighty (180) days following the date on which the Executive first has
the right to commence such proceeding pursuant to this Section 18(b). The
Company shall not oppose the Executive's right to seek any such adjudication or
award in arbitration.
(c) De Novo Review. In the event that a determination shall have
been made pursuant to Section 16 of this Agreement that the Executive is not
entitled to indemnification, any judicial proceeding or arbitration commenced
pursuant to this Section 18 shall be conducted in all respects as a de novo
trial, or arbitration, on the merits and the Executive shall not be prejudiced
by reason of that adverse determination. In any such proceeding or arbitration,
the Company shall have the burden of proving that the Executive is not entitled
to indemnification or advancement of Expenses, as the case may be.
(d) Company Bound. If a determination shall have been made or
deemed to have been made pursuant to Section 16 of this Agreement that the
Executive is entitled to indemnification, the Company shall be bound by such
determination in any judicial proceeding or arbitration absent (i) a
misstatement by the Executive of a material fact, or a failure to disclose
facts which would make Executive's statement not materially misleading, in
connection with the request for indemnification or (ii) a prohibition of such
indemnification under applicable law.
(e) Procedures Valid. The Company shall be precluded from
asserting in any judicial proceeding or arbitration commenced pursuant to this
Section 18 that the procedures and presumptions of Sections 16 and 17 are not
valid, binding and enforceable and shall stipulate in any such court or before
any such arbitrators that the Company is bound by all the provisions of this
Agreement.
(f) Expenses of Adjudication. In the event that the Executive,
pursuant to this Section 18, seeks a judicial adjudication of or an award in
arbitration to enforce the Executive's rights under, or to recover damages for
breach of, this Agreement, the Executive shall be entitled to recover from the
Corporation, and shall be indemnified by the Company against, any and all
Expenses actually and reasonably incurred by the Executive in such adjudication
or arbitration, but only if and to the extent that the Executive prevails
therein.
19. Non-Exclusivity, Subrogation.
(a) Non-Exclusivity. The rights of Executive to be indemnified
and to receive advancement of Expenses as provided by this Agreement shall not
be deemed exclusive of any other rights to which the Executive may at any time
be entitled under applicable law, the Certificate of Incorporation, the
By-Laws, any agreement, a vote of stockholders, a resolution of directors or
otherwise. No amendment, alteration, rescission or replacement of this
Agreement or any provision hereof shall be effective as to the Executive with
respect to any action taken or omitted by such the Executive in the Executive's
Corporate Status prior to such amendment, alteration, rescission or
replacement.
(b) Subrogation. In the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of
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the Executive, who shall execute all papers required and take all action
necessary to secure such rights, including execution of such documents as are
necessary to enable the Company to bring suit to enforce such rights.
(c) No Duplicative Payment. The Company shall not be liable
under this Agreement to make any payment of amounts otherwise actually received
such payment under any insurance policy, contract, agreement or otherwise.
20. Director and Officer Insurance.
The Company agrees to continue and maintain a directors and officers'
liability insurance policy covering the Executive to the extent the Company
provides such coverage for its other executive officers.
21. Effect of Agreement on Other Benefits.
Except as specifically provided in this Agreement, the existence of
this Agreement shall not prohibit or restrict the Executive's entitlement to
full participation in the executive benefit and other plans or programs in
which senior executives of the Company are eligible to participate, or restrict
Executive from the benefits of any other agreements.
22. Assignability: Binding Nature.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and assigns. No rights or obligations of the Company under this Agreement may
be assigned or transferred by the Company except that such rights or
obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company, provided
that the assignee or transferee is the successor to all or substantially all of
the assets of the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained in this
Agreement, by written contract. The Company further agrees that, in the event
of a sale of assets or liquidation as described in the preceding sentence, it
shall take whatever action it legally can in order to cause such assignee or
transferee to expressly assume the liabilities, obligations and duties of the
Company hereunder. No rights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive other than his rights
to compensation and benefits.
23. Representation.
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it or
and any other person, firm or organization. The Executive represents that he
knows of no agreement between him and any other person, firm or organization
that would be violated by the performance of his obligations under this
Agreement.
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24 Entire Agreement.
This Agreement contains the entire understanding and agreement between
the Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto. This Agreement
hereby amends and replaces the Amended Employment Agreement effective October
1, 1996.
25. Amendment or Waiver.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver must be in
writing and signed by the Executive or an authorized officer of the Company, as
the case may be.
26. Severability.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law.
27. Survivorship.
The respective rights and obligations of the Parties hereunder shall
survive any termination of this Agreement.
28. Beneficiaries/References.
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive's death
by giving the Company written notice thereof. In the event of the Executive's
death or a judicial determination of his incompetence, reference in this
Agreement to the Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
29. Governing Law/Jurisdiction.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of Delaware without reference to principles of
conflict of laws.
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30. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement
(including any action by Executive to enforce compliance or specific
performance with respect to this Agreement), shall at the election of the
Executive or the Company, be resolved by binding arbitration, to be held in New
York, New York in accordance with the rules and procedures of the American
Arbitration Association before three arbitrators. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. Nothing herein shall preclude either party from seeking provisional
remedies in aid of arbitration, such as a preliminary injunction, from a court
of competent jurisdiction. Costs of the arbitration or litigation, including,
without limitation, reasonable attorneys' fees of both Parties, shall be borne
by the Company. Pending the resolution of any arbitration or court proceeding,
the Company shall continue payment of all amounts due the Executive under this
Agreement consistent with past practice and all benefits to which the Executive
is entitled at the time the dispute arises.
31. Notices.
Any notice given to a Party shall be in writing and shall be deemed to
have been given when delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly addressed to the Party
concerned at the address indicated below or to such changed address as such
Party may subsequently give such notice of:
If to the Company:
Nabors Industries, Inc.
515 West Greens Road, Suite 1200
Houston, Texas 77067
Attention: President
If to the Executive:
Mr. Eugene M. Isenberg
Two North Breakers Row, Apt. 25-S
Palm Beach, Florida 33480
32. Headings.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
33. Counterparts.
This Agreement may be executed in two or more counterparts.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
Nabors Industries, Inc.
By: /s/ JACK WEXLER
---------------------------------
Jack Wexler
/s/ EUGENE M. ISENBERG
---------------------------------
Eugene M. Isenberg
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EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT, effective this 1st day of October, 1996 by and between Nabors
Industries, Inc., a Delaware Company (together with its successors and assigns
permitted under this Agreement, the "Company"), and Anthony G. Petrello (the
"Executive").
W I T N E S S E T H
WHEREAS, Company and Executive entered into a certain employment
agreement, last amended October 1, 1994 (the "Amended Employment Agreement");
and
WHEREAS, Company and Executive desire to amend and restate the Amended
Employment Agreement to extend the term of employment so as to make available
to the Company the Executive's unique and special skills, and to reward the
Executive for his leadership of the Company as demonstrated by the Company's
growth and success.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a person or other entity shall mean a
person or other entity that directly or indirectly controls, is controlled by,
or is under common control, with the person or other entity specified. Fifty
percent of the Voting Stock or fifty percent of the equity ownership shall
conclusively establish control.
(b) "Annual Cash Bonus" shall mean the amount calculated as
set forth in Section 5(a).
(c) "Auditors" shall mean an independent nationally recognized
accounting firm jointly selected by Executive and the Company. The Auditors
shall not, during the two years preceding the date of its selection, have acted
in any way on behalf of the Company or any Affiliate thereof. If the Executive
and the Company cannot agree on the firm to serve as the Auditors, then the
Executive and the Company shall each select one accounting firm and those two
firms shall jointly select a single accounting firm to serve as the Auditors.
(d) "Average Stockholder's Equity" for any fiscal year shall
be defined as the average of the stockholders' equity on a consolidated basis
of the Company and its Affiliates (including all Affiliates of any successor-
in-interest to the Company in the event of a merger or consolidation of the
Company with another entity or a Change in Control) for each of the thirteen
(13) month ends, commencing with the month ending on the
<PAGE> 2
September 30th of the fiscal year prior to the fiscal year in question and
ending with the month ending on the September 30th of the fiscal year in
question, as determined in accordance with generally accepted accounting
principles.
(e) "Base Salary" shall mean the salary provided for in
Section 4 below or any increased salary granted to the Executive pursuant to
Section 4.
(f) "Board" shall mean the Board of Directors of the Company.
(g) "Cash Flow" shall mean income or loss of the Company and
its Affiliates (including all Affiliates of any successor-in-interest to
Company in the event of a merger or consolidation of Company with another
entity or a Change in Control) on a consolidated basis determined in accordance
with generally accepted accounting principles before income taxes, plus each of
the following: depreciation, any non-cash amortization, deferred interest, any
asset write-downs and shall be adjusted for any non-cash charges or credits
which have been used in the calculation of net income. Equitable adjustments
shall be made to reflect properly the timing of transactions that take place at
or near the end of any fiscal year to assure that the cash flow resulting
therefrom is properly reflected in that appropriate fiscal year.
(h) "Cause" shall mean the Executive is convicted of a felony
involving moral turpitude, which conviction has become final and non-
appealable.
(i) A "Change in Control" shall mean the occurrence of any one
of the following events:
(i) any "person," as such term is used in Sections
3(a)(9), 13(d) and 14d(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), becomes a "beneficial owner," as such term
is used in Rule 13d-3 promulgated under the Exchange Act, of 20% or more
of the Voting Stock of the Company;
(ii) the Board of Directors or the shareholders of Company
adopt any plan or proposal which would result directly or indirectly in
the liquidation, transfer, sale or other disposal of all or
substantially all of the assets of the Company;;
(iii) all or substantially all of the assets or business
of the Company are disposed of pursuant to a merger, consolidation or
other transaction (unless the shareholders of the Company immediately
prior to such merger, consolidation or other transaction beneficially
own, directly or indirectly, in substantially the same proportion as
they owned the Voting Stock of the Company, all of the Voting Stock or
other ownership interests of the entity or entities, if any, that
succeed to the business of the Company);
(iv) the Company or a direct or indirect subsidiary of the
Company combines with another company (regardless of which entity is the
surviving one) or the Company or a direct or indirect subsidiary of the
Company acquires stock or assets in a corporate transaction, but, in any
of the preceding circumstances, immediately after the transaction, the
shareholders of the Company immediately
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prior to the combination hold, directly or indirectly, 66-2/3% or less
of the Voting Stock of the resulting company;
(v) a recapitalization of the Company occurs which results
in either a decrease by 33% or more in the aggregate percentage
ownership of Voting Securities held by Independent Shareholders (on a
primary basis or on a fully diluted basis after giving effect to the
exercise of stock options and warrants) or an increase in the aggregate
percentage ownership of Voting Securities held by non-Independent
Shareholders (on a primary basis or on a fully diluted basis after
giving effect to the exercise of stock options and warrants) to greater
than 50%. For purposes of this subsection, the term "Independent
Shareholder" shall mean any shareholder of the Company except any
executive officers or directors(s) of the Company or any employee
benefit plan(s) sponsored or maintained by the Company or any subsidiary
thereof;
(vi) a change in the composition of the Board such that
the "Continuing Directors" cease for any reason to constitute at least a
seventy percent (70%) majority of the Board. The "Continuing Directors"
shall mean those members of the Board who either: (x) were directors at
the Effective Date of this Agreement; or (y) were elected by, or on the
nomination or recommendation of, at least a three-quarters (3/4)
majority (consisting of at least four directors) of the then existing
Board; or
(vii) at any time an individual is elected to the Board
who was not nominated by the Board to stand for election or if Eugene M.
Isenberg ceases to be either the Chief Executive Officer or the Chairman
of the Board, and Executive does not assume the position on mutually
agreeable terms;
(viii) an event that would be required to be reported in
response to Item 1 of Form 8-K, Current Report pursuant to Section 13 or
15(d) of the Exchange Act whether or not (i) such event is so reported
on such Form or (ii) the Company is then subject to such reporting
requirement.
(j) "Change in Control Price" shall mean the higher of (x) the
highest reported sales price of a share of Common Stock in any transaction
reported on the principal exchange on which such shares are listed during the
60 business day period prior to the Change in Control, or (y) the highest price
to be paid per share of common stock in any transaction or series of
transactions pursuant to which a Change in Control is effectuated. To the
extent that the consideration paid in any transaction described in (y) consists
of all or in part of securities or other non-cash consideration, the value of
such securities or non-cash consideration shall be determined by a mutually
agreed upon investment bank, or if no such investment bank can be agreed upon,
each party will choose an investment bank and the two investment banks chosen
shall select the investment bank.
(k) "Code" or "Internal Revenue Code" shall mean the Internal
Revenue Code of 1986, as amended, final regulations thereunder and any
subsequent Internal Revenue Code.
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(l) "Constructive Termination Without Cause" shall mean
termination of the Executive's employment at his election as provided in
Section 12 below following the occurrence, without the Executive's written
consent, of one or more of the following events:
(i) a reduction in the Executive's then current Base
Salary or the termination or material reduction of any Executive benefit
or perquisite enjoyed by him;
(ii) the failure to elect or reelect the Executive to any
of the positions described in Section 3 below or the removal of him from
any such position;
(iii) a diminution in the Executive's duties or the
assignment to the Executive of duties which are materially inconsistent
with his duties or which impair the Executive's ability to function as
the President and Chief Operating Officer of the Company;
(iv) the failure to continue the Executive's participation
in any incentive compensation plan unless a plan providing a
substantially similar compensation is substituted;
(v) the relocation of the Company's principal office to a
location more than 50 miles from Houston, Texas, or the relocation of
the Executive's own office location to a location other than as
determined by the Executive;
(vi) the failure of the Company to obtain the assumption
in writing of its obligation to perform this Agreement by any successor
(or, the ultimate parent of any successor where applicable) to all or
substantially all of the assets of the Company within 15 days after a
merger, consolidation, sale or similar transaction;
(vii) any act or failure to act by the Board of Directors
of the Company which would cause Executive (A) not to be reelected or to
be removed from the position of Chief Operating Officer or position of
the President or (B) not to be elected or reelected as a director by
the shareholders of the Company at any meeting held for that purpose or
by written ballot of shareholders of the Company;
(viii) upon written election by Executive, the failure of
the Company (or by any successor-in-interest) to perform or otherwise
breach any of its obligations under this Agreement. Such election may
be made by Executive at any time within six (6) months after the last
occurrence of the act or commission which Executive deems to be a breach
of this Agreement; or
(ix) upon written election by Executive within one year
after the date an event constituting a Change in Control shall have
occurred.
(m) "Disability" shall mean the Executive's physical or mental
inability to perform substantially his duties and responsibilities under this
Agreement for a period of 180 consecutive days as determined by an approved
medical doctor. For this purpose an approved
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<PAGE> 5
medical doctor shall mean a medical doctor selected by the Company and the
Executive. If the Parties cannot agree on a medical doctor, each Party shall
select a medical doctor and the two doctors shall select another medical doctor
who shall be the sole medical doctor for this purpose.
(n) "Stock" shall mean the Common Stock of the Company
(o) "Subsidiary" of the Company shall mean any corporation or
other entity of which the Company owns, directly or indirectly, 50% or more of
the Voting Stock.
(p) "Tax Counsel" for purposes of this subsection 12(d) shall
refer to an independent law firm that is nationally recognized and that is
selected by the Auditors.
(q) "Term of Employment" shall mean the period specified in
Section 2 below.
(r) "Trading Day" is a day on which the Stock is traded on the
American Stock Exchange or any successor principal national securities exchange
or the over the counter market on which the Company's shares are traded.
(s) "Voting Stock" shall mean capital stock of any class or
classes having the power to vote under ordinary circumstances, in the absence
of contingencies, in the election of directors.
2. Term of Employment.
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, for the period commencing October 1, 1996 and ending
at the close of business on September 30, 2001 (the "Expiration Date"),
provided that on each October 1st of every succeeding year after October 1,
1996, the then Expiration Date shall be extended automatically for an
additional one year term unless ten (10) days prior to such October 1st, a
notarized written notice of expiration is given by Company in writing to
Executive and delivered personally to him and by certified mail to his place of
notice set forth in Article 31 hereof. The term specified in the first
sentence of this Section 2 is subject to earlier termination in accordance with
Section 12 of this Agreement.
3. Position, Duties and Responsibilities.
(a) During the Term of Employment, the Executive shall be
employed as the President and Chief Operating Officer of the Company and be
responsible for the general management of the affairs of the Company. The
Executive shall also be a member of the Executive Committee of the Board of
Directors. The Executive, in carrying out his duties under this Agreement,
shall report to the Board.
(b) The Executive shall devote such time as is, in his
opinion, reasonably necessary for the performance of his responsibilities and
duties hereunder. Anything herein to the contrary notwithstanding, nothing
shall preclude the Executive from (i) serving on the boards of directors of a
reasonable number of other corporations or the boards of a
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<PAGE> 6
reasonable number of trade associations and/or charitable organizations, (ii)
engaging in charitable activities and community affairs, and (iii) managing his
personal investments and affairs.
4. Base Salary.
The Executive shall be paid an annualized Base Salary, payable in
accordance with the regular payroll practices of the Company, of $275,000.00.
Effective October 1, 1997, the Base Salary shall be increased to $525,000.00.
The Base Salary shall be reviewed no less frequently than annually for increase
in the discretion of the Board and its Compensation Committee.
5. Annual Incentive Awards.
The Executive shall participate in all annual incentive award programs,
including, without limitation, the following:
(a) Annual Cash Bonus. The Company shall pay to Executive an
Annual Cash Bonus each fiscal year equal to the following: the greater of (i)
$700,000 or (ii) two (2) percent of the quantity which is the excess of the
Cash Flow of the Company and its Affiliates in that fiscal year above fifteen
(15) percent of the Average Stockholder's Equity in that fiscal year. The
Annual Cash Bonus shall be paid no later than 135 calendar days following the
end of the respective fiscal year.
(b) Stock Options and Stock Grant Awards. The Company may
award stock options and stock grants from time to time as it deems appropriate.
(c) General. The Executive shall be eligible to participate in
other annual or long-term incentive programs of the Company on the same basis
as other senior-level executives of the Company.
(d) Special Bonus. The Company may from time to time provide a
special non-recurring cash or stock-based bonus for certain extraordinary
specific developments that materially enhance the value of the Company.
(e) Confirmation. The Company acknowledges that Executive has
previously been awarded stock options and stock grants that are fully vested as
identified in Schedule 5.1 and Company reaffirms herein its contractual
commitments in those agreements. The terms of the stock option agreements in
Schedule 5.1 shall continue to apply and be construed so as not to change or
modify any rights of Executive set forth therein. The Company acknowledges
that Executive also has previously been awarded stock options that are not
fully vested as identified in Schedule 5.1 and Company reaffirms herein its
contractual commitments in those agreements. Notwithstanding any provision in
any stock option agreement or plan to the contrary, Company agrees that all
outstanding stock options granted or to be granted Executive may be assigned by
Executive to any third party, subject only to whatever requirements or
restrictions that may be relevant under the applicable
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<PAGE> 7
securities laws. Company agrees to undertake all steps (including registration
with the SEC), if necessary to permit Executive to make such assignments if so
desired.
6. Executive Benefit Programs.
Executive shall be entitled to participate in all Executive pension and
welfare benefit plans and programs made available to the Company's senior level
executives or to its executives generally, as such plans or programs may be in
effect from time to time, including, without limitation, pension, profit
sharing, savings and other retirement plans or programs, medical, dental,
hospitalization, short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection, travel accident insurance, and
any other pension or retirement plans or programs and any other Executive
welfare benefit plans or programs that may be sponsored by the Company from
time to time, including any plans that supplement the above-listed types of
plans or programs, whether funded or unfunded. The Executive shall be entitled
to participate in all such programs and plans on a basis that is no less
favorable than any other person. With respect to any post-retirement welfare
benefits, Executive shall be entitled to participate on a basis no less
favorable than that of any other person provided that for this purpose the
Executive's period of employment shall be deemed to be the period necessary to
obtain the maximum level of such benefits.
7. Life Insurance and Benefits.
The Company shall provide life insurance coverage for the benefit of
Executive as set forth in Schedule 7.1 hereto.
8. Disability Benefits
The Company shall provide disability insurance coverage for the benefit
of Executive as set forth in Schedule 8 hereto.
9. Reimbursement of Business and Other Expenses; Perquisites.
(a) The Executive is authorized to incur reasonable expenses
as determined in his judgment in carrying out his duties and responsibilities
under this Agreement and the Company shall promptly reimburse him for all
business expenses incurred in connection with carrying out the business of the
Company. All expenses reimbursed shall be subject to documentation and review
in accordance with the Company's policy; the Company shall have one (1) year
from the close of the fiscal year in which the expenses were reimbursed to
review such expenses and, thereafter, expenses reimbursed will be presumed
conclusively to be reimbursable. In no event will the review of expenses
result in an adjustment unless the aggregate amount of adjustment in a fiscal
year exceeds $15,000. Company's sole and exclusive remedy with respect to any
act or omission relating to the reimbursement of expenses shall be an
accounting under the provisions of this paragraph and in no way may Company
seek any other remedy (including, but not limited to, termination).
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(b) Executive shall be entitled to participate in any of the
Company's executive fringe benefits in accordance with the terms and conditions
of such arrangements as are made available from time to time for the Company's
executives on a basis no less favorable than any other executive.
(c) The Corporation shall provide reimbursement of reasonable
expenses incurred by Executive and his spouse to locate and purchase housing
accommodations in Houston. Those expenses shall include the cost of reasonable
accommodations and travel expense in Houston until Executive purchases a home
in the Houston area. In addition, Executive shall be entitled to the benefits
set forth in Schedule 9(c).
(d) In all events, the Company shall:
(i) pay for any club membership fees (including any bond
requirement) and luncheon clubs as the Executive determines are
appropriate to his carrying out his duties hereunder;
(ii) provide the Executive with a car (including
insurance, repair and maintenance) and driver trained in security
techniques if needed for his use;
(iii) provide the Executive with personal financial
(including tax) counseling by a firm to be chosen by the Executive; and
(iv) provide the Executive with a security system or
security coverage at the job location, at his residence or otherwise if
reasonably requested by Executive.
(v) The Company shall provide the Executive with a
personal Umbrella policy in the amount of $5,000,000.
(vii) Items (i) thru (v) shall be reviewed annually with
the Chairman of the Compensation Committee
(e) It is the intention of the Company that the Executive
shall, after taking into account any taxes on reimbursements or other benefits
under this Section 9, be kept whole with respect to such reimbursement or other
benefit. Accordingly, to the extent the Executive is taxable on any such
reimbursements or benefits, the Company shall pay the Executive in connection
therewith an amount which after all taxes incurred by the Executive on such
amount shall equal the amount of the reimbursement or benefit being provided
10. Vacation.
The Executive shall be entitled to six weeks paid vacation per year.
Vacation shall be taken each fiscal year and, if not taken within six (6)
months after the end of the fiscal year, shall not be carried forward
thereafter without Board approval.
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11. Life Insurance for Company's Benefit.
The Company in its discretion may apply for and procure as owner and for
its own benefit, insurance on the life of the Executive, in such amount and in
such forms as the Company may choose. The Executive shall have no interest
whatsoever in any such policy or policies, but, at the request of the Company,
shall submit to medical examinations and supply such information and execute
such documents as may reasonably be required by the insurance company or
companies to which the Company has applied for insurance.
12. Termination of Employment.
(a) This Agreement may be terminated prior to the Expiration
Date provided that the amounts and obligations set forth in this Section are
paid and performed by Company and only in the following events:
(i) Executive's death;
(ii) Executive's Disability;
(iii) By Company, for "Cause" as defined in Section 1 of
this Agreement;
(iv) By Executive, for Constructive Termination Without
Cause as defined in Section 1, or by Company for any reason other than
that specified in (iii) above; and
(v) By Executive, upon written voluntary resignation by a
notarized instrument signed personally by Executive to be delivered to
the Chief Executive Officer, provided thirty (30) day written notice is
given;
provided, however, that any termination shall not be effective unless the
amounts and obligations of Company are paid and performed as required by the
provisions of this Section 12.
(b) In the event that Executive's employment is terminated on
the basis of events in Section 12(a)(i), (ii) or (iv), Executive (or his estate
or his beneficiaries as the case may be) shall be entitled to receive within
thirty (30) days, upon occurrence of such event, the following:
(i) The greater of (x) all Base Salary which would have
been payable through the Expiration Date as if such date were the
termination date, or (y) three (3) times the then current Base Salary.
(ii) The greater of (w) all Annual Cash Bonus calculated
under Section 5(a) which would have been payable through the Expiration
Date as if such date were the termination date, or (x) three (3) times
the highest "bonus" paid during the last three fiscal years prior to
termination (for this purpose, "bonus" shall include any Annual Cash
Bonus and other cash bonus, and shall also include the fair market value
of any
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grants of stock awards or stock options valued on a Black-Scholes basis
at a 40% volatility without regard to any vesting or other restrictions)
or (y) three (3) times the highest Annual Cash Bonus calculated under
Section 5(a) for each of the three previous fiscal years prior to
termination, regardless of whether that amount was in fact paid. For
purposes of making the lump sum calculation required in the preceding
sentence, the future amounts of the Annual Cash Bonus shall be based on
the Annual Cash Bonus which would have been payable based on the last
fiscal year's results and the amount due in the case of (w) under the
preceding sentence shall be adjusted each year to reflect the Annual
Cash Bonus based on actual results that would have been payable, all
such calculations to be made by the Auditors. Any additional amounts
due in future years shall be paid in cash within ninety (90) days of the
respective fiscal year-end.
(iii) Any restricted stock outstanding, whether or not
vested, shall become immediately and fully vested and transferable to
the full extent possible at the time of termination.
(iv) Any outstanding stock option (including any reload
rights contained therein) of any kind whatsoever shall become
immediately and fully vested and transferable to the full extent
possible at the time of termination without regard to any contingencies
or conditions specified therein, for the remainder of the original term
of the option.
(v) Any amounts earned, accrued or owing to Executive but
not yet paid, including any and all obligations to be performed
following termination under Sections 6-9. Executive, or his designee,
shall be entitled to continue to receive all the benefits set forth in
Section 6-9 through the later of: (1) Expiration Date as if no
termination occurred, or (2) three-years from the date of termination
(vi) Continued participation in medical, dental and life
insurance coverage until Executive receives equivalent coverage and
benefits under the plans and programs of a subsequent employer (such
coverage and benefits to be determined on a coverage-by-coverage or
benefit-by-benefit basis) or death of the later of Executive or his
spouse; provided that (x) if the Executive is precluded from continuing
his participation in any Executive benefit plan or program as provided
in this clause (vi) of this Section 12(b), he shall be provided with the
after-tax economic equivalent of the benefits provided under the plan or
program in which he is unable to participate for the period specified in
this clause, (y) the economic equivalent of any benefit foregone shall
be deemed to be the lowest cost that would be incurred by the Executive
in obtaining such benefit himself on an individual basis, and (z)
payment of such after-tax economic equivalent shall be made quarterly in
advance;
(vii) Other or additional benefits in accordance with
applicable plans or programs of the Company.
(viii) In the event that the termination is related to a
Change in
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Control (or there is some other basis for termination as well as a basis
related to a Change in Control), then, in addition to the items listed
in (i) through (vii) above, Executive shall be entitled, upon his
election to terminate because of a Change in Control, to receive in lieu
of the exercise of any such number of outstanding options as selected by
Executive an amount of cash in exchange therefor in an amount equal to
(x) the excess of the Change in Control Price over the exercise price of
the options per share of common stock, multiplied by (y) the number of
options selected by Executive. If Executive is entitled to reload
options, his right to reload options shall be preserved and the number
of such reload options in the continuing entity shall be adjusted to
represent in the continuing entity the same percentage of the total
shares and options of the Company outstanding immediately prior to the
Change of Control. In lieu of retaining all or a portion of any reload
options, Executive shall, upon his election to terminate because of a
Change in Control, be entitled to monetize such reload options as he
selects and receive in lieu thereof an amount of cash equal to the value
of the selected reload options computed on a Black Scholes basis using
the following assumptions: (i) a 40% volatility, (ii) a 10 year option
term, (iii) a stock price equal to the greater of the Change in Control
Price or the closing stock price on the date the election is made to
terminate because of a Change in Control and (iv) and no other
restrictions on exercise. Notwithstanding anything to the contrary, in
addition, Executive shall be entitled to an amount of cash equal to one
dollar less than the amount that would constitute an "excess parachute
payment" as defined in Section 280G of the Internal Revenue Code of
1986, as amended (the "Section 280 Amount") in lieu of the amounts that
would be payable to Executive under 12(b)(i) and 12(b)(ii) of this
Section 12 if such Section 280 Amount is greater than the sum of the
amounts under 12(b)(i) and 12(b)(ii). In addition, Executive shall be
entitled to be granted additional options immediately exercisable for
five years to acquire a number of shares of common stock equal to the
highest number of options granted during any fiscal year during the
period comprising the then current fiscal year, and the three fiscal
years preceding such termination at an exercise price per share equal to
the average closing price per share of Stock during the twenty trading
days prior to the event which resulted in the triggering of the Change
in Control.
(c) In the event Executive's employment is terminated on the
basis of events in Sections 12(a)(iii) or (v), Executive shall be entitled to
receive within (60) days, upon occurrence of such event, the following:
(i) Base Salary through the date of the termination.
(ii) All Annual Cash Bonus calculated under Section 5(a)
(and pro-rated for the relevant part of the fiscal year) which would
have been payable through the date of termination; such amount shall be
estimated based on the last fiscal year's results and adjusted later
based on actual results, all such calculations to be performed by the
Auditors. Any additional amounts to be paid shall be paid within ninety
(90) days of the end of the respective fiscal year-end.
(iii) All restricted stock that has vested on or prior to
the date of termination.
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(iv) Any outstanding stock option (including any reload
rights contained therein) of any kind whatsoever vested on or prior to
the date of termination, for the remainder of the original term of the
option.
(v) Any amounts earned, accrued or owing to the Executive
but not yet paid, including any and all obligations to be performed
following termination under Sections 6-9.
(vi) Other or additional benefits in accordance with
applicable plans of programs of the Company.
(d) In the event that Executive becomes entitled to any
payments provided under Section 12 (the "Agreement Payments") and in the event
that any of the Agreement Payments are subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code (or any similar tax that may hereafter be
imposed), the Company shall pay or cause to be paid to Executive at the time
specified in this subsection an additional amount ( the "Gross-up Payment")
such that the net amount retained by Executive, after deduction of any Excise
Tax on the Total Payments (as hereinafter defined) and any federal, state and
local income tax and Excise Tax upon the Gross-up Payment provided for this
subsection, but before deduction for any federal, state or local income tax on
the Agreement Payments, shall be equal to the Total Payments. To the extent
that the Excise Tax is amended or modified, or any similar tax is hereinafter
imposed, the provisions of this subsection shall be applied mutatis mutandis to
effect the same desired result of providing Executive net of such additional
taxes the benefits of the payments in Section 12.
For purposes of determining whether any of the Agreement Payments will
be subject to the Excise Tax and the amount of such Excise Tax, (i) any other
payments or benefits received or to be received by Executive in connection with
a Change in Control of the Company or the Executive's termination of employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement
or agreement with the Company, or with any person whose actions result in a
Change in Control of the Company or any person affiliated with the Company or
such person) (which, together with the Agreement Payments, shall constitute the
"Total Payments") shall be treated as "parachute payments" within the meaning
of Section 280G(b)(2) of the Code, and all "excess parachute payments" within
the meaning of Section 280G(b)(1) of the Code shall be treated as subject to
the Excise Tax, unless in the opinion of Tax Counsel selected by the Auditors
such other payments or benefits (in whole or in part) do not constitute
parachute payments, or such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered within the
meaning of Section 280G(b)(4) of the Code in excess of the base amount within
the meaning of Section 280G(b)(3) of the Code or are otherwise not subject to
the Excise Tax, (ii) the amount of the Total Payments which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (1) the total amount
of the Total Payments or (2) the amount of excess parachute payments within the
meaning of Section 280G(b)(1) of the Code (after applying clause (i), above),
and (ii) the value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Auditors in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code.
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For purposes of determining the amount of the Gross-up payment,
Executive shall be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation for the calendar year in which the Gross-up
Payment is to be made and the applicable state and local income taxes at the
highest marginal rate of taxation for the calendar year in which the Gross-up
Payment is to be made, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes. . In
the event that the Excise Tax is determined to exceed the amount taken into
account hereunder at the time the Gross-up Payment is made (including by reason
of any payment the existence or amount of which cannot be determined at the
time of the Gross-up Payment), the Company shall make or cause to be made an
additional Gross-up Payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
The Gross-up Payment or portion thereof provided for above shall be paid
not later than the thirtieth (30) day following payment of any amounts under
Section 12; provided, however, that if the amount of such Gross-up payment or
portion thereof cannot be finally determined on or before such day, the Company
shall pay or cause to be paid to Executive on such day an estimate, as
determined by the Auditors, of the minimum amount of such payments and shall
pay or cause to be paid the remainder of such payments (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the
amount thereof can be determined, but in no event later than the forty-fifth
day after payment of any amounts under Section 12. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan to Executive, repayable on
the fifth day after demand by the Company (together with interest at the rate
provided in Section 1274(b)(2)(B) of the Code).
(e) No Mitigation: No Offset. In the event of any termination
of employment under this Section 12, the Executive shall be under no obligation
to seek other employment and there shall be no offset against amounts due the
Executive under this Agreement on account of any remuneration attributable to
any subsequent employment that he may obtain except as specifically provided in
this Section 12.
(f) Nature of Payments. Any amounts due under this Section 12
are in the nature of severance payments considered to be reasonable by the
Company and are not in the nature of a penalty.
13. Confidentiality.
(a) During the Term of Employment and thereafter, the
Executive shall not disclose to anyone or make use of any trade secret or
proprietary or confidential information of the Company, including such trade
secret or proprietary or confidential information of any customer or other
entity to which the Company owes an obligation not to disclose such
information, which he acquires during the Term of Employment, including but not
limited to records kept in the ordinary course of business, except (i) as such
disclosure or use may be required or appropriate in connection with his work as
an Executive of the Company or (ii) when required to do so by a court of law,
by any governmental agency having supervisory authority over the business of
the Company or by any administrative or legislative body
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<PAGE> 14
(including a committee thereof) with apparent jurisdiction to order him to
divulge, disclose or make accessible such information; provided, however, that
no trade secret or proprietary or confidential information shall be required to
be treated as such to the extent such portions of such information are or
become generally available to the public other than as a result of a disclosure
by Executive or other Company representative bound by an agreement or duty of
confidentiality.
14. Indemnification.
(a) Defined Terms. For purposes of Sections 14 through 19
inclusive, the following terms shall have the meaning given here:
(i) "Corporate Status" shall mean the status of a person
who is or was a director, officer or fiduciary of the Company or of any
other corporation, partnership, joint venture, trust, executive benefit
plan or other enterprise which such person is or was serving at the
express written request of the Company.
(ii) "Disinterested Director" shall mean a director of the
Company who is not and was not a party to the Proceeding in respect of
which indemnification is sought by the Executive.
(iii) "Enterprise" shall mean the Company and any other
corporation, partnership, joint venture, trust, executive benefit plan
or other enterprise which the Executive is or was serving as a director,
officer or fiduciary at the express written request of the Corporation.
(iv) "Expenses" shall include all reasonable attorneys'
fees and costs, retainers, court costs, transcript costs, fees of
experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees, and
all other disbursements or expenses of the types customarily incurred in
connection with prosecuting, defending, preparing to prosecute or
defend, appealing, settling, investigating or being or preparing to be a
witness in a Proceeding.
(v) "Good Faith" shall mean the Executive's having acted
in good faith and in a manner the Executive reasonably believed to be
in, or not opposed to, the best interests of the Corporation, and, with
respect to any criminal Proceeding, having had no reasonable cause to
believe his conduct was unlawful.
(vi) "Independent Counsel" means a law firm, or a member
of a law firm, that is experienced in matters of corporate law and
neither presently is, and has not in the past five (5) years has been,
retained to represent: (i) the Company or Executive in any matter
material to either party, or (ii) any other party to the Proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding
the foregoing, the term "Independent Counsel" shall not include any
person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in
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representing either the Company or the Executive in an action to
determine the Executive's rights under this Agreement.
(vii) "Proceeding" includes any action, suit arbitration,
alternate dispute resolution mechanism, investigation, administrative
hearing or any other actual, threatened or completed proceeding, whether
civil, criminal, administrative or investigative, other than one
initiated by the Executive.
(b) In General. In connection with any Proceeding involving
acts or omissions occurring on or subsequent to January 6, 1987, the Company
shall indemnify and advance Expenses to the Executive as provided in this
Agreement to the fullest extent permitted by applicable law in effect on the
Effective Date and to such greater extent as applicable law may thereafter from
time to time permit.
(c) Proceedings Other Than Proceedings by or in the Right of
Company. If, by reason of the Executive's Corporate Status, the Executive is or
is threatened to be made a party to any Proceeding other than a Proceeding by
or in the right of the Company, the Company shall indemnify the Executive
against Expenses, judgments, penalties, fines and amounts paid in settlement or
actually and reasonably incurred by the Executive or on the Executive's behalf
in connection with such Proceeding or any claim, issue or matter therein if the
Executive acted in Good Faith.
(d) Proceedings by or in the Right of Company. If, by reason
of the Executive's Corporate Status, the Executive is, or is threatened to be
made a party to any Proceeding brought by or in the right of the Company to
procure a judgment in its favor, the Executive shall be indemnified against
Expenses, judgments, penalties, fines and amounts paid in settlement, or
actually and reasonably incurred by the Executive or on the Executive's behalf
in connection with such Proceeding or any claim, issue or matter therein if the
Executive acted in Good Faith. Notwithstanding the foregoing, no such
indemnification shall be made in respect of any claim, issue or matter in such
Proceeding as to which the Executive shall have been adjudged to be liable to
the Company if applicable law prohibits such indemnification; provided,
however, that if applicable law so permits, indemnification shall nevertheless
be made by the Company in such event if and only to the extent that the Court
of Chancery of the State of Delaware or the court in which such Proceeding
shall have been brought or is pending shall determine.
(e) Indemnification of a Party who is Wholly or Partly
Successful. Notwithstanding any other provision of this Agreement, to the
extent that the Executive is, by reason of the Executive's Corporate Status, a
party to and is successful on the merits or otherwise, as to one or more but
less than all claims, issues or matters in such Proceeding the Company shall
indemnify the Executive against all Expenses, judgments, penalties, fines and
amounts paid in settlement, or actually and reasonably incurred by the
Executive or on the Executive's behalf in connection with each successfully
resolved claim, issue or matter, except as permitted by law. For purposes of
this paragraph (e) and without limitation, the termination of any claim, issue
or matter, in such a Proceeding by dismissal, with or without prejudice, shall
be deemed to be a successful result as to such claim, issue or matter, so long
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as there has been no finding (either adjudicated or pursuant to this Section
14) that the Executive did not act in Good Faith.
(f) Indemnification for Expenses of a Witness. Notwithstanding
any other provision of this Agreement, to the extent that the Executive is, by
reason of the Executive's Corporate Status, a witness in any Proceeding, the
Executive shall be indemnified against all Expenses actually and reasonably
incurred by the Executive or on the Executive's behalf in connection therewith.
(g) Successors. The indemnification and advancement of
expenses provided by, or granted pursuant to, this Agreement shall continue as
to the Executive and shall inure to the benefit of the heirs, executors and
administrators of the Executive.
15. Advancement of Expenses.
Notwithstanding any provision to the contrary in this Agreement, the
Company shall advance all reasonable Expenses, which, by reason of the
Executive's Corporate Status, were incurred by or on behalf of the Executive in
connection with any Proceeding, within twenty (20) days after the receipt by
the Company of a statement or statements from the Executive requesting such
advance or advances, whether prior to or after final disposition of such
Proceeding. Such statement or statements shall reasonably evidence the Expenses
incurred by the Executive and shall include or be preceded or accompanied by an
undertaking by or on behalf of the Executive to repay any Expenses if it shall
ultimately be determined that the Executive is not entitled to be indemnified
against such Expenses. Any advance and undertakings to repay pursuant to this
Section 15 shall be unsecured and interest-free.
16. Procedures for Determination of Entitlement to Indemnification.
(a) Initial Request. To obtain indemnification under this
Agreement, the Executive shall submit to the Company a written request,
including therein or therewith such documentation and information as is
reasonably available to the Executive and which is reasonably necessary to
determine whether and to what extent the Executive is entitled to
indemnification. The Secretary of the Company shall promptly advise the Board
in writing that the Executive has requested indemnification .
(b) Method of Determination. If required by applicable law, a
determination with respect to the Executive's entitlement to indemnification
shall be made as follows;
(i) if a Change in Control has occurred, unless the
Executive shall request in writing that such determination be made in
accordance with paragraph (b) (ii) of this Section 16, the determination
shall be made by Independent Counsel in a written opinion to the Board,
a copy of which shall be delivered to the Executive;
(ii) if a Change in Control has not occurred the
determination shall be made by the Board by a majority vote of a quorum
consisting of Disinterested Directors. In the event that a quorum of the
Board consisting of Disinterested Directors is not obtainable or, even
if obtainable, such quorum of Disinterested Directors so directs,
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the determination shall be made by Independent Counsel in a written
opinion to the Board, a copy of which shall be delivered to the
Executive.
(c) Selection. Payment and Discharge of Independent Counsel.
In the event the determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to Section 16(b) of this Agreement, the
Independent Counsel shall be selected, paid and discharged in the following
manner:
(i) If a Change in Control has not occurred the
Independent Counsel shall be selected by the Board and the Company shall
give written notice to the Executive advising the Executive of the
identity of the Independent Counsel so selected.
(ii) If a Change in Control has occurred, the Independent
Counsel shall be selected by the Executive (unless the Executive shall
request that such selection be made by the Board, in which event clause
(i) of this Section shall apply), and the Executive shall give written
notice to the Company advising it of the identity of the Independent
Counsel so selected.
(iii) Following the initial selection described in clauses
(i) and (ii) of this Section 16(c), the Executive or the Corporation, as
the case may be, may, within seven (7) days after such written notice of
selection has been given, deliver to the other party a written objection
to such selection. Such objection may be asserted only on the ground
that the Independent Counsel so selected does not meet the requirements
of "Independent Counsel" and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and
timely objection, the person so selected shall act as Independent
Counsel. If such written objection is made, the Independent Counsel so
selected may not serve as Independent Counsel unless and until a court
has determined that such objection is without merit.
(iv) Either the Company or the Executive may petition the
Court of Chancery of the State of Delaware or other court of competent
jurisdiction if the parties have been unable to agree on the selection
of Independent Counsel within twenty (20) days after submission by the
Executive of a written request for indemnification pursuant to Section
16(a) of this Agreement. Such petition may request a determination
whether an objection to the party's selection is without merit and/or
seek the appointment as Independent Counsel of a person selected by the
Court shall designate. A person so appointed shall act as Independent
Counsel under Section 16(b) of this Agreement.
(v) The Company shall pay any and all reasonable fees and
expenses of Independent Counsel incurred by such Independent Counsel in
connection with acting pursuant to this Agreement, and the Company shall
pay all reasonable fees and expenses incident to the procedures of this
Section 16(c), regardless of the manner in which such Independent
Counsel was selected or appointed.
(vi) Upon the due commencement of any judicial proceeding
or arbitration pursuant to Section 18(b) of this Agreement, Independent
Counsel shall be
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discharged and relieved of any further responsibility in such capacity
(subject to the applicable standards of professional conduct then
prevailing).
(d) Cooperation. The Executive shall cooperate with the
person, persons or entity making the determination with respect to the
Executive's entitlement to indemnification under this Agreement, including
providing to such person, persons or entity upon reasonable advance request any
documentation or information which is not privileged or otherwise protected
from disclosure and which is reasonably available to the Executive and
reasonably necessary to, such determination. Any costs or expenses (including
attorneys' fees and disbursements) incurred by the Executive in so cooperating
with the person, persons or entity making such determination shall be borne by
the Company(irrespective of the determination as to the Executive's entitlement
to indemnification) and the Company hereby indemnifies and agrees to hold the
Executive harmless therefrom.
(e) Payment. If it is determined that the Executive is
entitled to indemnification, payment to the Executive shall be made within ten
(10) days after such determination.
17. Presumption and Effect of Certain Proceedings.
(a) Burden of Proof. In making a determination with respect to
entitlement of indemnification hereunder, the person or persons or entity
making such determination shall presume that the Executive is entitled to
indemnification under this Agreement if the Executive has submitted a request
for indemnification in accordance with Section 16(a) of this Agreement, and the
Company shall have the burden of proof to overcome that presumption in
connection with the making of any person, persons or entity of any
determination contrary to that presumption.
(b) Effect of Other Proceedings. The termination of any
Proceeding or of any claim, issue or matter therein, by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not (except as otherwise expressly provided in this Agreement) of itself
adversely affect the right of the Executive to indemnification or create a
presumption that the Executive did not act in Good Faith.
(c) Reliance as Safe Harbor. For purposes of any determination
of Good Faith, the Executive shall be deemed to have acted in Good Faith if the
Executive's action is based on the records or books of account of the
Enterprise, including financial statements, or on information supplied to the
Executive by the officers of the Enterprise in the course of their duties, or
on information or records given or reports made to the Enterprise by an
independent certified public accountant or by an appraiser or other expert
selected with reasonable care by the Enterprise. The provisions of this Section
17(c) shall not be deemed to be exclusive or to limit in any way the other
circumstances in which the Executive may be deemed to have met the applicable
standard of conduct set forth in this Agreement.
(d) Actions of Others. The knowledge and/or actions, or
failure to act, of any director, officer, agent or Executive of the Enterprise
shall not be imputed to the Executive for purposes of determining the right to
indemnification under this Agreement.
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18. Remedies of the Executive.
(a) Application. This Section 18 shall apply in the event of a
dispute. For purposes of this Section, "Dispute" shall mean any of the
following events:
(i) a determination is made pursuant to Section 16 of this
Agreement that the Executive is not entitled to indemnification under
this Agreement;
(ii) advancement of Expenses is not timely made pursuant
to Section 15 of this Agreement;
(iii) the determination of entitlement to be made pursuant
to Section 16(b) of this Agreement has not been made within ninety (90)
days after receipt by the Company of the request for indemnification;
(iv) payment of indemnification is not made pursuant to
Section 14(f) of this Agreement within ten (10) days after receipt by
the Company of a written request therefor; or
(v) payment of indemnification is not made within ten (10)
days after a determination has been made that the Executive is entitled
to indemnification or such determination is deemed to have been made
pursuant to Section 16 of this Agreement.
(b) Adjudication. In the event of a Dispute, the Executive
shall be entitled to an adjudication in an appropriate court of the State of
Delaware, or in any other court of competent jurisdiction, of the Executive's
entitlement to such indemnification or advancement of Expenses. Alternatively,
the Executive at the Executive's option, may seek an award in arbitration to be
conducted by a three person arbitration panel pursuant to the rules then
obtaining of the American Arbitration Association. The Executive shall commence
such proceeding seeking an adjudication or an award in arbitration within one
hundred eighty (180) days following the date on which the Executive first has
the right to commence such proceeding pursuant to this Section 18(b). The
Company shall not oppose the Executive's right to seek any such adjudication or
award in arbitration.
(c) De Novo Review. In the event that a determination shall
have been made pursuant to Section 16 of this Agreement that the Executive is
not entitled to indemnification, any judicial proceeding or arbitration
commenced pursuant to this Section 18 shall be conducted in all respects as a
de novo trial, or arbitration, on the merits and the Executive shall not be
prejudiced by reason of that adverse determination. In any such proceeding or
arbitration, the Company shall have the burden of proving that the Executive is
not entitled to indemnification or advancement of Expenses, as the case may be.
(d) Company Bound. If a determination shall have been made or
deemed to have been made pursuant to Section 16 of this Agreement that the
Executive is entitled to indemnification, the Company shall be bound by such
determination in any judicial
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proceeding or arbitration absent (i) a misstatement by the Executive of a
material fact, or a failure to disclose facts which would make Executive's
statement not materially misleading, in connection with the request for
indemnification or (ii) a prohibition of such indemnification under applicable
law.
(e) Procedures Valid. The Company shall be precluded from
asserting in any judicial proceeding or arbitration commenced pursuant to this
Section 18 that the procedures and presumptions of Sections 16 and 17 are not
valid, binding and enforceable and shall stipulate in any such court or before
any such arbitrators that the Company is bound by all the provisions of this
Agreement.
(f) Expenses of Adjudication. In the event that the Executive,
pursuant to this Section 18, seeks a judicial adjudication of or an award in
arbitration to enforce the Executive's rights under, or to recover damages for
breach of, this Agreement, the Executive shall be entitled to recover from the
Corporation, and shall be indemnified by the Company against, any and all
Expenses actually and reasonably incurred by the Executive in such adjudication
or arbitration, but only if and to the extent that the Executive prevails
therein.
19. Non-Exclusivity, Subrogation.
(a) Non-Exclusivity. The rights of Executive to be indemnified
and to receive advancement of Expenses as provided by this Agreement shall not
be deemed exclusive of any other rights to which the Executive may at any time
be entitled under applicable law, the Certificate of Incorporation, the By-
Laws, any agreement, a vote of stockholders, a resolution of directors or
otherwise. No amendment, alteration, rescission or replacement of this
Agreement or any provision hereof shall be effective as to the Executive with
respect to any action taken or omitted by such the Executive in the Executive's
Corporate Status prior to such amendment, alteration, rescission or
replacement.
(b) Subrogation. In the event of any payment under this
Agreement, the Company shall be subrogated to the extent of such payment to all
of the rights of recovery of the Executive, who shall execute all papers
required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring
suit to enforce such rights.
(c) No Duplicative Payment. The Company shall not be liable
under this Agreement to make any payment of amounts otherwise actually received
such payment under any insurance policy, contract, agreement or otherwise.
20. Director and Officer Insurance.
The Company agrees to continue and maintain a directors and officers'
liability insurance policy covering the Executive to the extent the Company
provides such coverage for its other executive officers.
20
<PAGE> 21
21. Effect of Agreement on Other Benefits.
Except as specifically provided in this Agreement, the existence of this
Agreement shall not prohibit or restrict the Executive's entitlement to full
participation in the executive benefit and other plans or programs in which
senior executives of the Company are eligible to participate, or restrict
Executive from the benefits of any other agreements.
22. Assignability: Binding Nature.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and assigns. No rights or obligations of the Company under this Agreement may
be assigned or transferred by the Company except that such rights or
obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company, provided
that the assignee or transferee is the successor to all or substantially all of
the assets of the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained in this
Agreement, by written contract. The Company further agrees that, in the event
of a sale of assets or liquidation as described in the preceding sentence, it
shall take whatever action it legally can in order to cause such assignee or
transferee to expressly assume the liabilities, obligations and duties of the
Company hereunder. No rights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive other than his rights
to compensation and benefits.
23. Representation.
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it or
and any other person, firm or organization. The Executive represents that he
knows of no agreement between him and any other person, firm or organization
that would be violated by the performance of his obligations under this
Agreement.
24. Entire Agreement.
This Agreement contains the entire understanding and agreement between
the Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto. This Agreement
hereby amends and replaces the Amended Employment Agreement effective October
1, 1996.
25. Amendment or Waiver.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such
other Party shall be deemed a waiver of a similar or dissimilar condition or
provision at the same or any prior or subsequent time. Any waiver
21
<PAGE> 22
must be in writing and signed by the Executive or an authorized officer of the
Company, as the case may be.
26. Severability.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and
shall remain in full force and effect to the fullest extent permitted by law.
27. Survivorship.
The respective rights and obligations of the Parties hereunder shall
survive any termination of this Agreement.
28. Beneficiaries/References.
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive's death
by giving the Company written notice thereof. In the event of the Executive's
death or a judicial determination of his incompetence, reference in this
Agreement to the Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.
29. Governing Law/Jurisdiction.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of Delaware without reference to principles of
conflict of laws.
30. Resolution of Disputes.
Any disputes arising under or in connection with this Agreement
(including any action by Executive to enforce compliance or specific
performance with respect to this Agreement), shall at the election of the
Executive or the Company, be resolved by binding arbitration, to be held in New
York, New York in accordance with the rules and procedures of the American
Arbitration Association before three arbitrators. Judgment upon the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. Nothing herein shall preclude either party from seeking provisional
remedies in aid of arbitration, such as a preliminary injunction, from a court
of competent jurisdiction. Costs of the arbitration or litigation, including,
without limitation, reasonable attorneys' fees of both Parties, shall be borne
by the Company. Pending the resolution of any arbitration or court proceeding,
the Company shall continue payment of all amounts due the Executive under this
Agreement consistent with past practice and all benefits to which the Executive
is entitled at the time the dispute arises.
22
<PAGE> 23
31. Notices.
Any notice given to a Party shall be in writing and shall be deemed to
have been given when delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly addressed to the Party
concerned at the address indicated below or to such changed address as such
Party may subsequently give such notice of:
If to the Company:
Nabors Industries, Inc.
515 West Greens Road, Suite 1200
Houston, Texas 77067
Attention: Chief Executive Officer
If to the Executive:
Mr. Anthony G. Petrello
111 North Post Oak Lane, Suite 445
Houston, Texas 77024
32. Headings.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
33. Counterparts.
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
Nabors Industries, Inc.
/s/ JACK WEXLER
-------------------------
Jack Wexler
By: /s/ EUGENE M. ISENBERG
-------------------------
Eugene M. Isenberg
/s/ ANTHONY G. PETRELLO
-------------------------
Anthony G. Petrello
23
<PAGE> 1
EXHIBIT 11
NABORS INDUSTRIES, INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended March 31, Six months ended March 31,
1997 1996 1997 1996
-------- ------- -------- -------
Primary:
<S> <C> <C> <C> <C>
Average shares outstanding 95,914 84,819 94,073 84,592
Net effect of dilutive stock options and warrants-based
on the treasury stock method using
average market price 5,344 7,644 6,059 6,868
-------- ------- -------- -------
Total 101,258 92,463 100,132 91,460
-------- ------- -------- -------
Net income $ 21,441 $16,822 $ 41,556 $32,084
-------- ------- -------- -------
Per share amount $ .21 $ .18 $ .42 $ .35
-------- ------- -------- -------
Fully Diluted:
Average shares outstanding 95,914 84,819 94,073 84,592
Net effect of dilutive stock options and warrants-based
on the treasury stock method using
quarter-end market price, if higher than
average market price 5,571 8,873 6,485 8,873
Assumed conversion of 5% convertible notes (1) 9,517 -- 9,517 --
-------- ------- -------- -------
Total 111,002 93,692 110,075 93,465
-------- ------- -------- -------
Net income $ 21,441 $16,822 $ 41,556 $32,084
Add 5% convertible note interest, net
of federal income tax effect (1) 1,402 -- 2,804 --
-------- ------- -------- -------
Total $ 22,843 $16,822 $ 44,360 $32,084
-------- ------- -------- -------
Per share amount $ .21 $ .18 $ .40 $ .34
-------- ------- -------- -------
</TABLE>
(1) The convertible securities are not included in the fully diluted earnings
per share calculation for the three months and six months ended March 31,
1996 because they had not been issued at that time.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 68,093
<SECURITIES> 5,952
<RECEIVABLES> 201,887
<ALLOWANCES> 0
<INVENTORY> 20,000
<CURRENT-ASSETS> 323,692
<PP&E> 920,583
<DEPRECIATION> 281,272
<TOTAL-ASSETS> 1,006,711
<CURRENT-LIABILITIES> 166,644
<BONDS> 230,497
0
0
<COMMON> 9,680
<OTHER-SE> 564,041
<TOTAL-LIABILITY-AND-EQUITY> 1,006,711
<SALES> 455,760
<TOTAL-REVENUES> 455,760
<CGS> 340,104
<TOTAL-COSTS> 340,104
<OTHER-EXPENSES> 63,842
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,332
<INCOME-PRETAX> 68,509
<INCOME-TAX> 26,953
<INCOME-CONTINUING> 41,556
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,556
<EPS-PRIMARY> .42
<EPS-DILUTED> .40
</TABLE>
