<PAGE> 1
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-18437
POOL ENERGY SERVICES CO.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-0263755
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10375 RICHMOND AVENUE
HOUSTON, TEXAS 77042
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 954-3000
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED 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 ___
The number of shares outstanding of each of the issuer's classes of
common stock, as of March 31, 1996: Common Stock, no par value - 14,091,183
shares
===============================================================================
<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS
POOL ENERGY SERVICES CO.
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED)
(IN THOUSANDS EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 81,682 $ 62,854
Earnings Attributable to Unconsolidated Affiliates . . . . . . . . . . . 658 775
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82,340 63,629
----------- -----------
Costs and Expenses:
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . 63,581 51,178
Selling, general and administrative expenses . . . . . . . . . . . . 11,298 9,362
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . 4,253 3,335
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,132 63,875
----------- -----------
Other Income (Expense) - Net . . . . . . . . . . . . . . . . . . . . . . 164 481
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645 151
----------- -----------
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . 2,727 84
Income Tax Provision (Credit) . . . . . . . . . . . . . . . . . . . . . . 1,304 (131)
----------- -----------
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,423 $ 215
=========== ===========
Earnings Per Share of Common Stock . . . . . . . . . . . . . . . . . . . $ .10 $ .02
=========== ===========
Average Common Shares Outstanding . . . . . . . . . . . . . . . . . . . . 14,074,006 13,561,440
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
2
<PAGE> 3
POOL ENERGY SERVICES CO.
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
----------------------------
1996 1995
--------- ---------
<S> <C> <C>
Operating Activities:
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,423 $ 215
Noncash items included above:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 4,253 3,335
Deferred income taxes (credit) . . . . . . . . . . . . . . . . . . 940 (266)
Undistributed earnings of unconsolidated affiliates . . . . . . . . (674) (776)
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . (102) (297)
Refund (payment) of pre-1990 personal injury and property
damage claims . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 (20)
Payment for lease of manufacturing facility . . . . . . . . . . . . . (537) (537)
Other - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (262) (39)
Net effect of changes in operating working capital . . . . . . . . . (4,427) 942
--------- ---------
Net Cash Flows Provided by Operating Activities . . . . . . . . . 618 2,557
--------- ---------
Investing Activities:
Property additions . . . . . . . . . . . . . . . . . . . . . . . . . (5,356) (8,340)
Expenditures for the acquisition of GPC, including acquisition costs (68) -
Proceeds from disposition of property, plant and equipment . . . . . 276 329
Cash dividends received from unconsolidated affiliates . . . . . . . - 98
Other-net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 270 207
--------- ---------
Net Cash Flows Used in Investing Activities . . . . . . . . . . . (4,878) (7,706)
--------- ---------
Financing Activities:
Proceeds and repayments of short-term borrowings - net . . . . . . . - 5,200
Proceeds from exercise of stock options . . . . . . . . . . . . . . . 203 -
Payments for debt financing costs . . . . . . . . . . . . . . . . . . (196) (13)
Proceeds from project financing . . . . . . . . . . . . . . . . . . . 6,500 -
Principal payments on project financing . . . . . . . . . . . . . . . (554) -
Principal payments on long-term debt . . . . . . . . . . . . . . . . (1,008) (31)
--------- ---------
Net Cash Flows Provided by Financing Activities . . . . . . . . . 4,945 5,156
--------- ---------
Net Increase in Cash and Cash Equivalents . . . . . . . . . . . . . . . . 685 7
Cash and Cash Equivalents at January 1, . . . . . . . . . . . . . . . . . 5,492 2,560
--------- ---------
Cash and Cash Equivalents at March 31, . . . . . . . . . . . . . . . . . $ 6,177 $ 2,567
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
POOL ENERGY SERVICES CO.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT NUMBER OF SHARES)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
--------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . $ 6,177 $ 5,492
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 163
Accounts and notes receivable (net of allowance for doubtful accounts of
$1,153 and $1,059) . . . . . . . . . . . . . . . . . . . . . . . . . . 58,647 54,984
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,925 10,516
Deferred income tax asset (net of $319 and $407 allowance) . . . . . . . 3,865 3,469
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 6,839 3,525
--------- ---------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . 86,619 78,149
Property, Plant and Equipment - Net . . . . . . . . . . . . . . . . . . . . . 125,760 124,024
Investment in and Noncurrent Receivables from Unconsolidated Affiliates . . . 26,673 26,001
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,321 11,174
Noncurrent Deferred Income Tax Asset (net of $6,075 and $6,314 allowance) . . 4,728 5,528
Noncurrent Receivables (net of allowance for doubtful accounts of $2,230 and
$2,824) and Other Assets . . . . . . . . . . . . . . . . . . . . . . . . 3,105 2,594
Noncurrent Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . . . 931 973
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 259,137 $ 248,443
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . $ 6,197 $ 4,785
Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 22,726 24,123
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,344 19,615
Accrued taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,346 2,647
--------- ---------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . 57,613 51,170
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,310 15,784
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,480 2,323
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,081 43,139
Shareholders' Equity:
Common stock, no par value:
25,000,000 shares authorized; 14,091,183 and 14,063,983 shares
issued and outstanding . . . . . . . . . . . . . . . . . . . . . . . 134,641 134,438
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,334 1,911
Cumulative foreign currency translation adjustments . . . . . . . . . . . (322) (322)
--------- ---------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . 137,653 136,027
--------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 259,137 $ 248,443
========= =========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
POOL ENERGY SERVICES CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements included in this report
are unaudited but in the opinion of management include all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the financial information for the periods indicated. All
dollar amounts in the tabulations in the notes to the financial statements are
stated in thousands unless otherwise indicated. Certain reclassifications have
been made in the 1995 financial statements to conform with the 1996
presentation. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
(2) UNCONSOLIDATED AFFILIATES
The following table sets forth certain summarized financial information of
the Company's unconsolidated affiliates as shown by the financial statements of
the affiliates.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
------------------------
1996 1995
-------- ---------
<S> <C> <C>
Revenues:
Pool Arabia, Ltd. . . . . . . . . . . . . . $ 6,718 $ 8,057
Antah Drilling Sdn. Bhd. . . . . . . . . . 1,048 1,043
Pool Santana, Limited . . . . . . . . . . . 960 1,236
Intairdril Oman L.L.C. . . . . . . . . . . 265 118
-------- ---------
Total . . . . . . . . . . . . . . . . . $ 8,991 $ 10,454
======== =========
Gross profit (a):
Pool Arabia, Ltd. . . . . . . . . . . . . . $ 2,346 $ 3,133
Antah Drilling Sdn. Bhd. . . . . . . . . . 596 609
Pool Santana, Limited . . . . . . . . . . . 333 511
Intairdril Oman L.L.C. . . . . . . . . . . 115 79
-------- ---------
Total . . . . . . . . . . . . . . . . . $ 3,390 $ 4,332
======== =========
Net income (loss):
Pool Arabia, Ltd. . . . . . . . . . . . . . $ (291) $ 415
Antah Drilling Sdn. Bhd. . . . . . . . . . 59 (27)
Pool Santana, Limited . . . . . . . . . . . 89 151
Intairdril Oman L.L.C. . . . . . . . . . . 36 (242)
-------- ---------
Total . . . . . . . . . . . . . . . . . $ (107) $ 297
======== =========
</TABLE>
- -----------
(a) Gross profit is computed as revenues less operating expenses
(which excludes depreciation and general and administrative
expenses).
5
<PAGE> 6
POOL ENERGY SERVICES CO.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
Earnings attributable to unconsolidated affiliates is summarized below:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
----------------------
1996 1995
-------- --------
<S> <C> <C>
The Company's portion of net income (loss) . . . . . . . . . . . . . . . . . $ (57) $ 154
Adjustment to depreciation recorded by affiliates to the Company's basis . . 354 224
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377 398
-------- --------
Equity in income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674 776
Management fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 9
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 15
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16) (25)
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 658 $ 775
======== ========
</TABLE>
In April 1996, the Company acquired the 51% interest not already owned by
the Company in Pool Santana, Limited, a Trinidad corporation, for $1.2 million
in cash. The assets of the Company's Trinidad operation consist primarily of a
platform workover rig and its related equipment.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - QUARTERS ENDED MARCH 31, 1996 AND 1995
For the quarter ended March 31, 1996, the Company had consolidated net
income of $1.4 million, reflecting stronger overall market conditions than
those prevailing in the first quarter of 1995, for which the Company reported
net income of $0.2 million. The average price per barrel of West Texas
Intermediate crude oil was higher by approximately 7% in the first quarter of
1996 than in the first quarter of 1995, and average natural gas prices
increased approximately 105% comparing the same periods. Results from the
Company's domestic operations improved primarily due to higher activity for the
Company's jackup rigs and increased rates for its platform rigs located in the
Gulf of Mexico, increased land drilling activity in Alaska and the inclusion of
results from rigs and equipment acquired in the June 1995 Golden Pacific Corp.
("GPC") acquisition. The Company's domestic onshore operation reported first
quarter well-servicing rig hours 31% higher than in the corresponding quarter
of 1995, primarily due to the inclusion of rigs acquired in the GPC
acquisition. The Company's offshore operation in the Gulf of Mexico
experienced rig utilization of 66% in the first quarter of 1996, compared to
57% during the comparable period of 1995; average rig rates were also 26%
higher. Earnings from the Company's Alaska operations increased from the first
quarter of 1995 due to all of its three Arctic land drilling rigs operating
during the first quarter of 1996, whereas only two were working and one was on
standby during the comparable period of 1995. Results from the Company's
international operations decreased primarily due to lower rig activity by its
unconsolidated affiliate in Saudi Arabia and reduced activity in Tunisia and
Oman, offset partly by results from a new offshore platform workover rig in
Australia that began contributing in the second half of 1995.
Revenues. Revenues were $81.7 million in the first quarter of 1996, a 30%
increase compared with revenues of $62.9 million in the first quarter of 1995.
This increase was attributable to the inclusion of revenues from rigs and
equipment acquired in the GPC acquisition, higher activity for the jackup rigs
and rates for the platform rigs located in the Gulf of Mexico, as well as
higher land drilling activity in Alaska. Domestic onshore well-servicing and
related services revenues increased $11.2 million or 36% in the first quarter
of 1996 from the corresponding quarter of 1995, chiefly as a result of the GPC
acquisition. Domestic onshore rig utilization was 53% in both the first
quarter of 1996 and the first quarter of 1995. Gulf of Mexico offshore
workover and drilling revenues increased $5.5 million or 77%, and Alaska
operations revenues increased $2.6 million or 40%. International operations
revenues were unchanged from the first quarter of 1995 as the revenues
attributable to the new offshore platform workover rig in Australia were offset
by the absence of a rig contract in Tunisia, lower rig utilization in Oman and
the completion of a land drilling contract in Ecuador. Revenues for
international operations do not include revenues from the Company's foreign
joint ventures, which are unconsolidated affiliates.
Earnings Attributable to Unconsolidated Affiliates. Earnings attributable
to unconsolidated affiliates were $0.7 million in the first quarter of 1996
compared to $0.8 million in the first quarter of 1995. Earnings attributable
to Pool Arabia, Ltd., the Company's Saudi Arabia affiliate, decreased $0.4
million from the first quarter of 1995 primarily as a result of the completion
in March 1995 of a land drilling contract in Saudi Arabia. The decrease in the
earnings of Pool Arabia, Ltd. was mostly offset by better operating results
from the joint ventures located in Oman and Malaysia.
Costs and Expenses. The Company's costs and expenses were $79.1 million
in the first quarter of 1996, a 24% increase compared to costs and expenses of
$63.9 million in the corresponding quarter of 1995. Such increase was
attributable to the inclusion of costs and expenses related to the rigs and
equipment obtained in the GPC acquisition as well as costs associated with
higher levels of activity in the Gulf of Mexico and in Alaska.
Interest Expense. Interest expense was $0.5 million higher in the first
quarter of 1996 than in the corresponding quarter of 1995 due primarily to
borrowings related to the term loan entered into in April 1995 that were used
to refinance the 1994 acquisition of the 60.7% partnership interest in Pool
Arctic Alaska, the
7
<PAGE> 8
notes payable related to the GPC acquisition and the term loan used to
refinance the construction costs of the new offshore platform workover rig in
Australia, offset partly by lower average borrowings under the Company's
syndicated bank revolving line of credit.
Income Taxes. The Company recorded income tax expense of $1.3 million in
the first quarter of 1996 (which included $0.9 million of deferred taxes) on
income before income taxes of $2.7 million, compared to an income tax benefit
of $0.1 million on income before income taxes of $0.1 million in the first
quarter of 1995. This net increase of $1.4 million of income tax expense was
due primarily to stronger domestic operating results in the first quarter of
1996 compared to the first quarter of 1995. The Company's interim period tax
expense is determined by utilizing the aggregate of estimated annual effective
tax rates for each of the Company's domestic and foreign locations.
FINANCIAL CONDITION AND LIQUIDITY
Cash Flows. The Company had cash and cash equivalents of $6.2 million at
March 31, 1996 compared to $5.5 million at December 31, 1995. Working capital
was $29.0 million and $27.0 million at March 31, 1996 and December 31, 1995,
respectively. The Company used a net $4.9 million for investing activities in
the first quarter of 1996, primarily for capital expenditures of $5.4 million,
offset partly by $0.3 million of proceeds from dispositions of equipment. The
Company used a net $7.7 million for investing activities in the first quarter
of 1995, primarily for capital expenditures of $8.3 million, offset partly by
$0.3 million of proceeds from disposition of equipment. The Company
anticipates that 1996 capital expenditures will consist of (i) approximately
$18 million for capital additions and improvements to its existing rig fleet
and (ii) approximately $7.5 million for an extensive refurbishment and upgrade
of an idle platform drilling rig in the Gulf of Mexico. It is anticipated that
these expenditures will be financed chiefly through internally generated funds,
although the Company may avail itself of borrowings as needed. Acquisitions of
additional assets and businesses are expected to continue to be an important
part of the Company's strategy for growth. The Company would, under certain
circumstances, need to obtain additional debt and/or equity financing to fund
such acquisitions.
Credit Facilities and Long-Term Debt. The Company has available a
syndicated bank line of credit to finance temporary working capital
requirements and to support the issuance of letters of credit. The maximum
availability is the lesser of (i) $35 million, or (ii) a calculated amount
based on a percentage of domestic receivables meeting certain criteria. At
March 31, 1996, the maximum availability was $35 million, of which none had
been drawn in cash and $13.4 million was being utilized to support the issuance
of letters of credit.
In January 1996 the Company received $6.5 million under a four-year term
loan agreement in order to refinance the construction costs incurred during
1995 to build a new offshore platform workover rig for a contract in Australia.
During the first quarter of 1996 the Company made scheduled principal payments
on this project financing of $0.6 million.
During the first quarter of 1996, the Company made scheduled principal
payments on other long-term debt of $1.0 million.
8
<PAGE> 9
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 2, 1996 the Company held its Annual Meeting of Shareholders. At
such meeting the following matters were voted upon:
(i) The following persons were elected to serve as Class II directors of
the Company, each for a term of three years or until a successor is elected and
qualified:
<TABLE>
<CAPTION>
VOTES VOTES
FOR WITHHELD
----------- -----------
<S> <C> <C>
Gary D. Nicholson 13,065,477 40,430
W. C. McCord 13,065,170 40,737
</TABLE>
(ii) A proposal to approve the Pool Energy Services Co. 1996 Directors'
Stock Incentive Plan received 12,566,800 affirmative votes, 221,398 negative
votes, and there were 155,696 abstentions and 162,013 broker non-votes; such
proposal received sufficient affirmative votes for approval.
(iii) A proposal to amend the Company's Articles of Incorporation to
increase the Company's authorized Common Stock from 25 million shares to 40
million shares received 10,298,478 affirmative votes, 2,691,419 negative votes,
and there were 19,606 abstentions and 96,404 broker non-votes; the number of
affirmative votes cast was sufficient to attain the required majority
(two-thirds of outstanding shares) for such proposal to be approved.
(iv) A proposal to ratify the appointment of Deloitte & Touche LLP as
independent auditors of the Company for the year 1996 received 13,086,743
affirmative votes, 9,751 negative votes, and there were 9,413 abstentions; such
proposal received sufficient affirmative votes for approval.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
- ----------- --------
<S> <C>
3.1(*) - Articles of Incorporation of the Company, as amended
10.1(*) - Pool Energy Services Co. 1996 Management Bonus Plan - Senior Executive Level
10.2 - Pool Energy Services Co. 1996 Directors' Stock Incentive Plan (incorporated by reference to Exhibit
4.1 to the Company's Registration Statement on Form S-8 No. 333-03159 filed with the commission on
May 3, 1996)
10.2.1 - Form of Stock Option Agreement, Pool Energy Services Co. 1996 Directors' Stock Incentive Plan
(incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-8 No.
333-03159 filed with the commission on May 3, 1996)
10.3(*) - Pool Energy Services Co. 1996 Longterm Incentive Plan
27(*) - Financial Data Schedule
</TABLE>
- ----------
(*) Filed herewith
(b) Reports on Form 8-K - There were no reports on Form 8-K filed during the
quarter ended March 31, 1996.
9
<PAGE> 10
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.
POOL ENERGY SERVICES CO.
(Registrant)
MAY 15, 1996 /s/ E. J. SPILLARD
- -------------------------------- ------------------------------------------
(Date) E. J. Spillard
Senior Vice President, Finance
(principal financial officer)
MAY 15, 1996 /s/ B. G. GORDON
- -------------------------------- ------------------------------------------
(Date) B. G. Gordon
Controller
(principal accounting officer)
10
<PAGE> 11
POOL ENERGY SERVICES CO.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT
------ --------
<S> <C>
3.1 - Articles of Incorporation of the Company, as amended
10.1 - Pool Energy Services Co. 1996 Management Bonus Plan - Senior Executive Level
10.3 - Pool Energy Services Co. 1996 Longterm Incentive Plan
27 - Financial Data Schedule
</TABLE>
11
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF INCORPORATION OF
POOL ENERGY SERVICES CO.
I, the undersigned natural person of the age of eighteen or more and a
citizen of the State of Texas, acting as the incorporator of a corporation
under the Texas Business Corporation Act, do hereby adopt the following
Articles of Incorporation for such corporation:
ARTICLE ONE
The name of the corporation is Pool Energy Services Co.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the corporation is organized are:
(1) To own and operate well and gas well servicing and drilling
equipment, both as owner thereof and under lease from other persons
and corporations, both upon leased premises owned by the corporation
and under contract for other persons and corporations;
(2) to own and operate oil, gas and mineral leases and to conduct
drilling and exploration operations thereon;
(3) To engage in the manufacture, sale, and distribution of oil, gas, and
water well drilling and producing equipment and machinery;
(4) To drill and bore wells for oil, water, gas, or any other substance
and to buy, own, sell, and lease, construct and operate oil, water,
and gas well machinery, tools, equipment, pipelines, and other
personal property in connection therewith and necessary for said
purposes;
(5) To transport personal property of every kind and description within
or without the State of Texas, whether or not for compensation; to
own, lease, operate and otherwise deal in and with any and all motor
vehicles and other equipment convenient for such purpose; and to do
any and all acts and things necessary, convenient or capable of being
carried on in connection with the foregoing or incidental to the
furtherance thereof;
<PAGE> 2
(6) To engage in the general business of manufacturing, buying, selling,
or otherwise dealing in and with goods, wares, merchandise and
personal property of every kind and description either within or
without the State of Texas.
(7) To own all or any part of the stock or other corporations including
but not limited to one or more corporations engaged in the oil and
gas producing business and one or more corporations engaged in the
oil pipeline business;
(8) To do any and all lawful business for which corporations may be
incorporated under the provisions of the Texas Business Corporation
Act, as now provided or as may be hereafter set forth;
(9) To conduct and carry on its business or any branch thereof in any
state or territory of the United States, or in any foreign country in
conformity with the laws of such state, territory, or foreign country
and to have and maintain in any state, territory, or foreign country
a business office, plant, store, or other facility; and
(10) To do all and everything necessary, suitable, or proper for the
accomplishment of any of the purposes, the attainment of any of the
objects, or the exercise of any other powers herein set forth, either
alone or in conjunction with other corporations, firms, or
individuals and either as principals or agents, and to do every other
act or acts, thing or things, incidental or appurtenant to or growing
out of or connected with the above-mentioned objects, purposes, or
powers.
ARTICLE FOUR
The aggregate number of shares which the corporation shall have the
authority to issue is Twenty-five Million ($25,000,000) shares, all of which
shall be without nominal or par value.
ARTICLE FIVE
Pre-emptive rights are expressly denied.
ARTICLE SIX
The corporation will not commence business until it has received for the
issuance of its shares consideration of the value of One Thousand Dollars
($1,000.00) consisting of money, labor done, or property actually
- 2 -
<PAGE> 3
received, which sum is not less than One Thousand Dollars ($1,000.00).
ARTICLE SEVEN
The power to alter, amend or repeal the Bylaws is exclusively reserved to
the Directors.
ARTICLE EIGHT
Each shareholder of stock of the corporation entitled to vote shall be
entitled to one vote for each share held. At each election of Directors each
shareholder entitled to vote at such election shall have the right to vote, in
accordance with the provisions of the Texas Business Corporation Act, the
number of shares owned by him for as many persons as there are Directors to be
elected and for whose election he has the right to vote. Cumulative voting is
expressly prohibited.
ARTICLE NINE
The street address of its initial registered office is 10375 Richmond
Avenue, Houston, Texas, 77042, and the name of its initial registered agent at
such address is G. G. Arms.
ARTICLE TEN
The number of Directors constituting the initial Board of Directors is
three (3), and the names and addresses of the persons who are to serve as
Directors until the first annual meeting of the shareholders or until their
successors are elected and qualified are:
C. V. Helm . . . . . . . . . . . . . . . 10375 Richmond Avenue
Houston, Texas 77042
J. W. Casey . . . . . . . . . . . . . . 10375 Richmond Avenue
Houston, Texas 77042
F. M. Pool . . . . . . . . . . . . . . . c/o Pool Center
Gas Plant Road
Old Christoval Highway
San Angelo, Texas 76904
ARTICLE ELEVEN
To the fullest extent permitted by the laws of the State of Texas as the
same presently exist or may be hereafter amended, a director of the corporation
shall not be liable to the corporation or its shareholders or members for
monetary damages for any act or omission in such director's capacity as a
director of the corporation.
- 3 -
<PAGE> 4
ARTICLE TWELVE
The name and address of the incorporator is:
G. G. Arms . . . . . . . . . . . . . . . 10375 Richmond Avenue
Houston, Texas 77042
In WITNESS WHEREOF, I have hereunto set my hand this 11th day of November,
1988.
/s/ G. G. ARMS
-----------------------------------
G. G. Arms
STATE OF TEXAS )
)
COUNTY OF HARRIS )
I, Susan A. Dougherty, a notary public, do hereby certify that on this
11th day of November, 1988, personally appeared before me G. G. Arms, who being
by me duly sworn, declared that he is the person who signed the foregoing
document as incorporator and that the statements contained therein are true.
/s/ SUSAN A. DOUGHERTY
----------------------------------
Notary Public in and for the
State of Texas
My commission expires:
February 4, 1990
- ----------------------
- 4 -
<PAGE> 5
ARTICLES OF AMENDMENT BY THE SHAREHOLDERS
TO THE ARTICLES OF INCORPORATION OF
POOL ENERGY SERVICES CO.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE. The name of the corporation is Pool Energy Services Co.
ARTICLE TWO. The following amendment to the Articles of Incorporation was
adopted by the shareholders of the corporation on December 20, 1988:
The Articles of Incorporation of the corporation are amended by revising
ARTICLE FOUR in its entirety to read as follows:
"ARTICLE FOUR
"The total number of shares that the corporation is authorized to issue is
25,049,000 shares, consisting of 25,000,000 Common shares, each of which shall
be without par value, and 49,000 Preferred shares having a par value of Ten
Dollars ($10.00) per share.
"1. The holders of shares of Preferred stock shall be entitled to receive
dividends at a rate equal to the stated "prime rate" per annum of Texas
Commerce Bank, Houston, that is in effect at the close of business three (3)
business days prior to the date on which dividends are to be paid, plus an
additional two percent (2%) per annum. The "prime rate" per annum of Texas
Commerce Bank, Houston, shall be the rate announced from time to time by said
bank as its prime rate of interest per annum and thereafter entered into the
minutes of said bank. Said dividends shall be paid quarterly when and as
declared by the board of directors on the first days of March, June, September
and December. Said dividends shall accrue from the date of issuance of the
Preferred shares and shall be deemed to accrue from day to day whether or not
earned or declared. Such dividends shall be cumulative, and if for any
quarterly dividend period dividends at the rate set forth above shall not have
been paid or declared or set apart therefor, the amount of the deficiency shall
be fully paid or declared and set apart for payment, but without interest,
before any distribution, whether in the form of dividends or otherwise, shall
be declared or paid upon or set apart for the Common shares. The amount of
dividends per share payable for each quarterly dividend period shall be
computed by dividing the dividend rate for such dividend
<PAGE> 6
period by four and applying such rate against the par value of the Preferred
shares.
"2. The Preferred shares shall be redeemable at the option of, and at the
discretion of the board of directors, in whole but not in part, at the par
value thereof, together with all accrued and unpaid dividends thereon to the
date of such redemption to the extent that funds of the corporation are
lawfully available therefor. The redemption of Preferred shares shall be
effected in accordance with the Provisions for Redemption as set forth in the
Texas Business Corporation Act.
"3. At any time beginning 90 days following the effective date of any
registration statement ("Registration Statement") as filed with the United
States Securities and Exchange Commission, pursuant to which the Common shares
of this corporation are first issued and sold to the public and ending at the
close of business on the day before the date of redemption stated in any
redemption notice, the holder of Preferred shares, on surrender of his
certificates for such Preferred shares at the office of the corporation, duly
indorsed and delivered to the corporation together with his written notice of
intention to convert, shall be entitled to convert the shares of Preferred
stock into that number of fully paid and nonassessable shares of Common stock
obtained by dividing the aggregate par value of the Preferred shares to be
converted by an amount equal to one hundred and twenty percent (120%) of the
Subscription Price, as defined in the Registration Statement. Should any
increases or reduction in the number of outstanding shares of Common stock
occur after the date of the first issuance of the Preferred stock by reason of
any split, share dividend, merger, consolidation, or other capital change or
reorganization affecting the number of outstanding Common shares, the number of
Common shares to be issued to the holder of the Preferred shares must be fairly
and equitably adjusted by appropriate amendment of this subparagraph so as
fairly and equitably to preserve as far as reasonably possible the original
conversion rights of all the Preferred shares. Any amendment and adjustment
necessitated by any increases or reduction in the number of the outstanding
shares of Common stock must be accomplished before any notice of redemption may
be given to the Preferred shareholders.
"The corporation shall at all times reserve and keep available, out of its
authorized but unissued Common shares, solely for the purpose of conversion of
its Preferred shares, such number of Common shares as shall be sufficient to
effect the conversion of all Preferred shares from time to time outstanding,
and the corporation shall obtain and keep in force such permits as may be
required in order to enable
2
<PAGE> 7
the corporation lawfully to issue and deliver such number of Common shares.
On conversion, no fractional Common share shall be issued, but in lieu thereof
the corporation shall pay therefor in cash.
"4. In the event of any voluntary of involuntary liquidation, dissolution
or winding up of the corporation, the holders of the Preferred shares shall
receive an amount equal to the par value of such shares, plus all accrued and
unpaid dividends whether or not earned or declared before any distribution
shall be made to the holders of the Common shares.
"5. In the event the closing price of the Common shares, as reported on a
national stock exchange, or the closing bid price as reported in the
over-the-counter market, shall be less than eighty percent (80%) of the
Subscription Price, as defined in the Registration Statement, for any ten (10)
days during a consecutive thirty (30)-day period, the holder(s) of all of the
issued and outstanding Preferred shares may, at its or their option, require
the corporation to purchase all, but not less than all, of such Preferred
shares as follows:
"a. The purchase price shall be Ten Dollars ($10) per share, plus all
accrued and unpaid dividends thereon to the date of such purchase.
"b. Such right shall be exercised, if at all, by the delivery of written
notice thereof, signed by all holders of the Preferred shares, to the
Treasurer of the corporation at the offices of the corporation in
Houston, Texas, not less than thirty (30) nor more than sixty (60)
days prior to the date such right is to be exercised. Payment of the
purchase price shall be made in cash or by certified or cashier's
check that shall be delivered upon surrender of certificates, duly
indorsed, representing all of the issued and outstanding shares of
Preferred stock.
"c. If the obligation to purchase shares hereunder shall be prohibited or
restricted by any provision of the laws of the State of Texas or the
Articles of Incorporation or any debt instrument of the corporation,
such obligation shall be suspended until such time as the purchase of
such shares may be accomplished without violating any such provision.
"6. Preferred shares converted or redeemed as herein provided shall be
cancelled and may not be reissued.
3
<PAGE> 8
"7. Except as otherwise provided by law or these Articles, the Common
shareholders have exclusive voting rights and power."
ARTICLE THREE. The designation and number of outstanding shares of each
class entitled to vote thereon as a class were as follows:
Class Number of Shares
----- ----------------
Common Stock 10
ARTICLE FOUR. The number of shares of each class voted for and against
such amendment, respectively, was:
Class Number of Shares Voted
----- ----------------------
For Against
--- -------
Common Stock 10 -0-
POOL ENERGY SERVICES CO.
Dated: December 21, 1988 By /s/ CY HELM
-------------------------
Its Chairman
4
<PAGE> 9
STATEMENT OF
CANCELLATION OF REDEEMABLE SHARES
To the Secretary of State
of the State of Texas:
Pursuant to the provisions of Article 4.10 of the Texas Business
Corporation Act, the undersigned corporation submits the following statement of
cancellation by redemption or purchase of redeemable shares of the corporation.
1. The name of the corporation is Pool Energy Services Co.
2. The number of redeemable shares cancelled through redemption or
purchase is 49,000, itemized as follows:
Number of
Class Shares
----- ---------
Preferred Stock 49,000
3. The aggregate number of issued shares of the corporation after giving
effect to such cancellation is 610, itemized as follows:
Number of
Class Series Shares
----- ------ ---------
Common Stock -- 610
---------
Total 610
4. The amount of the stated capital of the corporation after giving
effect to such cancellation is $10,000.
5. The number of shares that the corporation has authority to issue
after giving effect to the cancellation is 25,000,000, itemized as
follows:
Number of
Class Series Shares
----- ------ ---------
Common Stock -- 25,000,000
----------
Total 25,000,000
Dated this 11th day of April, 1990.
Pool Energy Services Co.
By /s/ G.G. ARMS
------------------------------
G.G. Arms, Vice President
<PAGE> 10
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
POOL ENERGY SERVICES CO.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE. The name of the corporation is Pool Energy Services Co.
ARTICLE TWO. The following amendments to the Articles of Incorporation
were adopted by the shareholders of the corporation on April 11, 1990.
The Articles of Incorporation of the corporation are amended by revising
ARTICLE FOUR in its entirety to read as follows:
ARTICLE FOUR
The total number of shares that the corporation is authorized to
issue is 25,001,000 shares, consisting of 25,000,000 shares of common
stock, without par value ("Common Stock"), and 1,000 shares of preferred
stock, without par value ("Preferred Stock").
The following is a statement of the designations and the powers,
preferences, relative rights and privileges and the restrictions,
limitations and qualifications, of the classes of stock of the
corporation.
Section I. Preferred Stock
(1) Dividends. The holders of the Preferred Stock shall not be
entitled to receive dividends thereon.
(2) Redemption. The Preferred Stock is not redeemable.
(3) Voting Rights of Preferred Stock. Except as otherwise required by
law and as set forth below in this subparagraph (3), holders of the
Preferred Stock shall not be entitled to vote on any matter to be voted on
by holders of the Common Stock.
(a) Whenever and so long as ENSERCH Corporation or any of its
affiliates (collectively "ENSERCH") is the holder of all of the
outstanding shares of Preferred Stock, ENSERCH, voting separately as
a class, shall be entitled, at any annual meeting of the shareholders
or special meeting held in place thereof, to elect two directors to
the Board of Directors of the corporation.
(b) Whenever and so long as ENSERCH is the holder of all of the
outstanding shares of Preferred Stock and an Event of Default as
<PAGE> 11
defined in Section 21 (a "Default") of that certain Contingent Support
Agreement between the corporation and ENSERCH dated on or about April
13, 1990 ("Contingent Support Agreement") shall have occurred and be
continuing, then and in such event, the authorized number of
directors of the corporation shall be increased and ENSERCH, voting
separately as a class, shall be entitled, at any annual meeting of
the shareholders or special meeting held in place thereof, or in lieu
of a meeting by written consent of ENSERCH, to elect that number of
directors just constituting a majority of the Board of Directors;
provided, however, any designee of ENSERCH serving on the Board of
Directors of the corporation pursuant to subparagraph (a) above shall
be deemed a director representing the Preferred Stock under this
subparagraph (b), and further provided, that none of the directors
required to be added pursuant to subparagraph (b) (the "Additional
Directors") shall be an officer, director, or employee of ENSERCH or
an affiliate thereof. Such right of ENSERCH to elect Additional
Directors may be exercised until all Defaults under the Contingent
Support Agreement shall have been cured or waived, and when so cured
or waived, then the right of ENSERCH to elect such Additional
Directors under this subparagraph (b) shall cease, but subject always
to the same provisions for the vesting of such voting rights in the
case of any such future Default or Defaults. At any time after such
right to elect Additional Directors shall have so vested in ENSERCH,
the Secretary of the corporation, upon the written request of ENSERCH
addressed to him at the principal office of the corporation, shall
call a special meeting of the holders of the Preferred Stock for the
election of the Additional Directors, to be held within forty (40)
days after delivery of such request and at the place and upon the
notice provided by law and in the bylaws for the holding of meetings
of shareholders; provided, however, that the Secretary shall not be
required to call such special meeting in the case of any such request
received less than ninety (90) days before the date fixed for the
next ensuing annual meeting of shareholders. No such special meeting
and no adjournment thereof shall be held on a date less than thirty
(30) days before the annual meeting of the shareholders or special
meeting held in place thereof. At any annual meeting or special
meeting called for the election of Additional Directors, the absence
of a quorum of the holders of the Common Stock shall not invalidate
or otherwise prevent the conduct of the meeting for the purpose of
the election of the Additional Directors. The Additional Directors so
elected shall serve until the next annual meeting or until their
respective successors shall be elected and shall qualify; provided,
however, that whenever ENSERCH shall be divested of voting power as
above provided, the terms of office of all persons elected as
Additional Directors under this subparagraph (b) shall forthwith
terminate, and the number of the Board of Directors shall be reduced
accordingly. Anything in this subparagraph (b) to the contrary
notwithstanding, ENSERCH, so long as it owns all of the outstanding
shares of Preferred Stock, may, at any time a Default exists, waive
any notice and call of meeting and elect the Additional Directors by
written consent in lieu of a meeting.
2
<PAGE> 12
(c) In the event of the resignation, death or removal of a
director elected pursuant to subparagraphs (a) or (b) above (except
for directors whose terms of office terminate by the curing or waiver
of Defaults as provided in subparagraph (b) above), the vacancy or
vacancies shall be filled by a majority vote of the directors then in
office. Any director so elected may be removed from office by vote of
ENSERCH, as long as ENSERCH owns all of the shares of Preferred
Stock, at a special meeting of the holders of the Preferred Stock
that may be called on the written request of ENSERCH, as holder of
all of the shares of Preferred Stock. The Secretary of the
corporation shall, in any event, within ten (10) days after delivery
to the corporation at its principal office of a request to such
effect signed by ENSERCH, as holder of all of the shares of Preferred
Stock, call a special meeting for such purpose to be held within
forty (40) days after delivery of such request; provided, however,
that the Secretary shall not be required to call such a special
meeting in the case of any such request received less than ninety
(90) days before the date fixed for the next ensuing annual meeting
of sharesholders. Anything in this subparagraph (c) to the contrary
not withstanding, ENSERCH, as long as it owns all of the outstanding
shares of Preferred Stock, may at any time remove a director who was
selected by the majority vote of the board to fill a vacancy as
provided in this subparagraph (c) and/or elect a director or
directors to fill a vacancy or vacancies by written consent in lieu
of a meeting and thereby waive any notice and call of meeting.
(d) So long as any shares of the Preferred Stock are
outstanding, the corporation shall not, without the affirmative vote
of the holders of a majority of the Preferred Stock, adopt an
amendment to these Articles of Incorporation if such amendment would
(i) authorize or create, or increase the authorized amount of, any
class of stock which is entitled to voting rights inconsistent with
the outstanding Preferred Stock, (ii) increase the authorized number
of shares of Preferred Stock, (iii) change any of the rights or
preferences of the then outstanding Preferred Stock or (iv)
materially alter any other provisions of the outstanding Preferred
Stock or the Common Stock of the corporation.
Each share of the Preferred Stock shall entitle the holder
thereof to one vote on all matters on which holders of Preferred
Stock are entitled to vote.
(4) Priority of Preferred Stock. In the event of any liquidation,
dissolution or winding up of the affairs of the corporation, whether
voluntary or otherwise, after payment or provision for payment of debts
and other liabilities of the corporation, the holders of the Preferred
Stock shall be entitled to receive out of the remaining assets of the
corporation the amount of One Dollar ($1.00) in cash for each share of
Preferred Stock before any distribution or payment shall be made to the
holders of any other series of Preferred Stock, any other class of stock
3
<PAGE> 13
ranking junior to the Preferred Stock, or the Common Stock of the
Corporation. After payment to the holders of the Preferred Stock of the
full preferential amounts distributable to them as aforesaid, the holders
of the Preferred Stock will have no other rights or claims to any of the
remaining assets of the Company either upon the distribution of such
assets or upon dissolution, liquidation or winding up.
Neither the consolidation nor merger of the corporation with or into
any other corporation, nor any sale, lease, exchange or conveyance of all
or any part of the property, assets or business of the corporation, nor
any liquidation, dissolution or winding up occurring substantially
concurrently with any such sale, lease, exchange of conveyance, shall be
deemed to be a voluntary liquidation, dissolution or winding up of the
corporation within the meaning of this Section (4).
Section II. Common Stock
(1) Dividends. Subject to the preferential rights, if any, of the
holders of Preferred Stock, the holders of Common Stock shall be entitled
to receive such dividends, if any, as may be declared from time to time by
the Board of Directors from funds legally available therefor.
(2) Priority of Common Stock. After distribution in full of the
preferential amount, if any, to be distributed to the holders of Preferred
Stock in the event of any liquidation, dissolution or winding up of the
affairs of the corporation, whether voluntary or involuntary, the holders
of the Common Stock shall be entitled to receive all the remaining assets
of the corporation, tangible and intangible, of whatever kind available
for distribution to shareholders, ratably in proportion to the number of
shares of the Common Stock held by each.
(3) Voting Rights. Except as may otherwise be required by law or the
Articles of Incorporation of the corporation, each holder of Common Stock
shall have one vote in respect of each share of Common Stock held by such
holder of each matter voted upon by the stockholders.
The Articles of Incorporation are amended by revising ARTICLE FIVE in its
entirety to read as follows:
ARTICLE FIVE
No shareholder of the corporation shall by reason of his holding
shares of any class have any preemptive or preferential right to acquire
or subscribe for any additional, unissued or treasury shares of any class
of the corporation now or hereafter to be authorized, or any notes,
debentures, bonds, or other securities convertible into or carrying any
right, option or warrant to subscribe to or acquire shares of any class
now or hereafter to be authorized, whether or not the issuance of any such
shares, or such notes, debentures, bonds or other securities, would
adversely affect the dividends or voting rights of such shareholders, and
the Board of Directors may issue or authorize the issuance of shares of
any class, or any notes,
4
<PAGE> 14
debentures, bonds or other securities convertible into or carrying rights,
options or warrants to subscribe to or acquire shares of any class,
without offering any such shares of any class, either in whole or in part,
to the existing shareholders of any class.
The Articles of Incorporation of the corporation are amended by revising
ARTICLE EIGHT in its entirety to read as follows:
ARTICLE EIGHT
Cumulative voting is expressly prohibited.
ARTICLE THREE. The designation and number of outstanding shares of each
class entitled to vote thereon as a class were as follows:
Class Number of Shares
----- ----------------
Common Stock 610
ARTICLE FOUR. The number of shares of each class voted for and against
such amendment, respectively, was:
Class Number of Shares Voted
----- ----------------------
For Against
--- -------
Common Stock 610 -0-
POOL ENERGY SERVICES CO.
Dated: April 12, 1990 By: /s/ J. T. JONGEBLOED
------------------------------
President
5
<PAGE> 15
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
POOL ENERGY SERVICES CO.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation adopts the following Articles of
Amendment to its Articles of Incorporation:
ARTICLE ONE. The name of the corporation is Pool Energy Services Co.
ARTICLE TWO. The Articles of Incorporation of the corporation are amended
by revising the first paragraph of Article Four thereof so that it shall read
as follows:
The total number of shares that the corporation is authorized to issue is
40,001,000 shares, consisting of 40,000,000 shares of common stock,
without par value ("Common Stock"), and 1,000 shares of preferred stock,
without par value ("Preferred Stock").
ARTICLE THREE. The foregoing amendment to the Articles of Incorporation
was adopted by the shareholders of the corporation on May 2, 1996.
ARTICLE FOUR. The designation and number of outstanding shares of each
class entitled to vote thereon as a class were as follows:
Class Number of Shares
----- ----------------
Common Stock 14,083,858
ARTICLE FIVE. The number of shares of each class voted for and against
such amendment, respectively, was:
Number of Shares Voted
----------------------
Class For Against
----- --- -------
Common Stock 10,156,036 2,685,520
Dated: May 3, 1996
POOL ENERGY SERVICES CO.
By: /s/ G. G. ARMS
-------------------------------------
Vice President and General Counsel
<PAGE> 1
EXHIBIT 10.1
POOL ENERGY SERVICES CO. 1996 MANAGEMENT BONUS PLAN
SENIOR EXECUTIVE LEVEL
1. Plan Period
The Plan shall be effective for the calendar year 1996 (the "Plan
Period") subject to early termination in accordance with Paragraph 8
hereof.
2. Purpose
The purposes of the Plan are to provide additional motivations to
management:
a. to cause the financial performance of Pool Energy Services Co.
(the "Company") to be equal to or better than budget;
b. to cause the Stock Performance of the Company to exceed that
of comparable companies and
c. to cause the achievement of safety goals.
3. Eligibility
Subject to the provisions of Paragraphs 7 and 8 hereof, the period of
an individual's participation in the Plan shall be concurrent with the
period of his full-time employment in a position which is designated
herein or has been designated by the Plan Committee as a Participating
Position. Full-time employee incumbents of Participating Positions
shall be Plan participants ("Participants").
4. Plan Committee
There shall be a Plan Committee consisting of the Company's President
("CEO"), its Senior Vice President, Finance ("CFO") and its Vice
President, Human Resources ("VPHR"). The Plan Committee shall make
decisions by majority vote, one of which must be that of the CEO, and
shall govern the Plan with respect to:
a. Participation. Participating Positions shall include the
CEO, CFO, VPHR, Vice President and General Counsel ("VPGC")
and each Group Vice President ("GVP"). The Plan Committee may
add or remove any other Participating Positions, subject to
the provisions of Paragraphs 7 and 8 hereof.
b. Safety Incentive. The Plan Committee may designate certain
Participating Positions as being subject to the safety
incentive feature of the Plan, as described in Paragraph 5.h.
hereof, may change those designations from time to time, and
may approve the Safety Goals for each such position,
<PAGE> 2
Senior Executive
Page 2
c. Plan Changes. The Plan Committee may recommend changes to the
Plan or recommend the termination of the Plan at any time,
subject to the provisions of Paragraph 8 hereof. Final
approval of any recommended changes or termination shall be by
the Compensation Committee of the Board of Directors of Pool
Energy Services Co. (the "Compensation Committee").
d. Adjustments of Awards. The Plan Committee may recommend an
increase or decrease in the amount of a bonus award payable to
any Participant when in the judgment of a majority of the Plan
Committee the bonus award otherwise payable would be excessive
or inadequate in view of the Participant's management efforts.
In the case of any adjustments to bonus awards payable to
persons with respect to whom adjustments in their compensation
otherwise would be subject to the approval of the Compensation
Committee, such adjustments to bonus awards hereunder shall
likewise be subject to Compensation Committee approval.
e. Interpretations. The Plan Committee shall interpret Plan
provisions, and such interpretations shall be conclusive.
5. Calculation of Benefits
a. For purposes of the calculation of bonus awards hereunder the
following definitions shall apply:
<TABLE>
<CAPTION>
Term Definition
---- ----------
<S> <C>
Actual Stock Performance The Stock Performance of the Company.
("ASP")
AEBITD * Actual earnings before interest expense, income tax provision
(credit) and depreciation and amortization of the Company for
the Plan Period.
ANI * Actual Net Income of the Company for the Plan Period.
ANI (Division) * Actual Net Income of an Operating Division for the Plan
Period.
- ------------------------
</TABLE>
* AEBITD, ANI and ANI (Division) shall include an accrued amount
for bonus awards to be paid under the Plan.
<PAGE> 3
Senior Executive
Page 3
<TABLE>
<CAPTION>
Term Definition
---- ----------
<S> <C>
BEBITD Budgeted earnings before interest expense, income tax
provision (credit) and depreciation and amortization of the
Company for the Plan Period as reflected in the Company's
1996 budget.
BNI Budgeted Net Income of the Company for 1996, as reflected in
the Company's 1996 budget for the Company.
BNI (Division) Budgeted Net Income for an Operating Division for 1996, as
reflected in the Company's 1996 budget for that Operating
Division.
Base Salary The base salary for a Participant, as specified in the
personnel and payroll records of the employing subsidiary of
the Company on the date the employee becomes a Participant.
For employees who are promoted, or otherwise transferred,
from one Participating Position to another after January 1,
1996, Base Salary for each period of service in a
Participating Position shall be the base salary for the
Participant as specified in the personnel and payroll records
of the employing subsidiary of the Company on the date the
employee assumed each such position or January 1, 1996,
whichever is later.
Operating Division Either of the following: U.S. Operations or International
Operations.
The ANI (Division), BNI (Division), SP, or SG applicable to
an individual Operation Participant shall be that of the most
senior of the above named Operating Divisions for which the
individual has functional responsibility.
</TABLE>
<PAGE> 4
Senior Executive
Page 4
<TABLE>
<CAPTION>
Term Definition
---- ----------
<S> <C>
Peer Group Atwood Oceanics, Inc.; Baker Hughes Incorporated; BJ Services
Company; Energy Service Company, Inc.; Energy Ventures, Inc.;
Global Marine Inc.; Halliburton Company; Helmerich & Payne,
Inc.; Noble Drilling Corporation; Parker Drilling Company;
Pride Petroleum Services, Inc.; Rowan Companies, Inc.;
Tuboscope Vetco International Corporation; Weatherford
Enterra, Inc.; and Western Atlas Inc.
Safety Goals ("SG") (1) For domestic operations: The targeted frequency in the
----------------------------
Plan Period of OSHA Recordable Incidents ("ORI") as defined
by the Occupational Safety and Health Act of 1970, for an
Operating Division as approved by the Plan Committee.
(2) For international operations: The budgeted frequency in
---------------------------------
the Plan Period of lost-time incidents ("LTI"), as approved
by the Plan Committee.
Safety Performance ("SP") (1) For domestic operations: The actual frequency in the Plan
----------------------------
Period of ORI reported for an Operating Division in the Pool Energy
Services Co. Management Report for the Plan Period.
(2) For international operations: The actual frequency in
---------------------------------
the Plan Period of LTI as reported for an Operating Division
in the Pool Energy Services Co. Management Report for the
Plan Period.
Stock Performance The difference, measured as a percent, between the closing
price of a share of common stock of a company on the first
trading day of the Plan Period and the closing price of a
share of such common stock on the final trading day of the
Plan Period.
Targeted Stock Performance The weighted average Stock Performance of
("TSP") the Peer Group.
</TABLE>
<PAGE> 5
Senior Executive
Page 5
b. Subject to the limitations and restrictions specified in
Paragraph 5.i. below, Participant's awards will be equal to
Base Salary multiplied by the sum of the applicable
percentages calculated under:
(a) Paragraph 5.c.,
(b) Paragraph 5.d. or 5.e. as applicable.
(c) Paragraph 5.f., and
(d) Paragraph 5.g. if applicable.
c. Stock Performance
<TABLE>
<CAPTION>
Condition Applicable Percentage
--------- ---------------------
CFO/ VPGC/
CEO GVP VPHR
--- --- ----
<S> <C> <C> <C>
(1) ASP is equal to TSP. 10.0% 7.5% 6.25%
(2) ASP is at least The percentage specified in 5.c.(1) above reduced by:
equal to 90% but
less than 100% of
TSP.
<CAPTION>
CFO/ VPGC/
CEO GVP VPHR
--- --- ----
<S> <C> <C> <C>
25-(25xASP 18.75-(18.75xASP 15.625-(15.625xASP
divided by TSP) divided by TSP) divided by TSP)
(3) ASP is more than The percentage specified in 5.c.(1) above increased by:
100% of TSP.
<CAPTION>
CFO/ VPGC/
CEO GVP VPHR
--- --- ----
<S> <C> <C> <C>
ASP-TSP ASP-TSP ASP-TSP
------- X 100 ------- X 75 ------- X 62.5
TSP TSP TSP
</TABLE>
d. BNI Achievement Applicable to Staff Participants
<TABLE>
<CAPTION>
Condition Applicable Percentage
--------- ---------------------
VPGC/
CEO CFO VPHR
--- --- ----
<S> <C> <C> <C> <C>
(1) ANI is equal to 100% 15% 11.25% 9.375%
of BNI.
</TABLE>
<PAGE> 6
wSenior Executive
Page 6
<TABLE>
<S> <C> <C>
(2) ANI is at least equal The percentage specified in 5.d.(1) above reduced
to 90% but less than by:
100% of BNI.
<CAPTION>
VPGC/
CEO CFO VPHR
--- --- ----
<S> <C> <C> <C> <C>
37.5-(37.5xANI 28.125-(28.125xANI 23.4375-(23.4375xANI
divided by BNI) divided by BNI) divided by BNI)
(3) ANI is more than The percentage specified in 5.d.(1) above increased
100% of BNI. by:
<CAPTION>
VPGC/
CEO CFO VPHR
--- --- ----
<S> <C> <C> <C>
ANI-BNI ANI-BNI ANI-BNI
------- X 75 ------- X 56.25 ------- X 46.875
BNI BNI BNI
</TABLE>
e. BNI Achievement Applicable to GVPs
<TABLE>
<CAPTION>
Condition Applicable Percentage
--------- ----------------------
<S> <C> <C>
(1) ANI is equal to 100% of BNI and 4.125%
ANI (Division) is at least equal
to BNI (Division).
(2) ANI is at least 90% but The percentage specified in 5.e.(1) above
less than 100% of BNI, and reduced by:
ANI (Division) is at least
equal to BNI (Division). 10.3125-(10.3125xANI divided by BNI)
(3) ANI is more than 100% of BNI, The percentage specified in 5.e.(1) above
and ANI (Division) is at least increased by:
equal to BNI (Division).
ANI-BNI
------- X 20.625
BNI
(4) ANI (Division) is equal to BNI 4.125%
(Division).
(5) ANI (Division) is at least 90% The percentage specified in 5.e.(4) above
but less than 100% of BNI reduced by:
(Division).
10.3125-[10.3125xANI (Division) divided by BNI
(Division)]
(6) ANI (Division) is more than 100% The percentage specified in 5.e.(4) above
of BNI (Division). increased by:
ANI (Division)-BNI (Division)
----------------------------- X 20.625
BNI (Division)
</TABLE>
<PAGE> 7
Senior Executive
Page 7
f. EBITD Achievement
<TABLE>
<CAPTION>
Condition Applicable Percentage
---------- ----------------------
CFO/ VPGC/
CEO GVP VPHR
--- --- ----
<S> <C> <C> <C> <C>
(1) AEBITD is equal to 100% 15% 11.25% 9.375%
of BEBITD
(2) AEBITD is at least equal The percentage specified in 5.f.(1) above reduced
to 90% but less than by:
100% of BEBITD
<CAPTION>
CFO/ VPGC/
CEO GVP VPHR
--- --- ----
<S> <C> <C> <C> <C>
37.5-(37.5xANI 28.125-(28.125xANI 23.4375-(23.4375xANI
divided by BNI) divided by BNI) divided by BNI)
(3) AEBITD is more than The percentage specified in 5.f.(1) above increased
100% of BEBITD. by:
<CAPTION>
CFO/ VPGC/
CEO GVP VPHR
--- --- ----
<S> <C> <C> <C>
ANI-BNI ANI-BNI ANI-BNI
------- X 75 ------- X 56.25 ------- X 46.875
BNI BNI BNI
</TABLE>
g. Safety Achievement Applicable to GVPs
<TABLE>
<CAPTION>
Condition Applicable Percentage
---------- ----------------------
<S> <C> <C>
(1) SP is equal to SG. 3.0%
(2) SP is less than SG. The percentage specified in 5.g.(1) above increased
by:
12.5-(12.5xSP divided by SG)
(3) SP is greater than SG. None
</TABLE>
h. Restrictions and Limitations
The maximum bonus payable to any Participant shall be a percentage of
Base Salary which is 80% for the CEO, 60% for the CFO and GVP and 50%
for the VPGC and VPHR. In addition, the maximum bonus payable for
exceeding any target in the Plan is limited to twice the amount that
would be payable for achieving that target. Bonus amounts calculated
in accordance with the applicable provisions of Subparagraphs 5.c.,
5.d., 5.e., 5.f., and 5.g. hereof will be reduced as necessary so as
not to exceed the limitations of this Subparagraph 5.h.
<PAGE> 8
Senior Executive
Page 8
6. Payment of Bonus Awards
A Participant's bonus award shall be paid in a single payment, less
applicable withholding taxes, no later than March 15, 1997, provided,
however, that at the discretion of the Compensation Committee, payment
may be in cash or in a combination of cash and shares of common stock
of the Company. In the event of the latter, not less than 50% of the
bonus award due will be paid in cash and the remainder (the
"Remainder") will be paid in Restricted Stock or Bonus Stock under the
provisions of the Pool Energy Services Co. 1993 Employee Stock
Incentive Plan (the "Stock Plan"). The number of shares so awarded
will be determined on the basis of the Fair Market Value, as defined
in the Stock Plan, on the final trading day of the Plan Period, or
such other date as the Compensation Committee shall determine, and
will be a number of shares, the aggregate Fair Market Value of which
equals 115% of the Remainder.
7. Termination of Employment
In the event of a Participant's becoming employed in, terminated (with
or without cause) from, reassigned to or reassigned from a
Participating Position during the Plan Period, any bonus award shall
be prorated for the portion of the Plan Period he was employed in the
Participating Position, and such prorated amount shall be paid when
due except that no bonus award whatsoever shall be payable to
Participants whose employment is terminated during the Plan Period for
reasons other than death, total disability, retirement or redundancy.
Bonus awards due to Participants who die during the Plan Period shall
be paid to the beneficiary designated by the Participant for Company
sponsored life insurance.
8. Termination of Plan
The Plan may be terminated at any time. No termination of the Plan
shall affect the Company's obligation with respect to any bonus
theretofore accrued. In the event of Plan termination the Plan Period
shall end on the effective date of the termination of the Plan.
<PAGE> 1
EXHIBIT 10.3
POOL ENERGY SERVICES CO.
1996 LONGTERM INCENTIVE PLAN
SECTION 1. NAME
The name of the plan is the Pool Energy Services Co. 1996 Longterm
Incentive Plan (the "Plan").
SECTION 2. PURPOSE
The purpose of the Plan is to assist Pool Energy Services Co. (the
"Company") and its Affiliates in attracting and retaining qualified individuals
to serve as executive officers of the Company and to encourage such executive
officers to protect and increase shareholder value by aligning the interests of
the executive officers with those of the shareholders.
SECTION 3. PLAN PERIOD
The Plan shall be effective for the three-year period beginning
January 1, 1996 and ending December 31, 1998 (the "Plan Period").
SECTION 4. DEFINITIONS
The following words shall have the indicated meanings unless otherwise
required by the context:
a. "Affiliate" means any corporation, partnership or other entity
in which the Company owns, directly or indirectly, an equity interest of at
least thirty-five percent (35%).
b. "Base Salary" means the base salary of a Participant at the
beginning of the Plan Period as specified in the personnel and payroll records
of the employing Affiliate.
c. "Award" means the dollar amount granted to a Participant,
calculated in accordance with the provisions of Section 7 of the Plan.
d. "Cause" means (1) the willful and continued failure by a
Participant to substantially perform his duties with the Company or employing
Affiliates (other than any such failure resulting from his incapacity due to
physical or mental illness) or (2) the willful engaging by the Participant in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise. For this purpose, no act or failure to act shall be
deemed willful unless done in other than good faith and without reasonable
belief that the action or omission was in the best interest of the Company.
e. "Compensation Committee" means the Compensation Committee of
the Board of Directors of the Company, in its capacity as the committee
administering this Plan as provided for in Section 6 of the Plan, as such
committee may be constituted from time to time.
<PAGE> 2
1996 Longterm Incentive Plan
Page 2
f. "Dividends" means the total of dividends per share of common
stock paid during the Plan Period.
g. "EBITD" means earnings before Interest, Income Tax Provision
(Credit) and Depreciation and Amortization for the Plan Period as reflected in
the audited financial statements of the Company.
h. "GVP" means Group Vice President.
i. "Participant" means any person who is eligible, in accordance
with the provisions of Section 5 of the Plan, to receive an Award under the
Plan.
j. "Peer Group" means Atwood Oceanics, Inc.; Baker Hughes
Incorporated; BJ Services Company; Energy Service Company, Inc.; Energy
Ventures, Inc.; Global Marine Inc.; Halliburton Company; Helmerich & Payne,
Inc.; Noble Drilling Corporation; Parker Drilling Company; Pride Petroleum
Services, Inc.; Rowan Companies, Inc.; Tuboscope Vetco International
Corporation; Weatherford Enterra, Inc.; Western Atlas Inc.; and the Company.
If during the Plan Period a Peer Group company ceases to exist or changes to
such an extent that, in the opinion of the Compensation Committee, it no longer
qualifies as a Peer Group company, then the Total Return to Shareholders for
such company shall be deemed to be the average Total Return to Shareholders of
the other companies in the Peer Group.
k. "Restricted Stock" means Restricted Stock as defined in the
Pool Energy Services Co. 1993 Employee Stock Incentive Plan (the "Stock Plan").
l. "Retirement" means leaving the employment of the Company or an
Affiliate, other than for Cause, after attaining the age of fifty-five and
after having completed not less than five years employment with the Company or
an Affiliate.
m. "Stock Appreciation" means the change over the Plan Period in
the value of a share of common stock, measured as the difference between (1)
the average of the closing prices of the stock on the thirty trading days ended
on the last trading day preceding the Plan Period and (2) the average of the
closing prices of the stock on the thirty trading days ending on the last
trading day in the Plan Period, all such closing prices as reported on the
principal securities exchange on which such stock is listed or admitted to
trading, or if a stock is not listed or admitted to trading on any such
exchange but is traded over-the-counter and reported on the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
or any similar system then in use, then as reported on that system.
n. "Total Return to Shareholders" means the sum of Dividends and
Stock Appreciation divided by the value of a share of common stock at the
beginning of the Plan Period, such value to be based on the average of the
closing prices of the stock on the thirty trading days ended on the last
trading day preceding the Plan Period, with all such closing prices as reported
on the securities exchange or over-the-counter systems specified in paragraph
4.m. hereof.
o. "VPGC" means Vice President & General Counsel
<PAGE> 3
1996 Longterm Incentive Plan
Page 3
SECTION 5. ELIGIBILITY
The persons who shall be eligible to receive Awards shall be full-time
salaried employees of the Company or any of its Affiliates, including directors
of the Company who are full-time salaried employees, who are incumbents of the
position of President or of any executive position reporting directly to that
of President.
SECTION 6. ADMINISTRATION
a. The Compensation Committee. The Plan shall be administered by,
and the decisions concerning the Plan shall be made solely by, the Compensation
Committee. All questions of interpretation or application of the Plan or of an
Award shall be subject to the determination of the Compensation Committee,
which determination shall be final and binding upon all parties. The
Compensation Committee shall make Awards to Participants in accordance with the
provisions of Section 7 of the Plan.
Subject to the express provisions of the Plan, the Compensation
Committee shall have the authority, in its sole and absolute discretion, (a) to
adopt, amend or rescind administrative and interpretive rules and regulations
relating to the Plan, (b) to make all determinations necessary or advisable for
administering the Plan, and (c) to exercise any other powers conferred on the
Committee by the Plan. The Compensation Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan in the manner
and to the extent it shall deem proper, and it shall be the sole and final
judge of such propriety. The determinations of the Compensation Committee on
the matters referred to in this Section 6 shall be final and conclusive.
b. The Plan Committee. There shall be a Plan Committee consisting of
the Company's President ("CEO"), its Senior Vice President, Finance ("CFO") and
its Vice President, Human Resources ("VPHR"). The Plan Committee shall make
decisions by majority vote, one of which must be that of the CEO.
The Plan Committee may recommend changes to the Plan or recommend the
termination of the Plan at any time subject to the provisions of Section 11
hereof. Final approval of any recommended changes or termination shall be by
the Compensation Committee.
The Plan Committee may recommend an increase or decrease in the amount
of an Award payable to any Participant when in the judgment of the majority of
the Plan Committee the Award otherwise payable would be excessive or inadequate
in view of the Participant's contribution to achieving the purpose of the Plan.
Final approval of any such adjustments shall be by the Compensation Committee.
<PAGE> 4
1996 Longterm Incentive Plan
Page 4
SECTION 7. CALCULATION OF AWARDS
a. EBITD. For each of the following conditions that is met, a
Participant shall receive an Award equivalent to the indicated percentage of
Base Salary:
<TABLE>
<CAPTION>
Condition Percentage
----------------- --------------------------------------------------------
CFO/ VPGC/
CEO GVP VPHR
------- ------- ------
<S> <C> <C> <C> <C>
(1) EBITD is less None None None
than $65.78
million
(2) EBITD is $76.15 15% 10% 6.25%
million
(3) EBITD is $79.83 30% 20% 12.50%
million
(4) EBITD is $87.56 45% 30% 18.75%
million
</TABLE>
If EBITD falls between two of the above conditions, the percentage of
Base Salary will be calculated on the basis of straight-line interpolation
between the two levels.
b. Total Return to Shareholders ("TRS"). If the TRS achieved by the
Company exceeds the TRS achieved by the following number of the companies in
the Peer Group, a Participant shall receive an Award equivalent to the
indicated percentage of Base Salary:
<TABLE>
<CAPTION>
Number of Companies Percentage
------------------- ----------------------------------------------------
CFO/ VPGC/
CEO GVP VPHR
------- ---- ----
<S> <C> <C> <C>
3 or less None None None
4, 5, 6 or 7 15% 10% 6.25%
8, 9, 10 or 11 30% 20% 12.50%
12 or more 45% 30% 18.75%
</TABLE>
<PAGE> 5
1996 Longterm Incentive Plan
Page 5
SECTION 8. PAYMENT OF AWARDS
A Participant's Award shall be paid no later than the March 15th first
following the close of the Plan Period as follows:
a. The Award shall be paid in Restricted Stock subject to the
restrictions specified in Section 9 hereof and in accordance with the
provisions of the Stock Plan. The number of shares of Restricted Stock so
awarded will be determined on the basis of the Fair Market Value, as defined in
the Stock Plan, on the final trading day of 1998 or such other date as the
Compensation Committee shall determine.
b. In the event that a sufficient number of shares to meet the
requirements of Paragraph 8.a. is not available under the Stock Plan, a portion
of the Award will be paid in cash as follows:
(1) The portion of the Award to be paid in Restricted
Stock will be determined by (a) multiplying the Fair
Market Value, as described in Paragraph 8.a., by the
number of shares available under the Stock Plan and
(b) allocating to each participant a percentage of
the amount so determined, which percentage shall
equal the Participant's Award divided by the total of
all Awards.
(2) The portion of the Award to be paid in cash will be
determined by subtracting from each Participant's
Award the amount to be paid to that Participant in
Restricted Stock under Paragraph 8.b.(1).
c. In the event that the condition specified in Paragraph 7.a.(4)
is achieved prior to the end of the Plan Period, all Awards attributable to
that achievement will be paid within 60 days following the end of the calendar
quarter in which such condition is achieved.
d. In the event that a Participant's employment or the Plan is
terminated or constructively terminated following a Change in Control of the
Company, as hereinafter defined, Awards shall be paid as specified in Section
11 hereof.
SECTION 9. RESTRICTIONS ON RESTRICTED STOCK
Restricted Stock issued under the Stock Plan pursuant to Section 8
hereof is issued subject to the provisions of Section 11 of the Stock Plan and
may not be sold, assigned, transferred, discounted, exchanged, pledged or
otherwise encumbered or disposed of until the Participant has completed the
following periods of continuous employment with the Company following (i) the
end of the Plan Period or (ii) in the case of Awards paid pursuant to Paragraph
8.c. hereof, the end of the calendar quarter in which the condition specified
in Paragraph 7.a.(4) is achieved:
<PAGE> 6
1996 Longterm Incentive Plan
Page 6
<TABLE>
<CAPTION>
Number of Years of Continuous
Employment Following (i) or Percent of Shares of Restricted Stock
(ii) Above No Longer Subject to Restriction
------------------------------ -------------------------------------
<S> <C>
Less than one year 0%
One year 50%
Two years 100%
</TABLE>
SECTION 10. PRORATION OF AWARDS
In the event an individual becomes or, by reason of death, total
disability, Retirement or redundancy, ceases to be a Participant during the
Plan Period, any Award granted to such Participant will be prorated for the
period of participation in the Plan and will be paid in accordance with the
provisions of Section 8 hereof. Awards due to Participants who die prior to
payment shall be paid to the beneficiary designated for Company-sponsored life
insurance.
SECTION 11. CHANGE IN CONTROL
For purposes of this Plan, a "Change in Control of the Company" shall
mean a change in control of a nature that would be required to be reported in
response to Item 1(a) of the Current Report on Form 8-K, as in effect on the
date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended ("Exchange Act") or would have been required to be so reported
but for the fact that such event had been "previously reported" as that term is
defined in Rule 12b-2 of Regulation 12B of the Exchange Act; provided that,
without limitation such a change in control shall be deemed to have occurred if
(a) any Person is or becomes the beneficial owner (as defined in rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities ordinarily (apart from rights accruing under special
circumstances) having the right to vote at election of directors ("Voting
Securities"), or (b) individuals who constitute the Board of Directors of the
Company on the date hereof (the "Incumbent Board") cease for any reason to
constitute at least a majority thereof, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
three-quarters of the directors comprising the remaining members of the
Incumbent Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for
director, without objection to such nomination) shall be, for purposes of this
clause (b), considered as though such person were a member of the Incumbent
Board, or (c) 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
<PAGE> 7
1996 Longterm Incentive Plan
Page 7
exercise of stock options and warrants) to greater than 50%. For purposes of
this paragraph, the term "Person" shall mean and include any individual,
corporation, partnership, group, association or other "person" as such term is
used in Section 14(d) of the Exchange Act, other than the Company, a subsidiary
of the Company or any employee benefit plan(s) sponsored or maintained by the
Company or any subsidiary thereof, and the term "Independent Shareholder" shall
mean any shareholder of the Company except any employee(s) or director(s) of
the Company or any employee benefit plan(s) sponsored or maintained by the
Company or any subsidiary thereof.
In the event that a Participant's employment with the Company is
terminated or constructively terminated or changed in any of the ways
contemplated by Section B, "Termination Following Change in Control," of the
Company's letter agreement with the Participant relating to Change in Control
of the Company, as such agreement may be amended from time to time, such
Participant shall immediately receive a lump-sum, cash Award in an amount equal
to:
a. his Base Salary multiplied by the sum of the maximum
percentages allowable for his position under each of Paragraphs 7.a. and 7.b.
hereof, multiplied by
b. one third (1/3) if the Change in Control occurs in the first
year of the Plan Period or two thirds (2/3) if the Change in Control occurs in
the second year of the Plan Period or one (1) if the Change in Control occurs
in the third year of the Plan Period, minus
c. any amount previously paid to the Participant under the
provisions of Paragraph 8.c. hereof.
SECTION 12. TERMINATION OF THE PLAN
The Plan may be terminated at any time. No termination of the Plan
shall affect the Company's obligation with respect to any benefits theretofore
accrued. In the event of Plan termination, the Plan Period shall end on the
effective date of the termination of the Plan.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 6,177
<SECURITIES> 0
<RECEIVABLES> 53,138
<ALLOWANCES> 1,153
<INVENTORY> 10,925
<CURRENT-ASSETS> 86,619
<PP&E> 206,381
<DEPRECIATION> 80,621
<TOTAL-ASSETS> 259,137
<CURRENT-LIABILITIES> 57,613
<BONDS> 18,485
<COMMON> 134,641
0
0
<OTHER-SE> 3,012
<TOTAL-LIABILITY-AND-EQUITY> 259,137
<SALES> 0
<TOTAL-REVENUES> 81,682
<CGS> 0
<TOTAL-COSTS> 63,581
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 48
<INTEREST-EXPENSE> 645
<INCOME-PRETAX> 2,727
<INCOME-TAX> 1,304
<INCOME-CONTINUING> 1,423
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,423
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
