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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 2, 1998
POOL ENERGY SERVICES CO.
(Exact name of registrant as specified in its charter)
TEXAS 000-18437 76-0263755
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
10375 RICHMOND AVENUE 77042
HOUSTON, TEXAS
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (713) 954-3000
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POOL ENERGY SERVICES CO.
TABLE OF CONTENTS
FOR
CURRENT REPORT ON FORM 8-K
Page
Item 5. Other Events........................................................ 2
Item 7. Financial Statements and Exhibits................................... 4
Signature .................................................................... 5
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ITEM 5. OTHER EVENTS.
Bylaw Amendment
On December 2, 1998, the Board amended Section 4 of Article III of the
Company's Bylaws to eliminate the automatic reduction in the number of directors
upon the resignation, death or disability of a director. As a result of the
amendment, any vacancy created by a director's failure to complete his or her
term may be filled by a majority of the remaining directors by the appointment
of a successor to serve for the balance of the unexpired term of the predecessor
director. Under the former bylaw provision, a director who failed to complete
his or her term could only be replaced by creating and filling a vacancy,
thereby restoring the number of directors. The Company's Bylaws, as amended, are
filed as Exhibit 3.2 to this Form 8-K.
Change in Control Agreements
As of December 9, 1998, the Company entered into amended and restated
Change In Control Agreements (the "Agreements") with James T. Jongebloed,
William J. Myers, Ronald G. Hale, Ernest J. Spillard and Geoffrey Arms. The
Company has provided or will provide ten other persons who currently have change
in control agreements, along with two additional persons who have assumed or
will soon be assuming enhanced executive responsibilities, the opportunity to
enter into similar change in control agreements.
The Agreements, which were amended and restated as part of a process
initiated in August 1998, set forth certain benefits that the Company will
provide to such officers in the event of a "change in control" or a "potential
change in control" of the Company, as defined in the agreements. Such agreements
continue in effect until terminated by the Company upon specified notice and
continue for three years following a change in control of the Company and for
the duration of any potential change in control. The agreements each provide
that if a change in control occurs, the officer shall be entitled to receive an
amount equal to the "target amount" provided for in each of the Long Term Plans
that is then in effect in which the officer participates. Such payment is to be
made in shares of Common Stock to the extent the Long Term Plan provides for
payment in stock and to the extent shares are available for such purpose, and
otherwise such amount is to be paid in cash. The agreements also provide that
all stock options of the officer will become fully vested upon a change in
control, and provide that if the officer's employment is terminated by the
Company or if the officer elects to terminate employment under certain
circumstances defined as "good reason" within three years following a change in
control of the Company, or if the officer's employment is terminated while there
exists a potential change in control and a change in control thereafter occurs
within a certain period of time, the officer will be
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entitled to a lump sum severance payment. Such severance payment is to be equal
to (i) three times the officer's annual base salary (but not in excess of the
aggregate base salary that could be earned up to the officer's normal retirement
date), (ii) an amount equal to three times the bonus award for achieving the
target performance goals provided for in the Company's management bonus plan for
the year preceding the change in control, and (iii) at the officer's election,
the value over the exercise price of unexercised stock options. In addition, the
officer shall be entitled to a three-year continuation of certain employee
benefits, two additional years of service credit under the Company's retirement
program, and reimbursement of certain legal fees, expenses, and any applicable
excise taxes. The definitive form of the Agreements is filed as Exhibit 10.1 to
this Form 8-K.
1999 Long-Term Incentive Plan
On December 2, 1998, the Compensation Committee approved and the Board
ratified the Company's 1999 Long-Term Incentive Plan ("1999 Plan") covering the
performance period commencing on January 1, 1999 and ending December 31, 2001.
Under the 1999 Plan, a target award of shares will be established for each
participant based on a percentage of the individual's salary in effect at the
beginning of the applicable three-year performance period. A payout under the
1999 Plan will depend on the extent to which the established performance
criteria are satisfied. Target awards under the 1999 Plan will be based 25
percent on earnings before interest, taxes and depreciation performance, 25
percent on total return to shareholders as compared to a peer group of
companies, 25 percent on Common Stock performance compared to the Standard &
Poor's 500 Index and 25 percent on price appreciation of the Common Stock. The
number of shares potentially issuable to Messrs. Jongebloed, Hale, Spillard and
Arms will be determined with reference to the average closing price of the
Company's common stock over the last twenty trading days of 1998.
All awards under the 1999 Plan are to be paid in Common Stock, to the
extent sufficient shares are available under the Company's 1993 Employee Stock
Incentive Plan, and otherwise are to be paid in cash. Shares received under the
1999 Plan will be restricted so that, (i) if the executive's employment
terminates within one year after the shares are earned, 100 percent of the
shares would be forfeited, and (ii) if the executive's employment terminates
between one and two years after the award is earned, 50 percent of the shares
would be forfeited except in the event of termination of the executive's
employment due to retirement, death, total disability, redundancy or change in
control. Target payouts are equal to specified percentages of participants'
annual base salaries in effect at the beginning of the performance period, as
follows: 60 percent for Mr. Jongebloed, 40 percent for Messrs. Spillard and
Hale, and 25 percent for Mr. Arms. Threshold payouts under the other 1999 Plan
are one-fourth of the target payouts. Maximum payouts under the 1999 Plan are
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150 percent of the target payouts. Threshold payouts are made if performance
falls within a certain range below that which is necessary to earn the target
award. Maximum payments are made if performance exceeds by a specified amount
that which is necessary to earn the target payouts. The Pool Energy Services Co.
1999 Long-Term Incentive Plan is filed as Exhibit 10.2 to this Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits
The following documents are filed as exhibits to this Current
Report:
Exhibit
Number Description of Exhibit
3.2 Bylaws of the Company as currently in effect.
10.1 Definitive Form of Change In Control Agreement.
10.2 Pool Energy Services Co. 1999 Long-Term Incentive Plan.
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SIGNATURE
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.
By: /s/ Geoffrey Arms
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Geoffrey Arms
Title: Vice President and General Counsel;
Corporate Secretary
Dated: December 24, 1998
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EXHIBIT INDEX
The following documents are filed as exhibits to this Current Report:
Exhibit
Number Description of Exhibit
3.2 Bylaws of the Company as currently in effect.
10.1 Definitive Form of Change In Control Agreement.
10.2 Pool Energy Services Co. 1999 Long-Term Incentive Plan.
EXHIBIT 3.2
BYLAWS OF POOL ENERGY SERVICES CO.
A CORPORATION INCORPORATED UNDER
THE LAWS OF THE STATE OF TEXAS
These Bylaws shall constitute the private laws of Pool Energy Services
Corporation duly incorporated under the laws of the State of Texas (herein
called the "corporation"), for the administration and regulation of the affairs
of the corporation.
In the event any provision of these Bylaws is or may be in conflict with
any applicable law of the United States or the State of Texas, or of any order,
rule, regulation, decree or judgment of any governmental body or power or court
having jurisdiction over this corporation, or over the subject matter to which
such provision of these Bylaws applies or may apply, such provision of these
Bylaws shall be inoperative to the extent only that the operation thereof
unavoidably conflicts with such law or order, rule, regulation, decree or
judgment, and shall in all other respects be in full force and effect.
ARTICLE I
OFFICES
Section 1. The registered office of the corporation shall be at 10375
Richmond Avenue, in the City of Houston, County of Harris, State of Texas, and
the registered agent of the corporation at such address shall be such person as
the Board of Directors may from time to time designate.
Section 2. The corporation may also have offices at such other places both
within and without the State of Texas as the Board of Directors may from time to
time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 1. All meetings of the shareholders shall be held at the registered
office of the corporation, or at such other place either within or without the
State of Texas as shall be designated from time to time by the Board of
Directors.
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Section 2. The annual meeting of shareholders shall be held on the first
Thursday of May of each year at 10:00 a.m., for the election of Directors and
the transaction of such other business as may properly be brought before the
meeting.
Section 3. Special meetings of the shareholders may be called by the
Chairman, the President, the Board of Directors, or the holders of not less than
one-tenth of all the shares entitled to vote at the meetings. Business
transacted at all special meetings shall be confined to the objects stated in
the notice of meeting.
Section 4. Written or printed notice stating the place, day and hour of the
meeting, and, in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
or at the direction of the Chairman, the President, the Corporate Secretary, or
the officer or person calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the stock transfer books of the corporation,
with postage thereon prepaid.
Section 5. The officer or agent having charge of the stock transfer books
for shares of the corporation shall make, at least ten (10) days before each
meeting of shareholders, a complete list of the shareholders entitled to vote at
such meeting or any adjournment thereof, arranged in alphabetical order, with
the address of and the number of shares held by each, which list, for a period
of ten (10) days prior to such meeting, shall be kept on file at the registered
office of the corporation and shall be subject to inspection by any shareholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any shareholder during the whole time of the meeting. The original
stock transfer books shall be prima-facie evidence as to who are the
shareholders entitled to examine such list or transfer books or to vote at any
meeting of shareholders.
Section 6. The holders of a majority of the shares issued and outstanding
and entitled to vote thereat, present in person or represented by written proxy,
shall constitute a quorum at all meetings of the shareholders for the
transaction of business. If, however, such quorum shall not
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be present or represented at any meeting of the shareholders, the shareholders
entitled to vote thereat, present in person or represented by proxy shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at the meeting as
originally notified.
Section 7. Each outstanding share, of any class, shall be entitled to as
many votes per share as the Articles of Incorporation shall provide, on each
matter submitted to a vote at a meeting of shareholders, except to the extent
that the voting rights of the shares of any class or classes are limited or
denied by the Articles of Incorporation or these Bylaws. The vote for the
election of Directors and, upon demand of any shareholder, the vote upon any
question before the meeting shall be by ballot. Cumulative voting is expressly
prohibited.
Section 8. At any meeting of the shareholders, every shareholder having the
right to vote shall be entitled to vote in person or by proxy executed in
writing by such shareholder or by his duly authorized attorney in fact. No proxy
shall be valid after eleven (11) months from the date of its execution unless
otherwise provided in the proxy. All proxies shall be revocable unless expressly
provided therein to be irrevocable and are coupled with an interest and shall be
filed with the Corporate Secretary of the corporation prior to or at the time of
the meeting at which they are to be voted.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the shares having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which, by express provision of the statutes or of the
Articles of Incorporation or of these Bylaws, a different vote is required, in
which case such express provision shall govern and control the decision of such
question. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Section 10. The Chairman shall preside at all meetings of the shareholders.
In his absence, an officer of the corporation designated by the Board of
Directors shall preside and perform the duties of the Chairman at such meeting.
He shall appoint two inspectors of voting to serve at each such meeting. Before
acting at any meeting, the inspectors shall be sworn faithfully
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to execute their duties with strict impartiality and according to the best of
their ability. The inspectors shall determine the number of shares outstanding,
the voting power of each, the shares represented at the meeting, the existence
of a quorum, the qualification of voters, the authenticity, validity and effect
of proxies, receive votes and ballots, hear and determine all challenges and
questions in any way arising in connection with the vote, count and tabulate all
votes and determine and announce the result of the voting.
Section 11. At an annual meeting of the shareholders, only such business
shall be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be specified in the
notice of meeting (or any supplement thereto) given by or at the direction of
the Board, otherwise properly brought before the meeting by or at the direction
of the Board, or otherwise properly brought before the meeting by a shareholder.
In addition to any other applicable requirements, for business to be properly
brought before an annual meeting by a shareholder, the shareholder must have
given timely notice thereof in writing to the Corporate Secretary. To be timely,
a shareholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation, not less than fifty (50) days
nor more than seventy-five (75) days prior to the meeting; provided, however,
that in the event that less than sixty-five (65) days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so received not later than the close of
business on the 15th day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made. A
shareholder's notice to the Corporate Secretary shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (ii) the name
and record address of the shareholder proposing such business, (iii) the class
and number of shares of the corporation which are beneficially owned by the
shareholder, and (iv) any material interest of the shareholder in such business.
Notwithstanding anything in the Bylaws to the contrary, no business shall
be conducted at the annual meeting except in accordance with the procedures set
forth in this Section 11; provided, however, that nothing in this Section 11
shall be deemed to preclude discussion by any shareholder of any business
properly brought before the annual meeting in accordance with said procedure.
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The Chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 11, and if he should
so determine, he shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted.
Section 12. Only persons who are nominated in accordance with the following
procedures shall be eligible for election as Directors. Nominations of persons
for election to the Board of the corporation may be made at a meeting of
shareholders by or at the direction of the Board of Directors by any nominating
committee or person appointed by the Board or by any shareholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section 12. Such
nominations, other than those made by or at the direction of the Board, shall be
made pursuant to timely notice in writing to the Corporate Secretary. To be
timely, a shareholder's notice shall be delivered to or mailed and received at
the principal executive offices of the corporation not less than fifty (50) days
nor more than seventy-five (75) days prior to the meeting; provided, however,
that in the event that less than sixty-five (65) days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by the shareholder to be timely must be so received not later than the close of
business on the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such shareholder's
notice to the Corporate Secretary shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a Director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of capital stock of the corporation which are beneficially owned by the
person, and (iv) any other information relating to the person that is required
to be disclosed in solicitations for proxies for election of Directors pursuant
to Rule 14a under the Securities Exchange Act of 1934 as amended; and (b) as to
the shareholder giving the notice (i) the name and record address of shareholder
and (ii) the class and number of shares of capital stock of the corporation
which are beneficially owned by the shareholder. The corporation may require any
proposed nominee to furnish such other information as may reasonably be required
by the corporation to determine the eligibility of such proposed nominee to
serve as Director of the corporation. No person shall be eligible for election
as a Director of the corporation unless nominated in accordance with the
procedures set forth herein.
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The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
Section 13. Any action required by law to be taken at a meeting of the
shareholders, or any action which may be taken at a meeting of the shareholders,
may be taken without a meeting if a consent in writing setting forth the action
so taken shall be signed by all of the shareholders entitled to vote with
respect to the subject thereof.
Section 14. Upon compliance with the notice requirements of this Article or
waiver of notice, a meeting of shareholders may be conducted by means of
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other.
ARTICLE III
DIRECTORS
Section 1. The business and affairs of the corporation shall be managed by
its Board of Directors who may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute or by the Articles of
Incorporation or by these Bylaws directed or required to be exercised or done by
the shareholders.
Section 2. The Board of Directors shall consist of at least two, but not
more than ten Directors, which number shall be determined by the Directors from
time to time, subject to the automatic reduction provisions of Section 4 of this
Article III. A person shall be ineligible to be a Director of the corporation
after the date of the annual meeting of shareholders of the corporation in the
year in which such person's seventy-seventh birthday occurs, provided, however,
that commencing as of the date of the annual meeting of shareholders to be held
in 1995, a person shall be ineligible to be elected as a Director of the
corporation if he or she is seventy years of age or older. Directors need not be
shareholders or residents of the State of Texas. The Directors shall be divided
into three classes, designated Class I, Class II and Class III. The initial term
for directors in Class I shall expire at the annual meeting of shareholders to
be held in 1995; the initial term for Directors in Class II shall expire at the
annual meeting of shareholders to be held in 1996; and the initial term for
Directors in Class III shall expire at the annual meeting of shareholders to be
held in 1997. Each class of Directors shall consist, as
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nearly as possible, of one-third of the total number of Directors constituting
the entire Board of Directors.
At the expiration of the initial term of each class of Directors, and of
each succeeding term of each class, each class of Directors shall be elected to
serve until the annual meeting of shareholders held three years from such
expiration and until their successors are elected and qualified or until their
earlier death, resignation, removal or retirement. Any increase or decrease in
the number of Directors constituting the Board shall be apportioned among the
classes so as to maintain the number of Directors in each class as nearly as
possible to one-third of the total number of Directors as so adjusted.
Section 3. Any Director may resign at any time either by oral tender of
resignation at any meeting of the Board of Directors or by giving written notice
thereof to the Corporate Secretary. Resignations shall take effect when tendered
or at the time specified in the tender and, unless otherwise specified, the
acceptance of a resignation shall not be necessary to make it effective.
Section 4. Any director may be removed from office only at a meeting of
shareholders called expressly for that purpose by the affirmative vote of the
holders of at least two-thirds of the shares then entitled to vote at an
election of directors, and only for cause. Except as may otherwise be provided
by law, cause for removal shall be construed to exist only if the director whose
removal is proposed has been convicted of a felony by a court of competent
jurisdiction and such conviction is no longer subject to direct appeal, has been
adjudged by a court of competent jurisdiction to be liable for negligence or
misconduct in the performance of his duties to the corporation in a matter of
substantial importance to the corporation and such adjudication is no longer
subject to direct appeal, or has been declared of unsound mind by order of
court. Any vacancy occurring in the Board of Directors other than by reason of
an increase in the number of directors may be filled by the affirmative vote of
a majority of the remaining Directors even though such remaining Directors shall
be less than a quorum of the Board of Directors. A Director elected to fill any
such vacancy shall be elected for the unexpired term of his predecessor in
office. A two-thirds majority of directors then in office may, in the case of a
vacancy occurring by reason of an increase in the number of directors, fill such
vacancy for a term of office continuing only until the next election of one or
more directors by the shareholders; provided, however, that the Board of
Directors may not fill more than two directorships to be filled by reason of an
increase in the number of directors between any two
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successive annual meetings of shareholders.
Section 5. The Board of Directors, by resolution adopted by a majority of
the full Board of Directors, may designate from among its members one or more
committees, each of which, to the extent provided in such resolution, or in the
Articles of Incorporation or in the Bylaws of the corporation, shall have and
may exercise all of the authority of the Board of Directors, except that no such
committee shall have the authority of the Board of Directors in reference to
amending the Articles of Incorporation, approving a plan of merger or
consolidation, recommending to the shareholders the sale, lease, or exchange of
all or substantially all of the property and assets of the corporation otherwise
than in the usual and regular course of its business, recommending to the
shareholders a voluntary dissolution of the corporation or a revocation thereof,
amending, altering, or repealing the Bylaws of the corporation or adopting new
Bylaws for the corporation, filling vacancies in the Board of Directors or any
such committee, electing or removing officers or members of any such committee,
fixing the compensation of any member of such committee, or altering or
repealing any resolution of the Board of Directors which by its terms provides
that it shall not be so amendable or repealable; and, unless such resolution,
the Articles of Incorporation, or the Bylaws of the corporation expressly so
provide, no such committee shall have the power or authority to declare a
distribution or share dividend or to authorize the issuance of shares of the
corporation.
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. The Directors of the corporation may hold their meetings, both
regular and special, either within or without the State of Texas.
Section 7. An organizational meeting of the Board of Directors shall be
held without further notice immediately following the annual meeting of
shareholders, and at the same place, unless, by unanimous consent of the
Directors then elected and serving such time or place shall be changed.
Section 8. Regular meetings of the Board of Directors may be held with or
without notice at such time and place as shall from time to time be determined
by the Board of Directors.
Section 9. Special meetings of the Board of Directors may be called on
twenty-four (24) hours' notice to each Director, or such shorter period of time
as the person calling the meeting deems appropriate in the circumstances, either
personally, or by mail, or by telegram; special
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meetings shall be called by the Chairman or the President or, in the event of
the inability of both the Chairman and the President to act, the Corporate
Secretary in like manner and on like notice on the written request of two
Directors. Neither the business to be transacted at, nor the purpose of, any
special meeting need be specified in a notice or waiver of notice.
Section 10. At all meetings of the Board of Directors the presence of a
majority of the Directors shall constitute a quorum for the transaction of
business and the act of a majority of the Directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. Any action
required or permitted to be taken at a meeting of the Board of Directors may be
taken without a meeting if a consent in writing, setting forth the action so
taken, is signed by all members of the Board of Directors. If a quorum shall not
be present at any meeting of Directors, the Directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 11. COMPENSATION OF DIRECTORS. The Board of Directors shall have
authority to establish, from time to time, the amount of compensation which
shall be paid to its members for their services as Directors.
Section 12. Upon compliance with the notice requirements of this Article or
waiver of notice, a meeting of the Board of Directors may be conducted by means
of conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other.
ARTICLE IV
NOTICES
Section 1. Whenever under the provisions of the statutes or of the Articles
of Incorporation or of these Bylaws, notice is required to be given to any
Director or shareholder, and no provision is made as to how such notice shall be
given, it shall not be construed to mean personal notice, but any such notice
may be given in writing, postage prepaid, addressed to such Director or
shareholder at such address as appears on the books of the corporation. Any
notice required or permitted to be given by mail shall be deemed to be given at
the time when the same shall be thus deposited in the United States mails as
aforesaid.
Section 2. Whenever any notice is required to be given to any shareholder
or Director of the corporation under the provisions of the statutes or of the
Articles of Incorporation, or of these
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Bylaws, a waiver thereof in writing signed by the person or persons entitled to
such notice, whether before or after the time stated in such notice, shall be
equivalent to the giving of such notice. Attendance of a Director at a meeting
shall constitute a waiver of notice of such meeting, except when a Director
attends a meeting for the express purpose, in writing filed at the meeting, of
objecting to the transaction of any business on the grounds that the meeting is
not lawfully called or held.
ARTICLE V
OFFICERS
Section 1. The executive officers of the corporation shall be a Chairman, a
President, one or more Executive Vice Presidents, Senior Vice Presidents or Vice
Presidents, a General Counsel, a Controller, a Corporate Secretary and a
Treasurer, all of whom shall be elected by the Board of Directors. Any two or
mare offices may be held by the same person, except that the Chairman or the
President and the Corporate Secretary shall not be the same person. Each such
executive officer shall have such authority and perform such duties in the
management of the corporation as may be determined by resolution of the Board of
Directors.
Section 2. The Board of Directors may elect or appoint such other officers
and agents as it shall deem necessary, who shall hold their offices for such
term and who shall have such authority and perform such duties as may be
prescribed by the Board of Directors or the President. The power to appoint such
other officers and agents may be delegated by the Board of Directors to the
Chief Executive Officer to the extent the Board may delineate by resolution.
Section 3. Each officer of the corporation shall hold office until his
successor is chosen and qualified in his stead or until his death or until his
resignation, retirement or removal from office. Any officer or agent elected or
appointed by the Board of Directors may be removed by the Board of Directors
whenever in its judgment the best interests of the corporation will be served
thereby, but such removal shall be without prejudice to the contracts rights, if
any, of the person so removed. Election or appointment of any officer or agent
shall not of itself create contract rights.
Section 4. CHAIRMAN. The Chairman shall be the Chief Policy Officer of the
corporation and shall, subject to the direction and control of the Board of
Directors, be their representative and medium of communication. He shall see
that all orders, resolutions and
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policies adopted by the Board of Directors are carried into effect. He shall
preside at all meetings of shareholders and at all meetings of the Board of
Directors. He shall, in the absence or inability of the President, be charged
with the duties and responsibilities of the President.
Section 5. PRESIDENT. The President shall be the Chief Executive Officer of
the corporation, with attendant responsibility and accountability, and shall be
in charge of the entire, full-time working organization, except as to the
Chairman's office. The President shall be directly responsible to the Chairman
in regard to policy matters as policies are enunciated by the Board. He shall,
in the absence or inability of the Chairman to act, preside at meetings of the
Board of Directors and of the shareholders.
Section 6. EXECUTIVE VICE PRESIDENTS. Each Executive Vice President shall
have such powers and responsibilities, and shall perform such duties, as
delineated by the Board or Chief Executive Officer. They shall be directly
responsible to such executive officers as the Chief Executive Officer may from
time to time prescribe.
Section 7. THE GENERAL COUNSEL. The General Counsel shall have general
control over all matters of a legal nature concerning the corporation and shall
perform such duties as delineated by the Board or by the Chief Executive
Officer. He shall be directly responsible to the President in said performance.
Section 8. SENIOR VICE PRESIDENTS. Each Senior Vice President shall have
such powers and responsibilities, and shall perform such duties, as may be
delineated by the Board or by the Chief Executive Officer. They shall be
directly responsible to such executive officer as the Chief Executive Officer
may from time to time prescribe.
Section 9. VICE PRESIDENTS. Each Vice President shall have such powers and
responsibilities, and shall perform such duties, as may be delineated by the
Board or the Chief Executive Officer. They shall be directly responsible to such
executive officer as the Chief Executive Officer may from time to time
prescribe.
Section 10. CONTROLLER. The Controller shall be in general control of the
accounts of the corporation, shall be responsible for the making of adequate
audits, shall prepare and interpret required accounting, financial and
statistical statements, shall be directly responsible to such executive officer
and shall perform such other duties as the Board or Chief Executive Officer may
from time to time prescribe.
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Section 11. CORPORATE SECRETARY. The Corporate Secretary shall attend all
meetings of the Board of Directors and shareholders and act as secretary thereof
and shall record all votes and minutes of all proceedings of the Board of
Directors and shareholders in a book for that purpose maintained and kept in his
custody. He shall keep in his custody the seal of the corporation and shall in
general perform all the duties incident to the office of Secretary of a
corporation. He shall act as Transfer Agent of the corporation and/or Registrar
of its capital stock and other securities; provided that the Board of Directors
may by resolution appoint one or more other persons or corporations as Transfer
Agents and/or Registrars or as Co-Transfer Agents and/or Co-Registrars. He shall
be directly responsible to such executive officer and shall perform such other
duties as the Board or Chief Executive Officer may from time to time prescribe.
Section 12. TREASURER. The Treasurer shall have custody of all funds and
securities of the corporation and shall keep full and accurate accounts of
receipts and disbursements. He may endorse checks, notes and other obligations
on behalf of the corporation for collection and shall deposit the same, together
with all monies and other valuable effects to the credit of the corporation in
banks or other depositories as the Board of Directors may designate by
resolution or as may be established in accordance with Article VIII of these
Bylaws. He shall be directly responsible to such executive officer as the Chief
Executive Officer may from time to time designate and shall perform all duties
incident to the Treasurer of a corporation as the Board or Chief Executive
Officer shall designate.
Section 13. ASSISTANT CORPORATE SECRETARY, ASSISTANT TREASURER, ASSISTANT
CONTROLLER. The Board of Directors may appoint one or more Assistant Corporate
Secretaries, Assistant Treasurers and Assistant Controllers and such other
appointive officers as may be appropriate and required. They shall be directly
responsible to such executive officer and shall perform such duties as the Board
or Chief Executive Officer may from time to time designate.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
Section 1. The shares of stock of this corporation shall be deemed personal
estate, and shall be transferable only on the books of the corporation in such
manner as these Bylaws prescribe.
<PAGE>
Section 2. Every shareholder in the corporation shall be entitled to have a
certificate or certificates representing the number of shares owned by him. The
certificates of shares of stock of the corporation shall be numbered and shall
be entered in the books of the corporation as they are issued. They shall
exhibit the holder's name and number of shares, and shall be signed by the
President or a Vice President, and the Treasurer or an Assistant Treasurer and
bear the corporate seal; but the signatures of such officers and the seal of the
corporation upon such certificates may be facsimiles, engraved or printed where
such certificate is signed by a duly authorized Transfer Agent or Co-Transfer
Agent and a Registrar or Co-Registrar.
Section 3. The Board of Directors may make such rules and regulations as it
may deem expedient concerning the issue, transfer, conversion, and registration
of certificates for shares of the capital stock of the corporation.
Section 4. The Board of Directors may direct a new certificate representing
shares to be issued in place of any certificate theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of the fact by the person claiming the certificate to be lost or
destroyed. When authorizing such issue of a new certificate, the Board of
Directors, in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost or destroyed certificate, or his
legal representative, to advertise the same in such manner as it shall require
and/or give the corporation a bond in such form, in such sum, and with such
surety or sureties as it may direct as indemnity against any claim that may be
made against the corporation and its Transfer Agents and Registrars and its
Co-Transfer Agents and Co-Registrars with respect to the certificate alleged to
have been lost or destroyed.
Section 5. Transfers of shares of stock shall be made on the books of the
corporation only by the person named in the certificate or by attorney, lawfully
constituted in writing, and upon surrender of the certificate therefor.
Section 6. The Board of Directors may close the stock transfer books of the
corporation for a period not to exceed sixty (60) days for the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any purpose,
provided that if such books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a shareholders' meeting, such
books shall be closed for at least ten (10) days immediately preceding such
meeting. In lieu of so closing the stock transfer books,
<PAGE>
the Board of Directors may fix a date in advance, not exceeding sixty (60) days
preceding the date of any meeting of shareholders, or the date for the payment
of any dividend or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, as a
record date for the respective determination of the shareholders entitled to
notice of, and to vote at, any such meeting, or entitled to receive payment of
any such dividend, or to any such allotment of rights, or to exercise rights in
respect of any such change, conversion or exchange of capital stock and in such
case such shareholders and only such shareholders as shall be shareholders of
record on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting, or to receive payment of such distribution and share dividend, or
to receive such allotment or rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any shares of stock on the books of the
corporation after any such record date fixed as aforesaid. In the absence of any
designation with respect thereto by the Board of Directors, the date upon which
the notice of a meeting is mailed or resolutions declaring a distribution and
share dividend are adopted shall be the record date for such determination in
regard to meetings of shareholders or declarations of distributions and share
dividends.
Section 7. The corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder in fact thereof and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such share on the part of any other person, whether or not it shall have express
or other notice thereof, save as expressly provided by the laws of Texas.
Section 8. BONDS, DEBENTURES, AND OTHER EVIDENCES OF INDEBTEDNESS. Bonds,
debentures and other evidence of indebtedness of the corporation shall be signed
by the President or any Vice President and the Treasurer or an Assistant
Treasurer and shall bear the corporate seal and when so executed shall be
binding upon the corporation, but not otherwise. The seal of the corporation
thereon may be facsimile, engraved or printed, and where any such bond,
debenture or other evidence of indebtedness is authenticated with the manual
signature of an authorized officer of the corporation or trustee appointed or
named by an indenture of trust or other agreement under which such security is
issued, the signature of any of the corporation's officers authorized to execute
such security may be facsimile.
Section 9. SIGNATURES ON SHARE CERTIFICATES, BONDS, DEBENTURES AND
EVIDENCES OF INDEBTEDNESS. In case any officer who signed, or whose facsimile
<PAGE>
signature has been placed on any certificate representing shares of stock, bond,
debenture or evidence of indebtedness of this corporation shall cease to be an
officer of the corporation for any reason before the same has been issued or
delivered by the corporation, such certificate, bond, debenture or evidence of
indebtedness may nevertheless be issued and delivered as though the person who
signed it or whose facsimile signature had been placed thereon had not ceased to
be such officer.
ARTICLE VII
DEEDS AND OTHER INSTRUMENTS OF CONVEYANCE
Section 1. Deeds and other instruments of the corporation conveying land or
any interest in land shall be signed by the President or a Vice President, or an
attorney-in-fact of the corporation when authorized by appropriate resolution of
the Board of Directors or shareholders, and attested by the Corporate Secretary
or an Assistant Corporate Secretary, and shall bear the corporate seal and when
so executed shall be binding upon the corporation, but not otherwise.
ARTICLE VIII
CHECKS, DRAFTS AND BILLS OF EXCHANGE
Section 1. The Chief Executive Officer of the corporation may from time to
time establish General Bank Accounts, Depository Bank Accounts, and such Special
Bank Accounts, as in his judgment may be needed in carrying on and dispatching
the business of the corporation. All checks, drafts and bills of exchange issued
in the name of the corporation and calling for the payment of money out of said
General Accounts, Depository Accounts, or Special Accounts of the corporation
shall be signed by the Controller or Assistant Controller, or such agents and
employees as the Chief Executive Officer may from time to time designate and
authorize to sign for the Controller, and countersigned by the Treasurer or any
Assistant Treasurer, or such agents and employees as the Chief Executive Officer
may from time to time designate and authorize to sign for the Treasurer; and
when so designated by the Chief Executive Officer, the signature of the
Treasurer or an Assistant Treasurer may be affixed by the use of a check-signing
machine; provided that for the purpose of transferring funds from any bank or
depository at which the corporation has funds on deposit to any other bank or
depository of the corporation for credit to the corporation's account, a form of
check having plainly printed upon its face "DEPOSITORY
<PAGE>
TRANSFER CHECK" and being by its wording payable to a bank or depository for
credit to the account of the corporation, is hereby authorized, and such checks
shall require no signature other than the name of the corporation printed at the
lower right corner; and further provided that checks, drafts and bills of
exchange issued in the name of the corporation in the amount of $5,000 or less
need bear only one signature and that being the signature of the Treasurer or an
Assistant Treasurer, affixed either manually or by the use of a check-signing
machine, or the manual signature of such agents and employees as the Chief
Executive Officer may from time to time designate and authorize to sign for the
Treasurer; and provided further that checks and drafts issued in the name of the
corporation and calling for payment of money out of Special Bank Accounts
established for the payment of dividends need bear only one signature and that
being the signature of the Treasurer or an Assistant Treasurer, affixed either
manually or by the use of a check-signing machine, or the manual signature of
such agents and employees as the Chief Executive Officer may from time to time
designate and authorize to sign for the Treasurer; and provided further that no
person authorized to sign checks or drafts may sign a check or draft payable to
himself. When signed in such applicable manner, but not otherwise, every check,
draft or bill of exchange issued in the name of the corporation and calling for
the payment of money out of the General Bank Accounts, Depository Bank Accounts,
and Special Bank Accounts of the corporation shall be valid and enforceable
according to its wording, tenor and effect, but not otherwise. Provided however,
that for the purpose of transferring funds between accounts of the corporation,
from accounts of the corporation to accounts of subsidiaries and affiliates,
from accounts of the corporation for the purpose of investment of corporate
funds, and from accounts of the corporation for the payment of dividends, the
Treasurer or an Assistant Treasurer, or such agents and employees as the Chief
Executive Officer may from time to time designate and authorize, may make such
transfer of funds by bank wire transfers through oral or written instructions;
and for the purpose of transferring funds from accounts of the corporation to
accounts of other third parties, such funds may be transferred by bank wire
transfers but only upon written instructions from the Treasurer or an Assistant
Treasurer or such agents and employees as the Chief Executive Officer may from
time to time designate and authorize to sign for the Treasurer, and
countersigned by the Controller or Assistant Controller, or such agents and
employees as the Chief Executive Officer may from time to time designate and
authorize to sign for the Controller.
<PAGE>
Section 2. The Treasurer of the corporation may establish special bank
accounts designated as Agent's Account or Local Manager's Account in such bank
or banks as in his judgment may be needed in carrying on and dispatching the
business of the corporation, provided that the Treasurer in establishing and
maintaining such accounts shall keep only such funds therein and in such amount
as may be required for the local needs of such accounts and provided that checks
or drafts issued against or drawn on such accounts shall be valid and binding on
the corporation according to their wording, tenor and effect when signed by
either the Treasurer of the corporation or by such agent or employee of the
corporation as may be designated by the Treasurer in writing to such bank or
when signed in such manner and by such agent or employee of the corporation as
may be designated by the Chief Executive Officer of the corporation; and further
provided that checks and drafts issued in the name of the corporation against
funds in such Agent's Account or Local Manager's Account in the amount of
$1,000.00 or more must be countersigned by two persons authorized to sign such
checks or drafts.
ARTICLE IX
FISCAL YEAR
Section 1. The fiscal year shall begin the first day of January in each
year.
ARTICLE X
DISTRIBUTIONS AND SHARE DIVIDENDS
Section 1. Distributions and share dividends upon the outstanding shares of
the corporation, subject to the provisions of the Articles of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting. Distributions may be paid in cash, or in property, and share dividends
may be paid in shares of the authorized but unissued shares or in treasury
shares of the corporation, subject to the provisions of the Articles of
Incorporation.
ARTICLE XI
RESERVES
Section 1. There may be created by resolution of the Board of Directors out
of the
<PAGE>
surplus of the corporation such reserve or reserves as the Directors from time
to time, in their discretion, think proper to provide for contingencies, or to
equalize dividends, or to repair or maintain any property of the corporation, or
for such other purpose as the Directors shall think beneficial to the
corporation, and the Directors may modify or abolish any such reserve in the
manner in which it was created.
ARTICLE XII
SEAL
Section 1. The corporation's seal shall have inscribed thereon the name of
the corporation, the year of the organization and the words "Corporate Seal,
Texas". Said seal may be used by causing it or a facsimile there of to be
impressed or affixed or reproduced or otherwise.
ARTICLE XIII
INDEMNIFICATION
Section 1. The corporation shall indemnify any person who (1) is or was a
director, officer, employee or agent of the corporation, or (2) while a
director, officer, employee or agent of the corporation, is or was serving at
the request of the corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise, to the fullest extent that a
corporation may or is required to grant indemnification to a director under the
Texas Business Corporation Act. The corporation may indemnify any person to such
further extent as permitted by law.
ARTICLE XIV
AMENDMENTS
Section 1. The power to alter, amend, suspend, or repeal the bylaws or to
adopt new bylaws shall be vested in the Board of Directors, provided, however,
that neither Section 4 of Article III nor this Article XIV may be altered,
amended, suspended, or repealed without the affirmative vote of a two-thirds
majority of the full Board of Directors.
As amended through December 2, 1998.
EXHIBIT 10.1
December 9, 1998
Mr. ___________________
c/o Pool Energy Services Co.
10375 Richmond Avenue
Houston, TX 77042
Dear Mr. _____________:
Pool Energy Services Co. (the "Company") considers the establishment and
maintenance of a sound and vital management to be essential to protecting and
enhancing the best interests of the Company and its shareholders. In this
connection, the Company recognizes that, as is the case with many publicly held
corporations, the possibility of a Change in Control may exist and that such
possibility, and the uncertainty and questions which it may raise among
management, may result in the departure or distraction of management personnel
to the detriment of the Company and its shareholders. Accordingly, the Company's
Board of Directors (the "Board") has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of
members of the Company's management, including yourself, to their assigned
duties without distraction in the face of the potentially disturbing
circumstances arising from the possibility of a Change in Control of the
Company.
In order to induce you to remain in the employ of the Company or such
subsidiary thereof by which you are employed (the "Employing Entity") this
Agreement sets forth certain benefits which the Company agrees will be provided
to you in the event of, among other things, a "Change in Control" of the Company
(as defined in section 2 hereof) under the circumstances described below.
1. TERM. This Agreement shall have an initial term expiring on the
earlier of (a) the third anniversary of the date hereof, assuming there has
been no Change in Control or Potential Change in Control of the Company, or
(b) your Normal Retirement Date as defined herein; provided, however, that
the period provided in the clause (a) shall be automatically extended for
successive periods of one (1) year on a continuing basis unless either
party shall give written notice of intention not to so extend at least six
(6) months prior to the end of the initial three (3) year period or any
renewal period. No notice by the Company of its intention
<PAGE>
not to extend shall be effective if, within one year prior to the original
expiration date, or if this Agreement is in a renewal period, within one
year prior to the termination date proposed by the Company, a Potential
Change in Control has occurred, or the Company otherwise has reason to
believe that a Person (as defined herein) has taken or is considering steps
that would when completed bring about a Change in Control of the Company.
This Agreement shall in any case continue in effect (i) for the period from
the date of a Potential Change in Control until the date described in
section 4(xvi) hereof, and (ii) for three (3) years following a Change in
Control of the Company.
2. CHANGE IN CONTROL; POTENTIAL CHANGE IN CONTROL. For purposes of
this Agreement:
(i) "Change in Control" of the Company shall mean, subject to the
provisions of paragraph (ii) below, 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 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 exercise of
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stock options and warrants) to greater than 50%. For purposes of this
Agreement, 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, any employee benefit plan(s)
sponsored or maintained by the Company or any subsidiary thereof, or a
mutual fund or other investor that does not engage in managing or
directing the management of entities in which it invests, 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.
(ii) An event that causes the 20% threshold specified in
paragraph (i) above to be crossed that is an acquisition of securities
directly from the Company shall not constitute a Change in Control
unless it results in a Person becoming the beneficial owner of 40% or
more of the Voting Securities of the Company.
(iii) A "Potential Change in Control" of the Company shall be
deemed to have occurred if:
(A) An event occurs that would constitute a Change in
Control but for the provisions of section 2(ii) above;
(B) Proxies for the election of director(s) are solicited by
anyone other than the Company and result in the election as a
director of any person that was not nominated for election by the
Incumbent Board;
(C) Any Person commences a tender offer or an exchange
offer, which, if consummated, would result in a Change in
Control;
(D) The Company enters into an agreement the consummation of
which would constitute a Change in Control; or
(E) Any other event occurs which is deemed by the Board to
be a Potential Change in Control.
3. TERMINATION OF EMPLOYMENT.
(i) Disability; Retirement.
(A) If, as a result of your incapacity due to physical or
mental illness, you shall have been unable for more than six (6)
consecutive full calendar months after the execution of this
Agreement to perform your duties with the Company or the
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Employing Entity on a full time basis, and within thirty (30)
days after written notice of termination is given you shall not
have returned to the full time performance of your duties, the
Company may terminate your employment for "Disability", provided
that the Board of Directors of the Company shall have before such
termination been furnished with the certificates of not less than
two qualified physicians, one selected by the Company and one by
or on behalf of you, stating that in their opinion you are or
will continue to be by reason of such inability totally unable or
unable adequately to perform the services required of you
pursuant to this Agreement. If the two physicians so selected are
unable to reach an agreement on the issue of your ability to
perform such services adequately, they shall promptly designate a
qualified physician to make such determination and the decision
of such third physician shall be binding on the Company and you.
If the two physicians are unable to agree upon a third physician
for such purpose, the parties shall request the Dean of the
School of Medicine of the University of Texas at Houston to
choose such third physician.
(B) Termination of your employment based on "Retirement"
shall mean retirement in accordance with the terms of Retirement
Plan(s) of the Company or the Employing Entity as identified in
Schedule A attached hereto and any successor or substitute
plan(s) put into effect prior to a Change in Control of the
Company (collectively, the "Retirement Plan") applicable to you,
including early retirement, or in accordance with any retirement
arrangement established with your consent by the Company or the
Employing Entity with respect to you. "Normal Retirement Date" as
used herein shall be the first day of the first calendar month
following the calendar month in which you reach age 65. Early
retirement initiated by the Company shall be treated as a
dismissal and not a voluntary early retirement.
(ii) Cause. Termination of your employment by the Company for
"Cause" shall mean termination upon (A) the willful and continued
failure by you substantially to perform your duties (other than any
such failure resulting from your incapacity due to physical or mental
illness), after a demand for substantial performance is delivered to
you by the Chairman, the Board or the President of the Company which
specifically identifies the manner in which it is believed that you
have not substantially performed your duties, and a reasonable period
of opportunity for such substantial performance is provided, or (B)
the willful engaging by you in illegal misconduct materially and
demonstrably injurious to the Company. For purposes of this paragraph,
no act, or failure to act, on your part shall
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<PAGE>
be considered "willful" unless done, or omitted to be done, by you not
in good faith and without reasonable belief that your action or
omission was in the best interest of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly
adopted by the Board or by the Board of Directors of the Employing
Entity or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by you in
good faith and in the best interest of the Company. Notwithstanding
the foregoing, you shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to you a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of
the Board called and held for that purpose (after reasonable notice to
you and an opportunity for you, together with your counsel, to be
heard before the Board), finding that in the good faith opinion of the
Board you were guilty of conduct set forth above in clauses (A) or (B)
in this paragraph and specifying the particulars thereof in detail.
(iii) Good Reason. "Good Reason" for you to terminate your
employment shall mean:
(A) An adverse change in your status or position(s) as an
executive or other key employee of the Company or of the
Employing Entity as in effect immediately prior to the Change in
Control, including, without limitation, any adverse change in
your status or position as a result of a diminution in your
duties or responsibilities (other than (i) a de minimis
diminution in duties or responsibilities, or (ii), if applicable,
any such change directly attributable to the fact that less than
50% of the Company's Voting Securities are publicly owned) or a
change in your business location of more than 35 miles or the
assignment to you of any duties or responsibilities which, in
your reasonable judgment, are inconsistent with such status or
position(s), or any removal of you from or any failure to
reappoint or reelect you to such position(s) (except in
connection with or as a result of the termination of your
employment for Cause, Disability or Retirement on or after your
Normal Retirement Date or as a result of your death or by you
other than for Good Reason);
(B) A reduction by the Company or the Employing Entity in
your base salary as in effect immediately prior to the Change in
Control or in the number of vacation days to which you are then
entitled under the Company's vacation policy as in effect
immediately prior to the Change in Control;
(C) The taking of any action by the Company or the
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Employing Entity (including the elimination of a plan without
providing substitutes therefor, the reduction of your awards
thereunder, or the failure to replicate a plan, such as an annual
bonus plan, that by its terms is time limited and is of a type
that it has been the Company's practice to replace with a similar
plan from time to time), that would diminish other than in a de
minimis amount the aggregate projected value of your awards under
any bonus, stock option or other management incentive plans in
which you were participating at the time of a Change in Control
of the Company;
(D) The taking of any action by the Company or the Employing
Entity that would diminish other than in a de minimis amount the
aggregate value of the benefits provided you under the Company's
medical, health, dental, accident, disability, life insurance,
stock purchase or retirement plans in which you were
participating at the time of a Change in Control of the Company;
(E) A failure by any successor (as hereinafter defined) to
provide the assumption and acknowledgement of this Agreement
contemplated by section 6 hereof;
(F) Any purported termination by the Company of your
employment that is not effected pursuant to a Notice of
Termination satisfying the requirements of paragraph (iv) below
(and, if applicable, paragraph (ii) above); for purposes of this
Agreement, no such purported termination shall be effective; or
(G) A Change in Control, as defined in section 2 above, but
only if you terminate your employment pursuant to this subsection
(G) within the period beginning 60 days after the date of such
Change in Control and ending one year after the date of such
Change in Control. This subsection (G) shall be inapplicable in
respect of any Change in Control that results from a merger or
other business combination that a majority of the Incumbent Board
determines in good faith, prior to the consummation of such
merger or other business combination, is a friendly transaction,
provided, however, that, for purposes of this subsection (G), no
merger or business combination that is consummated with any
person following the initiation by such person or any affiliate
of such person of a tender offer, exchange offer, proxy
solicitation or consent solicitation that is not approved by the
Board prior to the commencement thereof shall ever be
characterized as a friendly transaction.
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(iv) Notice of Termination. Any termination by the Company
pursuant to paragraphs (i) or (ii) above or by you pursuant to
paragraph (iii) above shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice specifying the
termination provision in this Agreement relied upon and setting forth
in reasonable detail the facts and circumstances claimed to provide a
basis for termination of your employment under the provision so
specified.
(v) Date of Termination. "Date of Termination" shall mean (A) if
your employment is terminated for Disability, thirty (30) days after
Notice of Termination is given (provided that you shall not have
returned to the performance of your duties on a full-time basis during
such thirty (30) day period); (B) if you terminate your employment
pursuant to paragraph (iii) above, the date specified in the Notice of
Termination; (C) if your employment is terminated for death or
Retirement on or after your Normal Retirement Date, the date of your
death or Retirement; (D) if the circumstances described in section
4(xiv) hereof occur, the date of the termination described therein and
(E) if your employment is terminated for any other reason, the date on
which Notice of Termination is given.
4. RIGHTS AND OBLIGATIONS UPON CHANGE IN CONTROL, POTENTIAL CHANGE IN
CONTROL, TERMINATION OR DURING DISABILITY.
(i) If a Change in Control of the Company occurs, the Company
shall pay to you or shall cause to be paid to you in a lump sum on or
before the fifth business day following the Change in Control an
amount equal to the "target amount" provided for in each then
outstanding long term incentive plan (each an "Incentive Plan") of the
Company in which you are a participant.
If, and to the extent that the payout provided for in an
Incentive Plan is denominated in shares of common stock of the
Company, the payment(s) to be made pursuant to this section 4(i) shall
be a number of shares (the "Shares") equal to the "target number of
shares". The Shares shall be fully registered and transferable.
To the extent that the payout provided for in an Incentive Plan
is denominated in shares of common stock of the Company and duly
registered shares of the Company's common stock are not available for
payment thereof, you shall receive a lump sum payment in cash, within
five (5) business days after the date of the Change in Control, of the
"target amount" under each such Incentive Plan. For purposes of this
section 4(i), the
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"target amount" and the "target number of shares" provided for in each
Incentive Plan shall be determined as provided in Schedule C attached
hereto.
(ii) Upon the occurrence of a Change in Control of the Company,
all outstanding stock options granted to you pursuant to the Stock
Option Plans shall become 100% vested and immediately exercisable.
(iii) After the occurrence of a Change in Control of the Company,
during any period that you fail to perform your duties hereunder as a
result of incapacity due to physical or mental illness, you shall
continue to receive your full base salary at the rate then in effect,
and any time of service for vesting purposes under any plan shall
continue to accrue during such period of incapacity until and if your
employment is terminated pursuant to section 3(i)(A) hereof (and for
any longer period as may be provided under applicable plans).
(iv) After the occurrence of a Change in Control of the Company,
if your employment is terminated for Cause, the Company shall pay you,
or shall cause to be paid to you, your full base salary and accrued
vacation pay through the date of Termination at the rate in effect at
the time Notice of Termination is given plus any benefits or awards
(including both the cash and stock components) which pursuant to the
terms of any plans have been earned or become payable, but which have
not yet been paid to you, and shall have no further obligations to you
under this Agreement.
(v) If the Company or the Employing Entity, within a period of
three (3) years after the occurrence of a Change in Control,
terminates your employment other than for Disability or Cause pursuant
to section 3(i)(A) or 3(ii) hereof, or if you, within a period of
three (3) years after the occurrence of a Change in Control of the
Company, terminate your employment for Good Reason as provided for in
sections 3(iii)(A) through 3(iii)(G) of this Agreement (which
termination may be effected by Retirement prior to your Normal
Retirement Date), or if the circumstances described in section 4(xiv)
hereof occur, then the Company shall pay to you or shall cause to be
paid to you (without regard to the provisions of any benefit plan) in
a lump sum on or before the tenth business day following the Date of
Termination an amount equal to the sum of the following paragraphs (A)
through (D):
(A) Your full base salary through the Date of Termination at
the rate in effect just prior thereto (not taking into account
any reduction in your base salary that constitutes Good Reason
for your
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<PAGE>
termination), plus any earned vacation time, plus any benefits or
awards (including both the cash and stock components) which
pursuant to the terms of any plans have been earned or become
payable, but which have not yet been paid to you; plus
(B) An amount equal to three (3) times the amount of the
bonus award for achieving the target performance goals provided
for in the Company's management bonus plan in which you were a
participant that was in effect during the year preceding the year
in which the Change in Control occurs; plus
(C) An amount equal to three (3) times the higher of (a)
your rate of annual base salary on the Date of Termination or (b)
your rate of annual base salary in effect immediately prior to
the Change in Control; provided however, that such amount shall
in no event exceed the aggregate amount of base salary that you
would have otherwise received had your employment continued at
such higher rate until your Normal Retirement Date; plus
(D) At your election, an amount equal to the market value of
a share of the Company's common stock on the later of (a) the
Date of Termination or (b) the date on which a Change in Control
occurs, or on any other date within 180 days preceding the date
specified above, on whichever date the value is highest,
multiplied by the aggregate number of options, vested or
unvested, granted to you prior to the Date of Termination under
the Company's stock option and stock incentive plan(s) identified
in Schedule B attached hereto and any successor or substitute
stock option or stock incentive plan(s) and which remain
unexercised on the Date of Termination, less the aggregate
exercise price of all such options.
(vi) The payment to you of appropriate amounts under paragraph
(D) shall be considered for all purposes a discharge of all
obligations pursuant to such stock option or stock incentive plan(s)
except any options that you do not elect to have cashed out pursuant
to said paragraph (D).
(vii) For purposes of this Agreement, the term "base salary"
shall include any amounts deducted pursuant to Sections 125 and 401(k)
of the Internal Revenue Code of 1986, as amended, (the "Code").
Amounts paid pursuant to this section 4 shall be deemed severance pay
and in lieu of any further salary for periods subsequent to the Date
of Termination.
(viii) In the event that you become entitled to the payments
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<PAGE>
provided by sections 4(i), 4(ii) or 4(v) hereof (the "Agreement
Payments"), if any portion of the Total Payments (as hereinafter
defined) will be 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 you at the time
specified in subsection (ix) below an additional amount (the "Gross-up
Payment") such that the net amount retained by you, after deduction of
any Excise Tax on the Total Payments and any federal, state and local
income tax, FICA, and Excise Tax upon the Gross-up Payment provided
for in this subsection (viii), but before deduction for any federal,
state or local income tax or FICA on the Total Payments shall be equal
to the Total Payments.
For purposes of determining whether any portion of theTotal
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (a) any other payments or benefits received or to be
received by you in connection with a Change in Control of the Company
or your termination of employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the
Company, any person whose actions result in a change of 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)(l) of the Code shall
be treated as subject to the Excise Tax, unless in the opinion of tax
counsel selected by the Company's independent 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, (b) 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)(l) of the Code (after applying clause (a),
above), and (c) the value of any non-cash benefits or any deferred
payment or benefit shall be determined by the Company's independent
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,
you 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
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<PAGE>
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 subsequently determined to
be less than the amount taken into account hereunder at the time the
Gross-up Payment is made, you shall repay to the Company at the time
that the amount of such reduction in Excise Tax is finally determined
the portion of the Gross-up Payment attributable to such reduction
(plus the portion of the Gross-up Payment attributable to the Excise
Tax and federal and state and local income tax imposed on the portion
of the Gross-up Payment being repaid by you if such repayment results
in a reduction in Excise Tax and/or a federal and state and local
income tax deduction), plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the Code. 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.
(ix) The Gross-up Payment(s) provided for in subsection (viii)
above shall be paid at the same time as payment of any amounts under
section 4(v); 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 you on such day
an estimate, as determined in good faith by the Company's independent
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
4(v). 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 you, 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).
(x) If the Company or the Employing Entity terminates your
employment other than for Disability or Cause pursuant to section
3(i)(A) or 3(ii) hereof or if you terminate your employment for Good
Reason (which termination may be effected by Retirement prior to your
Normal Retirement Date), the Company shall provide you with benefits
equal in value to each life, health, accident, or disability benefit
to which you were entitled (through insurance, direct reimbursement,
or otherwise) immediately before the Date of Termination (not taking
into account any reduction in such
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<PAGE>
benefit that constitutes Good Reason for your termination). The value
of the foregoing benefits shall be determined individually rather than
in the aggregate, and shall be compared after subtracting applicable
income and employment taxes. The Company shall provide the benefits
described in this subsection for a period terminating on the earlier
of (A) three years after the Date of Termination or after the date of
a Change in Control, if later, or (B) your Normal Retirement Date. An
election by you to terminate for Good Reason shall not be deemed a
voluntary termination of employment by you for purposes of this
Agreement or of any plan or practice of the Company. At the end of the
period of coverage, you shall have the option to have assigned to you,
at no cost and with no apportionment of prepaid premiums, any
assignable insurance policy owned by the Company or the Employing
Entity and relating specifically to you.
(xi) If your employment is terminated within the first three
years after a Change in Control, by the Company or the Employing
Entity without Cause or by you for Good Reason, you shall receive, at
the time you first receive any payment under or with respect to the
Retirement Plan, an amount (calculated and paid in the form of a Lump
Sum) equal to the difference between (i) the Lump Sum value of any
payment you receive at such time (or any monthly annuities that you
then become entitled to receive) (a) from the Retirement Plan and (b)
from the Company with respect to the portion, if any, of your
Retirement Plan pension which exceeds the limitations on pension
amounts to which the Retirement Plan is subject and (ii) the Lump Sum
value of the amount of such payment or payments if it or they had been
calculated as if you had been deemed to have had two additional years
of Service. "Service" shall be as defined in the Retirement Plan and
shall be applied as if you were a participant thereunder at the time
of your termination of employment. "Lump Sum" amounts shall be
calculated using (A) 100% of the applicable interest rate, both
immediate and deferred, as specified in Section 417(e) of the Internal
Revenue Code (the "PBGC Interest Rate") published for use as of
January 1 of the year in which you receive any payment under or with
respect to the Retirement Plan and (B) the 1984 Unisex Pension (UP84)
Mortality Table. When and if the PBGC Interest Rate is no longer
published as a variable standard, a comparable standard (i.e., a rate
that produces a lump sum value at an assumed retirement age of 60
which is at least as favorable to you as the lump sum value that would
have been produced by using the PBGC Interest Rate) shall be
determined and substituted for the current basis. For purposes of this
section 4(xi), the comparability of an actuarial basis to another
shall be determined as of the day the last published PBGC Rate is
effective.
(xii) You shall not be required to mitigate the amount of any
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<PAGE>
payment provided for in this section 4 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
in this section 4 be reduced by any compensation earned or benefit
received by you as the result of employment by another employer after
the Date of Termination, or otherwise.
(xiii) Upon entering into this Agreement and thereafter at any
time up to sixty (60) days before amounts are payable to you pursuant
to this Agreement, you may, in writing, direct the Company that any
amounts which should become payable to you pursuant to section 4(v)
hereof shall be paid to you in equal annual installments over a period
of three (3) to ten (10) years, with the first such installment
payable within five business days of the Date of Termination and each
successive installment paid on the anniversary of the Date of
Termination or the next following business day if such date is not a
business day (the "Deferred Payment Election"). Any amount deferred
pursuant to the preceding sentence shall be credited with interest at
the rate provided in Section 1274(b)(2))B) of the Code.
Notwithstanding anything in the foregoing to the contrary, a Deferred
Payment Election shall be automatically revoked should you terminate
your employment under the circumstances described in section 6 below.
(xiv) In the event (A) the Company or the Employing Entity,
within a period commencing upon the occurrence of a Potential Change
in Control of the Company and ending on the date described in section
4(xvi) hereof, terminates your employment other than for Disability or
Cause pursuant to section 3(i)(A) or 3(ii) hereof, and (B) a Change in
Control thereafter occurs (prior to the date described in section
4(xvi) hereof), then all of the rights and obligations set forth in
this Agreement shall apply as if such termination of employment had
occurred following a Change in Control and you shall receive payments
and other benefits in the same amounts and on the same dates as if you
had still been employed at the time of the Change in Control and your
employment had been terminated immediately following the occurrence of
the Change in Control.
(xv) After the occurrence of a Change in Control of the Company,
the Company shall continue to maintain in effect all bylaw provisions
and other contractual indemnities that afford to you rights to
indemnification against liability as an officer, director or employee
of the Company as were in effect immediately prior to the Change in
Control, and shall continue to maintain directors and officers
liability insurance coverages at least in the amounts and other terms
as the Company maintained in effect immediately prior to the Change in
Control for the remaining term of this Agreement.
(xvi) A Potential Change in Control, once it occurs, shall
continue
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in effect until the later of (A) the expiration of one (1) year after
the occurrence of the Potential Change in Control, or (B) the date on
which a majority of the Incumbent Board determines in good faith that
the Potential Change in Control has not resulted in, and is not likely
to result in, a Change in Control.
5. EMPLOYEE'S COMMITMENT; RIGHT TO TERMINATE.
(i) Except as otherwise provided in paragraph (ii) below, the
Company, the Employing Entity or you may terminate your employment at
any time, subject to the benefits specified herein being provided in
accordance with the terms hereof.
(ii) In the event a tender offer or exchange offer is made by a
Person for more than 20% of the combined voting power of the Company's
Voting Securities, including shares of Common Stock of the Company,
you agree that you will not voluntarily leave the employ of the
Company or the Employing Entity (other than as a result of Disability
or upon Normal Retirement) and will render the services contemplated
in this Agreement until such tender offer or exchange offer has been
abandoned or terminated or a Change in Control of the Company has
occurred.
(iii) During the life of this Agreement, you will faithfully
perform your duties to the best of your ability and in accordance with
the directions of the Chief Executive Officer and the Board, provided
that after a Change in Control of the Company such directions do not
constitute Good Reason for you to terminate your employment.
(iv) You will not at any time during the life of this Agreement,
or thereafter, communicate or disclose to any unauthorized person, or
use for your own account, without the written consent of the Company,
any proprietary processes, or other confidential information of the
Company or any subsidiary concerning their business or affairs,
suppliers or customers, it being understood, however, that the
obligations of this paragraph shall not apply to the extent that the
aforesaid matters (A) are disclosed in circumstances in which you are
legally required to do so, or (B) become generally known to and
available for use by the public otherwise than by your wrongful act or
omission.
6. SUCCESSOR'S BINDING AGREEMENT.
(i) The Company will, and you may, seek, by written request at
least five business days prior to the time a Person becomes a
Successor (as hereinafter defined), to have such Person, by agreement
in form and substance satisfactory to you, expressly assume the
Company's obligations under this Agreement and acknowledge that the
Successor is contractually
14
<PAGE>
bound to perform all of such obligations. Failure of such Person to
furnish such assumption and acknowledgement by the later of (A) three
business days prior to the time such Person becomes a Successor or (B)
two business days after such person receives a written request to so
assume and acknowledge shall constitute Good Reason for termination by
you of your employment if a Change in Control of the Company occurs or
has occurred. For purposes of this Agreement, "Successor" shall mean
any person that succeeds to, or has the practical ability to control
(either immediately or with the passage of time), the Company's
business directly, by merger or consolidation, or indirectly, by
purchase of the Company's Voting Securities or otherwise.
(ii) This Agreement shall inure to the benefit of and be
enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die before all amounts that would still be
payable to you hereunder if you had continued to live are paid, all
such unpaid amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to your devisee,
legatee, or other designee or, if there be no such designee, to your
estate.
7. FEES AND EXPENSES. The Company shall pay all legal fees, expenses
of litigation and related expenses incurred by you in connection with this
Agreement, including, without limitation, (a) all such fees and expenses,
if any, incurred in contesting or disputing any termination of your
employment following a Change in Control or under the circumstances
described in section 4(xiv) hereof or incurred by you in seeking advice
with respect to the matters set forth in the provisions hereof or (b) your
seeking to obtain or enforce any right or benefit provided by this
Agreement, irrespective of whether you are successful in contesting or
disputing such termination of your employment or in obtaining or enforcing
any right or benefit under this Agreement.
8. TAXES. All payments to be made to you under this Agreement will be
subject to required withholding of applicable federal, state and local
taxes.
9. SURVIVAL. The respective obligations of, and benefits afforded to,
the Company and you as provided in sections 4, 5, 6, 7 and 8 of this
Agreement shall survive termination of this Agreement.
10. NOTICES. Notices and all other communications provided for herein
shall be in writing and shall be deemed to have been duly given when
delivered or mailed by certified or registered mail, return receipt
requested, postage prepaid addressed to the respective addresses set forth
on the first page of this Agreement or to such other address as either
party may have furnished to the other
15
<PAGE>
in writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt. All notices to the Company shall be
directed to the attention of the Chief Executive Officer of the Company
with a copy to Corporate Secretary of the Company.
11. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged except in writing specifically referring to such
provision and signed by you and such officer as may be specifically
designated by the Board. No waiver at any time by either party hereto of
the breach of any condition or provision of this Agreement, or of
compliance by the other party with the same, shall be deemed a waiver of
any other condition or provision at the same or at any other time. No
agreement or representation still in effect, oral or otherwise, express or
implied, with respect to the subject matter hereof has been made by either
party other than (i) those set forth expressly in this Agreement or (ii)
those in any stock option agreements. Upon termination of your employment,
in the event of any conflict between the terms of this Agreement and the
terms of any other agreements between you and the Company, this Agreement
shall be controlling. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas.
12. VALIDITY. The invalidity or unenforceability of any provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
This Agreement shall supersede any prior agreement between the Company and
you that provides for similar benefits in the event of a Change in Control
(the "Prior Agreement"), provided, however, that (i) if any provision of
this Agreement is determined by a court or other competent authority to be
invalid or unenforceable, the corresponding provision (if any) of the Prior
Agreement shall automatically be reinstated as if it were a provision of
this Agreement, and (ii) if this Agreement is determined by a court or
other competent authority to be invalid or unenforceable, the Prior
Agreement shall automatically be reinstated in its entirety.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
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If this letter correctly sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter which
will then constitute our agreement on this subject.
Sincerely,
POOL ENERGY SERVICES CO.
By:
------------------------
AGREED to as of the date
first above written.
- ------------------------
- ------------------------
Printed Name/Date
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SCHEDULE A
Plans Comprising the "Retirement Plan"
Pool Company Retirement Income Plan
Amended and Restated Supplementary Executive Retirement Plan of Pool Company
(Effective September 30, 1996)
Pool Company 1996 Supplementary Executive Retirement Plan (Effective December 5,
1996)
<PAGE>
SCHEDULE B
Stock Option Plans
Pool Energy Services Co. 1990 Employee Stock Option Plan
Pool Energy Services Co. 1993 Employee Stock Incentive Plan
<PAGE>
SCHEDULE C
1. Pool Energy Services Co. 1996 Longterm Incentive Plan:
"Target amount" shall mean the amount determined by multiplying the "target
number of shares" by the "fair market value" of a share, where:
a. "Target number of shares" is the number of shares of the Company?s
common stock determined by dividing 60% (in the case of the Chief
Executive Officer), 40% (in the case of the Chief Financial Officer
and the Group VP's) or 25% (in the case of the VP & General Counsel
and the VP, Human Resources) of the Base Salary of such officer, as
defined in the Plan, by $9.50.
b. "Fair market value" means Fair Market Value as defined in the Pool
Energy Services Co. 1993 Employee Stock Incentive Plan on the date of
occurrence of a Change in Control.
2. Pool Energy Services Co. 1997 Longterm Incentive Plan:
"Target amount" shall mean the amount determined by multiplying the "target
number of shares" by the "fair market value" of a share, where:
a. "Target number of shares" is the number of shares of the Company's
common stock determined by dividing 60% (in the case of the Chief
Executive Officer), 40% (in the case of the Chief Financial Officer
and the Group VP's) or 25% (in the case of the VP & General Counsel
and the VP, Human Resources) of the Base Salary of such officer, as
defined in the Plan, by $14.6875.
b. "Fair market value" means Fair Market Value as defined in the Pool
Energy Services Co. 1993 Employee Stock Incentive Plan on the date of
occurrence of a Change in Control.
3. Pool Energy Services Co. 1998 Long-term Incentive Plan:
"Target amount" shall mean the amount determined by multiplying the "target
number of shares" by the "fair market value" of a share, where:
<PAGE>
SCHEDULE C, Cont'd
a. "Target number of shares" is the number of shares of the Company?s
common stock determined by dividing 60% (in the case of the Level I
Participant), 40% (in the case of the Level II Participants) or 25%
(in the case of the Level III Participants) of the Base Salary of such
Participant, as defined in the Plan, by $24.234375.
b. "Fair market value" means Fair Market Value as defined in the Pool
Energy Services Co. 1993 Employee Stock Incentive Plan on the date of
occurrence of a Change in Control.
4. Incentive Plans other than the foregoing:
"Target amount" and "target number of shares" shall mean the
respective amounts determined in accordance with the formulas set
forth therein that are designated as the determinants of the "Target
Amount" and Target Number of Shares".
EXHIBIT 10.2
POOL ENERGY SERVICES CO.
1999 LONG-TERM INCENTIVE PLAN
SECTION 1. NAME
The name of the plan is the Pool Energy Services Co. 1999 Long-term
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,
1999 and ending December 31, 2001 (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. "Award" means the dollar amount granted to a Participant, calculated in
accordance with the provisions of Section 7 of the Plan.
c. "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.
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>
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),
Depreciation and Amortization and Minority Interest for the Plan Period as
reflected in the audited financial statements of the Company.
h. "Participant" means the incumbent of any of the following positions:
Level I: Chairman, President and Chief Executive Officer
Level II: Group Vice President, International Operations Senior
Vice President, Finance Senior Vice President, Eastern U.
S. Operations Senior Vice President, Western U. S.
Operations
Level III: Vice President, Gulf Offshore Operations Vice
President, Alaska Operations Vice President,
International Operations Support Vice President and
General Counsel Vice President, Human Resources
i. "Peer Group" means Baker Hughes Incorporated; BJ Services Company;
Daniel Industries, Inc.; Global Marine Inc.; Halliburton Company; Helmerich &
Payne, Inc.; Key Energy Group, Inc.; McDermott International, Inc.; Nabors
Industries, Inc.; Parker Drilling Company; Petroleum Geo-Services A/S; Pride
International, Inc.; Rowan Companies, Inc.; Schlumberger Ltd.; Smith
International, Inc.; Tidewater, Inc.; Transocean Offshore, Inc.; Tuboscope,
Inc.; Varco International, Inc.; Weatherford 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.
j. "Restricted Stock" means Restricted Stock as defined in the Pool Energy
Services Co. 1993 Employee Stock Incentive Plan (the "Stock Plan").
k. "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.
l. "S&P 500 Performance" means the change over the Plan Period in the value
of the S&P 500 Index (the "Index") divided by the value of the Index at the
beginning of the Plan Period, such value to be based on the average of the
closing values of the Index on the twenty trading days ended on the last trading
day preceding the Plan Period, with all such closing values as published in the
Wall Street Journal.
2
<PAGE>
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 twenty 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 twenty 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. "Target Amount" means the amount determined by multiplying the "Target
Number of Shares" by the "Fair Market Value" of a share, where:
(1) "Target Number of Shares" is the number of shares of the Company's
common stock that would be awarded to a Participant if all four of the
performance goals designated in Section 7 hereof as "Target" were achieved
but not exceeded.
(2) "Fair Market Value" means Fair Market Value as defined in the Pool
Energy Services Co. 1993 Stock Incentive Plan on the date on which the
Target Amount becomes payable.
o. "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 twenty 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.
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 vice president's position including Vice
President, Group Vice President and Senior Vice President.
SECTION 6. ADMINISTRATION
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. The
Compensation Committee may increase or decrease the amount of an Award payable
to any Participant when in the judgment of the Compensation Committee the Award
otherwise payable would be excessive or inadequate in view of the Participant's
contribution to achieving the purpose of the Plan.
3
<PAGE>
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 Compensation Committee may amend or, subject to the
provisions of Sections 11 and 12 hereof, terminate the Plan at any time. The
determinations of the Compensation Committee on the matters referred to in this
Section 6 shall be final and conclusive.
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
- ---------------------------------------- -------------------------------------------------------------
Level I Level II Level III
Participants Participants Participants
------------ ------------ ------------
<S> <C> <C> <C>
(1) EBITD is less than None None None
$317.77 million.
(2) EBITD is $317.77 7.5% 5% 3.125%
million.
(3) EBITD is $333.15 15% 10% 6.25%
million. (Target)
(4) EBITD is $365.39 22.5% 15% 9.375%
</TABLE>
If EBITD falls between two of the above levels, 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") compared to Peer Group. 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
- ---------------------------------------- -------------------------------------------------------------
Level I Level II Level III
Participants Participants Participants
------------ ------------ ------------
<S> <C> <C> <C>
6 or less None None None
7,8,9,10
11, 12, or 13 (Target) 15% 10% 6.25%
14 or more 22.5% 15% 9.375%
</TABLE>
4
<PAGE>
In the event that a Peer Group company ceases to exist, is acquired by or
merged with another entity, or otherwise becomes inappropriate for inclusion in
the Peer Group during the Plan Period, such company shall be removed from the
Peer Group, and its Total Return to Shareholders shall be replaced by the
average Total Return to Shareholders of the companies remaining in the Peer
Group.
c. Stock Appreciation. 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
- ---------------------------------------- -------------------------------------------------------------
Level I Level II Level III
Participants Participants Participants
------------ ------------ ------------
Company's Stock Appreciation is:
<S> <C> <C> <C> <C>
Less than 25% None None None
25% 7.5% 5% 3.125%
50% (Target) 15% 10% 6.25%
75% 22.5% 15% 9.375%
</TABLE>
If the Company's Stock Appreciation falls between two of the above levels,
the percentage of Base Salary will be calculated on the basis of straight-line
interpolation between the two levels.
d. Total Return to Shareholders compared to S&P 500 Performance. 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
- ------------------------------------------------------- -------------------------------------------------
Level I Level II Level III
Participants Participants Participants
------------ ------------ ------------
<S> <C> <C> <C> <C>
If the Company's Total Return to Shareholders as a
percent of S&P 500 Performance is:
Less than 85% None None None
85% 7.5% 5% 3.125%
100% (Target) 15% 10% 6.25%
105% 22.5% 15% 9.375%
</TABLE>
If the Company's Total Return to Shareholders as a percent of S&P 500
Performance falls between two of the above levels, the percentage of Base Salary
will be calculated on the basis of straight-line interpolation between the two
levels.
5
<PAGE>
SECTION 8. PAYMENT OF AWARDS
a. Except as provided in Paragraphs c. and d. of this Section 8, a
Participant's Award shall be paid, no later than the March 15th first following
the close of the Plan Period, 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 by
dividing the dollar amount of the Award calculated under Section 7 hereof by the
fair market value of a share of the Company's common stock, where such fair
market value is equal to the average of the closing prices of the Company's
common stock on the twenty 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 system specified in Paragraph 4.1. hereof.
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 of a share of
the Company's common stock, 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 an individual, by reason of death, total disability,
Retirement or redundancy, ceases to be a Participant during the Plan Period, any
Award granted to such Participant shall be paid as specified in Paragraph 10.b.
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.
e. Awards due to Participants who die prior to payment shall be paid to the
beneficiary designated for Company-sponsored life insurance, or, if no such
beneficiary is specified, to the Participant's estate.
SECTION 9. RESTRICTIONS ON RESTRICTED STOCK
a. 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,
except as provided in Paragraph b. of this Section 9, 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 immediately following the end of the Plan Period:
6
<PAGE>
Number of Years of Continuous
Employment Immediately Following Percent of Shares of Restricted Stock
End of Plan Period No Longer Subject to Restriction
-------------------------------- ------------------------------------
Less than one year 0%
One Year 50%
Two years 100%
b. In the event that a Participant's employment with the Company is
terminated at any time prior to the expiration of two years following the end of
the Plan Period by reason of death, total disability, Retirement or redundancy,
any restrictions to which Restricted Stock awarded to such participant under the
Plan would otherwise be subject at the date of such termination shall cease to
exist as of the date of such termination.
SECTION 10. PRORATION OF AWARDS
a. In the event that an individual becomes 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.
b. In the event that a Participant's employment with the Company is
terminated by reason of death, total disability, Retirement or redundancy at any
time 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 no later
than the March 15th first following the close of the Plan Period.
SECTION 11. CHANGE IN CONTROL
For purposes of this Plan:
a. "Change in Control" of the Company shall mean, subject to the provisions
of paragraph b. below, 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
7
<PAGE>
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 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, any employee benefit plan(s) sponsored or maintained by the
Company or any subsidiary thereof, or a mutual fund or other investor that does
not engage in managing or directing the management of entities in which it
invests, 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.
b. An event that causes the 20% threshold specified in paragraph a. above
to be crossed that is an acquisition of securities directly from the Company
shall not constitute a Change in Control unless it results in a Person becoming
the beneficial owner of 40% or more of the Voting Securities of the Company.
In the event that a Change in Control of the Company occurs, the provisions
of any valid and enforceable Change in Control agreement between the Participant
and the Company shall prevail. In the absence of any such agreement, each
Participant shall receive in a lump-sum on or before the fifth business day
following the Change in Control the Target Number of Shares, which shares shall
be fully registered and transferable. To the extent that duly registered shares
of the Company's common stock are not available to make the payments specified
in this paragraph, each Participant shall receive a lump sum payment in cash,
within five business days after the date of the Change in Control, of the Target
Amount.
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 the Plan termination, the Plan Period shall end on the
effective date of the termination of the Plan.
8
