Document:

exv10w2

Exhibit 10.2

EXECUTIVE EMPLOYMENT AGREEMENT

     This Executive Employment Agreement (this “Agreement”) is made by and between Nabors
Industries Ltd. (together with its successors and assigns permitted under this Agreement, “Nabors
Bermuda”), Nabors Industries, Inc. (together with its successors and assigns permitted under this
Agreement, “Nabors Delaware”) (Nabors Bermuda and Nabors Delaware collectively referred to herein
as “the Company”), and Anthony G. Petrello (the “Executive”), effective as of April 1, 2009 (the
“Effective Date”). Whenever there is a reference to an obligation of “Company” in this Agreement,
that reference is to an obligation of Nabors Bermuda and Nabors Delaware jointly and severally.

W I T  N            E  S S E T H

     WHEREAS, Nabors Delaware and the Executive entered into that certain Employment Agreement
effective as of October 1, 1996 (as amended on June 24, 2002, July 17, 2002, December 29, 2005
 and December 31, 2008, collectively the “Amended Employment Agreement”); and Nabors
Bermuda became a party to the Employment Agreement pursuant to the amendment dated June 24, 2002;
and

     WHEREAS, the Amended Employment Agreement is set to expire on September 30, 2010; and

     WHEREAS, the Executive is willing to accept a reduction or elimination of certain benefits to
which he is or may become entitled under the Amended Employment Agreement in exchange for certain
other consideration, including an extended term of employment;

     WHEREAS, the Company and the Executive desire to amend and restate in its entirety the Amended
Employment Agreement to extend the term of employment so as to make available to the Company the
Executive’s unique and special skills, and to reward the Executive for his leadership of the
Company as demonstrated by the growth and success of the Company;

     WHEREAS, the Compensation Committee believes it is in the best interests of the Company and
its shareholders to establish a succession plan for the Chief Executive Officer and that the
Executive be retained by the Company and incentivized to be the designated successor; and

     WHEREAS, Nabors Bermuda and Nabors Delaware desire to allocate between themselves the various
obligations to provide compensation to the Executive as provided in this Agreement and the
Executive is willing to accept such allocation.

     NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually acknowledged, Nabors
Bermuda, Nabors Delaware and the Executive (individually a “Party” and together the
“Parties”) agree that the provisions of the Amended Employment Agreement are no longer in force and
the following provisions supersede in all respects the Amended Employment Agreement, as of the
Effective Date:

 

 

ARTICLE I

DEFINITIONS

     Section 1.1 “Affiliate” of a person or other entity shall mean a person or other entity that
directly or indirectly controls, is controlled by, or is under common control with, the person or
other entity specified. Fifty percent of the equity ownership shall conclusively establish control
for purposes of this definition.

     Section 1.2 “Agreement Expiration Notice” shall mean the notice specified in Section 2.1
below.

     Section 1.3 “Amended Employment Agreement” shall mean the Agreement defined in the first
recital to this Agreement.

     Section 1.4 “Annual Bonus” shall mean the amount calculated as set forth in Section 3.1(b)(i).

     Section 1.5 “Average Stockholder’s Equity” for any fiscal year shall be defined as the average
of the stockholders’ equity on a consolidated basis of Nabors Bermuda and its Affiliates (including
all Affiliates of any successor-in-interest to Nabors Bermuda in the event of a merger or
consolidation of Nabors Bermuda with another entity or a Change in Control) for each of the
thirteen (13) month ends, commencing with the month ending on December 31 of the fiscal year prior
to the fiscal year in question and ending with the month ending on December 31 of the fiscal year
in question, as determined in accordance with then applicable generally accepted accounting
principles.

     Section 1.6 “Base Salary” shall mean the salary provided for in Section 3.1(a) below or any
increased salary granted to the Executive pursuant to Section 3.1(a).

     Section 1.7 “Business” shall mean (i) the operation and marketing of land drilling rigs, land
workover and well-servicing rigs, and offshore platform workover and drilling rigs; the provision
of a wide range of ancillary well-site services including engineering, construction, logistics,
maintenance, well logging, directional drilling, rig instrumentation, data collection and other
support services; and (ii) any other line of business if, at the time the Executive’s employment
with the Company is terminated, such other line of business for each of the previous three fiscal
years constituted at least twenty (20) percent of the Company’s operating income; provided,
however, that in no event shall the Business include the E&P, midstream, or manufacturing business;
and provided, further, that no third-party entity shall be considered engaged in a Business unless
at least twenty (20) percent of its operating income during its preceding last fiscal year was
derived from such Business (it being understood that in no event can Executive exercise control
over the day to day management of such Business on behalf of any third party).

     Section 1.8 “Cash Flow” shall mean income or loss of Nabors Bermuda and its Affiliates
(including all Affiliates of any successor-in-interest to Nabors Bermuda in the event of

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a merger or consolidation of Nabors Bermuda with another entity or a Change in Control) on a
consolidated basis determined in accordance with then applicable U.S. generally accepted accounting
principles before income taxes, plus each of depreciation, any non-cash amortization, deferred
interest and any asset write-downs, and shall be adjusted for any non-cash charges or credits which
have been used in the calculation of net income, provided, however, that an appropriate adjustment
shall be made upon any subsequent transaction or other realization event, including but not limited
to the sale of any depreciated or impaired asset, such that amounts added back in the calculation
of Cash Flow are not counted more than once in any calculation of Cash Flow regardless of the
accounting period. Equitable adjustments shall be made to reflect properly the timing of
transactions that take place at or near the end of any fiscal year to assure that the cash flow
resulting therefrom is properly reflected in that appropriate fiscal year. For the sake of
clarification, depletion shall not be added back to income or loss in the calculation of Cash Flow
for purposes of this Agreement and the definition set forth in this subsection. By way of further
clarification, goodwill impairments shall be treated as asset write-downs.

     Section 1.9 “Cause” shall mean a good faith determination by the vote of at least seventy-five
percent (75%) of the independent members of each of the Nabors Bermuda Board and Nabors Delaware
Board that one or more of the following events exists or has occurred:

     (a) the Executive is convicted of a felony or a crime involving moral turpitude;
provided, however, if such conviction is reversed on a subsequent appeal, any termination
for cause shall be considered to be a termination by the Company under Section 4.1(e) ab
initio; or

     (b) only with respect to the period beginning one year after such time as the Executive
is appointed Chief Executive Officer of Nabors Bermuda, there are facts and applicable law
showing demonstrably that Executive has materially breached a material obligation under
this Agreement; provided, however, that (i) a breach shall be considered material only if it
causes substantial harm to the Company; (ii) upon becoming aware of any alleged breach,
Company shall first provide written notice to Executive of the basis of the alleged breach
in reasonable detail and shall provide Executive ninety (90) days following such written
notice to cure, correct, or mitigate the event so it does not become a basis for a
termination for cause; (iii) if the alleged breach has been cured or corrected by Executive
within ninety (90) days of written notice, no “cause” shall be found; (iv) if the conduct
surrounding the alleged breach, although not capable of being cured or corrected, is
nevertheless stopped or reversed, and the Company has neither been materially financially
harmed nor incurred substantial nonfinancial adverse effects, no “cause” shall be found to
exist, and (iv) in all events, prior to the respective board making any good faith vote on
the matter, Executive shall be afforded the opportunity upon reasonable notice, with counsel
of his choosing, to be heard before the board on the matter, and (v) any dispute regarding
the respective board’s decision shall be subject to Section 8.12, but the termination will
be effective as of the date of the board’s decision.

     Section 1.10 A “Change in Control” shall mean the occurrence of any one of the following
events:

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     (a) any “person,” as such term is used in Sections 3(a)(9), 13(d) and 14d(3) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), becomes a “beneficial
owner,” as such term is used in Rule 13d-3 promulgated under the Exchange Act, of
twenty-five percent (25%) or more of the Voting Stock of Nabors Bermuda;

     (b) the Nabors Bermuda Board or the shareholders of Nabors Bermuda adopt any plan or
proposal which would result directly or indirectly in the liquidation, transfer, sale or
other disposal of all or substantially all of the assets of Nabors Bermuda;

     (c) all or substantially all of the assets or business of Nabors Bermuda are disposed
of pursuant to a merger, consolidation or other transaction (unless the shareholders of
Nabors Bermuda immediately prior to such merger, consolidation or other transaction
beneficially own, directly or indirectly, in substantially the same proportion as they owned
the Voting Stock of Nabors Bermuda, all of the Voting Stock or other ownership interests of
the entity or entities, if any, that succeed to the business of Nabors Bermuda);

     (d) Nabors Bermuda or a direct or indirect subsidiary of Nabors Bermuda combines with
another company (regardless of which entity is the surviving one) or Nabors Bermuda or a
direct or indirect subsidiary of Nabors Bermuda acquires stock or assets in a corporate
transaction, but, in any of the preceding circumstances, immediately after the transaction,
the shareholders of Nabors Bermuda immediately prior to the combination hold, directly or
indirectly, sixty-six and two-thirds percent (66-2/3%) or less of the Voting Stock of the
resulting company;

     (e) a recapitalization of Nabors Bermuda occurs which results in either a decrease by
thirty-three percent (33%) or more in the aggregate percentage ownership of Voting
Securities held by Independent Shareholders (on a primary basis or on a fully diluted basis
after giving effect to the exercise of stock options and warrants) or an increase in the
aggregate percentage ownership of Voting Securities held by non-Independent Shareholders (on
a primary basis or on a fully diluted basis after giving effect to the exercise of stock
options and warrants) to greater than fifty percent (50%). For purposes of this subsection,
the term “Independent Shareholder” shall mean any shareholder of Nabors Bermuda except any
executive officers or directors(s) of Nabors Bermuda or any employee benefit
plan(s) sponsored or maintained by Nabors Bermuda or any subsidiary thereof;

     (f) a change in the composition of the Nabors Bermuda Board such that the “Continuing
Directors” cease for any reason to constitute at least a seventy percent (70%) majority of
the Nabors Bermuda Board. The “Continuing Directors” shall mean those members of the Nabors
Bermuda Board who either: (x) were directors at the Effective Date of this Agreement; or
(y) were elected by, or on the nomination or recommendation of, at least a three-quarters
(3/4) majority (consisting of at least four directors) of the Nabors Bermuda Board who were
or become Continuing Directors;

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     (g) if Eugene M. Isenberg ceases to be either the Chief Executive Officer or the
Chairman of the Board of either Nabors Bermuda or Nabors Delaware and the Executive is not
offered such position in which Mr. Isenberg is no longer serving, with the terms of this
Agreement to apply with respect to the Executive’s continued employment in such position; or

     (h) an event that would be required to be reported in response to Item 5.01 of Form
8-K, Current Report pursuant to Section 13 or 15(d) of the Exchange Act whether or not
(x) such event is so reported on such Form or (y) the Company is then subject to such
reporting requirement.

     Section 1.11 “Code” or “Internal Revenue Code” shall mean the Internal Revenue Code of 1986,
as amended, final regulations thereunder and any subsequent Internal Revenue Code.

     Section 1.12 “Company Relationships” shall mean the relationships specified in Section 6.1
below.

     Section 1.13 “Compensation Committee” shall mean the Compensation Committee of the Nabors
Bermuda Board.

     Section 1.14 “Confidential Information” shall mean the information specified in Section 6.1
below.

     Section 1.15 “Constructive Termination Without Cause” shall mean termination of the
Executive’s employment at his election as provided in Section 4.1(d) following the occurrence,
without the Executive’s written consent, of one or more of the following events:

     (a) a reduction in the Executive’s then current Base Salary or the termination or
material reduction of any executive benefit or perquisite enjoyed by him unless a plan or
program providing substantially similar benefits or perquisites is substituted;

     (b) the failure to elect or reelect the Executive to any of the positions described in
Section 2.2 below or the removal of him from any such position (including the positions of
Chief Executive Officer or Chairman of the Board upon any assumption of those positions
following Eugene M. Isenberg), other than upon the voluntary request of the Executive;

     (c) a material diminution in the Executive’s duties or the assignment to the Executive
of duties which are materially inconsistent with his duties or which materially impair the
Executive’s ability to function as the President and Chief Operating Officer of Nabors
Bermuda and Nabors Delaware (including the positions of Chief Executive Officer or Chairman
of the Board upon any assumption of those positions following Eugene M. Isenberg);

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     (d) the failure to continue the Executive’s participation in any incentive compensation
plan unless a plan providing a substantially similar compensation is substituted;

     (e) the relocation of the Company’s principal office to a location more than fifty (50)
miles from Houston, Texas, or the relocation of the Executive’s own office location to a
location other than as determined by the Executive;

     (f) the failure of Nabors Bermuda and Nabors Delaware to obtain the assumption in
writing of their obligation to perform this Agreement by any successor (or, the ultimate
parent of any successor where applicable) to all or substantially all of the assets of
Nabors Bermuda within fifteen (15) days after a merger, consolidation, sale or similar
transaction;

     (g) any act or failure to act by the Nabors Bermuda Board or the Nabors Delaware Board,
other than upon the Executive’s voluntary request, which would cause the Executive (x) not
to be reelected or to be removed from the position of Chief Operating Officer or President
of either Nabors Bermuda or Nabors Delaware (including the positions of Chief Executive
Officer or Chairman of the Board upon any assumption of those positions following Eugene M.
Isenberg) or (y) not to be elected or reelected as a director by the shareholders of Nabors
Bermuda at any meeting held for that purpose or by written ballot of shareholders of Nabors
Bermuda;

     (h) delivery of the Agreement Expiration Notice by the Company to the Executive
pursuant to Section 2.1 of this Agreement, but only if the Executive remains employed for
such period of time after such delivery as the Nabors Bermuda Board may determine is
necessary to allow for an orderly transition of management of the Company; provided that
such period of time may not exceed six months unless otherwise agreed by the Executive;

     (i) the failure of Nabors Bermuda and/or Nabors Delaware (or by any
successor-in-interest) to perform, or the breach by Nabors Bermuda and/or Nabors Delaware
(or by any successor-in-interest) of, any of their material obligations under this
Agreement; or

     (j) upon the written election of the Executive within one year after the date an event
constituting a Change in Control shall have occurred.

Notwithstanding the foregoing, the Executive cannot terminate his employment hereunder for
Constructive Termination Without Cause unless he (i) first notifies the Nabors Bermuda Board or
Compensation Committee in writing of the event (or events) which the Executive believes constitutes
a basis for Constructive Termination Without Cause under subparagraphs (a), (c), (d), (e), (f),
(g), (h) or (i) above within ninety (90) days from the date of such event, and (ii) provides the
Company with at least thirty (30) days to cure, correct or mitigate the event so that it either (1)
does not constitute a basis for a Constructive Termination Without Cause hereunder or (2) the
Executive agrees, in writing, that after any such modification or accommodation made by the

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Company that such event shall not constitute a basis for Constructive Termination Without Cause
hereunder. Termination by Nabors Bermuda and/or Nabors Delaware due to the Executive’s death or
disability, or for “Cause,” pursuant to Sections 4.1(a), 4.1(b) and 4.1(c), respectively, shall not
constitute a basis for a Constructive Termination Without Cause as defined herein.

     Section 1.16 “Disability” shall mean the Executive’s physical or mental inability to perform
substantially his duties and responsibilities under this Agreement for a period of one hundred
eighty (180) consecutive days as determined by an approved medical doctor. For this purpose an
approved medical doctor shall mean a medical doctor selected by the Compensation Committee and the
Executive. If the Compensation Committee and the Executive cannot agree on a medical doctor, they
shall each select a medical doctor and the two doctors shall select another medical doctor who
shall be the sole medical doctor for this purpose.

     Section 1.17 “Expiration Date” shall mean the dated specified in Section 2.1 below.

     Section 1.18 “Nabors Bermuda” shall mean Nabors Industries Ltd.

     Section 1.19 “Nabors Bermuda Board” shall mean the Board of Directors of Nabors Bermuda.

     Section 1.20 “Nabors Delaware” shall mean Nabors Industries, Inc.

     Section 1.21 “Nabors Delaware Board” shall mean the Board of Directors of Nabors Delaware.

     Section 1.22 “Non-Competition Period” shall mean the period specified in Section 6.2(a) below.

     Section 1.23 “Stock” shall mean the Common Stock of Nabors Bermuda.

     Section 1.24 “Subsidiary” of Nabors Bermuda or Nabors Delaware, as applicable, shall mean any
corporation or other entity of which Nabors Bermuda or Nabors Delaware owns, directly or
indirectly, fifty percent (50%) or more of the equity interest.

     Section 1.25 “Term of Employment” shall mean the period specified in Section 2.1 below.

     Section 1.26 “Voting Stock” shall mean capital stock of any class or classes, or partnership
or other ownership interests, having the power to vote under ordinary circumstances, in the absence
of contingencies, in the election of directors.

ARTICLE II

EMPLOYMENT AND DUTIES

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     Section 2.1 Term of Employment. The Company hereby employs the Executive, and the
Executive hereby accepts such employment, for the period commencing April 1, 2009, and ending at
the close of business on March 30, 2013 (such date, as may be extended from time to time pursuant
to the terms hereof, the “Expiration Date”), provided that on each April 1 on which the Executive
is employed on or after April 1, 2011 (April 1, 2011 and each anniversary thereof during the term
of this Agreement, an “Extension Date”), the Expiration Date shall be extended automatically by one
(1) additional year. Notwithstanding the foregoing, the Company or the Executive may fix the
Expiration Date by providing written notice, no later than 90 days prior to the next upcoming
Extension Date, to the other Party hereto that it is terminating the automatic extension described
in the preceding sentence (“Agreement Expiration Notice”). The term specified in the first
sentence of this Section 2.1 is subject to earlier termination in accordance with Article IV of
this Agreement.

     Section 2.2 Duties of Employment. During the Term of Employment, the Executive shall
be employed as the President and Chief Operating Officer of each of Nabors Bermuda and Nabors
Delaware, and shall be responsible for the general management of the affairs of the Company. The
Executive shall also be a member of the Executive Committee of the Nabors Bermuda Board to the
extent such Executive Committee exists. The Executive, in carrying out his duties under this
Agreement, shall report to the Nabors Bermuda Board. The Executive agrees to serve in the
foregoing positions and to perform diligently and to the best of his abilities the duties and
services consistent with his positions as are determined and directed by the Nabors Bermuda Board
and Nabors Delaware Board or their designees, or as are necessary, in the reasonable judgment of
the Executive, to carry out his duties specified herein.

     Section 2.3 Conflict of Interest. The Executive agrees, during the period of his
employment by the Company, to devote his reasonable attention and time to the business and affairs
of the Company and its affiliates to discharge his responsibilities under this Agreement, and not
to knowingly become involved in a material conflict of interest with the Company or its affiliates,
or upon discovery thereof, allow such a conflict to continue. Moreover, the Executive agrees that
the Executive shall disclose to the Nabors Bermuda Board and Nabors Delaware Board any facts which
might involve such a material conflict of interest that has not been approved in writing by the
Nabors Bermuda Board and Nabors Delaware Board. The foregoing notwithstanding, the Parties
recognize and agree that the Executive may (i) serve on the boards of directors of a reasonable
number of other corporations or the boards of a reasonable number of trade associations and/or
charitable organizations, (ii) engage in charitable activities and community affairs, and
(iii) manage his personal investments and affairs, to the extent that such activities do not
conflict with the business and affairs of the Company or interfere with the Executive’s performance
of his duties and obligations hereunder.

     Section 2.4 Executive’s Other Obligations. The Executive represents to the Company
that he does not have any obligations to or agreements with other persons or entities (regardless
of whether the Executive believes such obligations or agreements to be enforceable or valid) which
may prevent him from performing his duties as stated in this Agreement.

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ARTICLE III

COMPENSATION AND BENEFITS

     Section 3.1 Compensation. Commencing on the Effective Date, and continuing during the
Term of Employment, Nabors Bermuda and/or Nabors Delaware, as provided below, shall provide
compensation to the Executive in the following forms:

     (a) Base Salary. Nabors Bermuda and Nabors Delaware shall pay the Executive an
annualized Base Salary, payable in accordance with the regular payroll practices of the
Company, of One Million, One Hundred Thousand and 00/100 Dollars ($1,100,000), less
applicable withholdings and authorized deductions. The Base Salary shall be reviewed no less
frequently than annually for increase in the discretion of the Nabors Bermuda Board and the
Compensation Committee.

     (b) Annual Incentive Awards. The Executive shall participate in annual
incentive award programs as follows:

     (i) Annual Bonus.

     (A) Nabors Bermuda and Nabors Delaware shall pay to the Executive an
Annual Bonus in cash each fiscal year equal to the following: one and
one-half percent (1.5%) of the quantity which is the excess of the Cash Flow
in that fiscal year over fifteen percent (15%) of the Average Stockholder’s
Equity in that fiscal year. Effective at such time as Executive becomes
Chief Executive Officer of Nabors Bermuda, this Section 3.1(b)(i)(A) shall
be automatically amended by replacing the words “one and one-half percent
(1.5%)” with “two percent (2%)”. The Executive may elect to receive up to
one-half of the Annual Bonus as an equity award pursuant to and subject to
the terms of any applicable stock plan of the Company provided that such
election shall be made on a timely basis under the requirements of Sections
409A and 451 of the Code and any other applicable laws and any
administrative requirements for such election that may be established from
time to time by the Compensation Committee. Executive undertakes, absent
financial hardship or exigencies, to maintain equity ownership in the form
of stock (restricted or unrestricted) and stock options (vested or unvested)
with a minimum “acquisition value” of five (5) times his Base Salary. In
the case of stock, “acquisition value” for this purpose shall mean the
market closing price on the date of grant or purchase. In the case of stock
options, “acquisition value” shall mean the Black Scholes value of the stock
options on the grant date for financial purposes. In the event the
aforesaid minimum is not met, fifty percent (50%) of subsequent Annual
Bonuses shall be paid in the form of equity until the minimum is met,
subject to the terms of any applicable stock plan of the Company.

     (B) Nabors Bermuda and Nabors Delaware shall pay the monetary portion
of the Annual Bonus and issue any equity award, which

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shall be issued under any equity compensation plan previously approved
by the Company’s stockholders, not later than two and one-half (2-1/2)
months after the end of the respective fiscal year.

Notwithstanding anything to the contrary in this Section 3.1(b)(i), the portion of the
Annual Bonus payable with respect to the first quarter of 2009 shall be calculated in
accordance with the Amended Employment Agreement, and the portion of the Annual Bonus
payable with respect to the last three quarters of 2009 shall be calculated in
accordance with this Agreement.

     (ii) Deferred Bonus. In consideration of the concessions made by the
Executive by foregoing certain benefits to which he was or may have become entitled
under the Amended Employment Agreement, the Executive shall be entitled to participate
in the Nabors Industries, Inc. Executive Deferred Compensation Plan (the “EDCP”) in
accordance with the following terms:

     (A) Commencing on June 30, 2009, and at the end of each calendar quarter
that the Executive is still employed by Nabors Delaware thereafter up to and
including March 30, 2019, Nabors Delaware will credit Two Hundred Fifty
Thousand Dollars ($250,000.00) to a deferred compensation account established
by Nabors Delaware for the Executive’s benefit under the EDCP (the
“Account”). The Executive shall be entitled to elect either to make deemed
investments of the amounts in the Account using the same or similar
investment vehicles available under the Nabors Industries, Inc. Deferred
Compensation Plan or in a deemed investment fund that, during the five year
period beginning on June 30, 2009 (the “Initial EDCP Term”) provides an
annual interest rate on such amounts equal to six percent (6%) and after the
Initial EDCP Term provides an annual interest rate on such amounts as
established by the Compensation Committee from time to time.

     (B) Within 10 days after the earliest occurrence of the following
events, Employee shall be paid the amounts credited to the Account, as
adjusted for deemed investment earnings and/or losses attributable thereto,
as of the date of such occurrence:

(I) At such time as Employee reaches age sixty-five (65) and remains
employed by the Company;

(II) The termination of Employee’s employment with the Company
pursuant to Sections 4.1(a), (b), (d) or (e), but subject to Section
8.2(b);

In the event that the Executive’s employment is terminated for any reason
other than pursuant to Sections 4.1(a), (b), (d) or (e), the Executive shall
forfeit his entire interest in the deferred compensation amounts and the
Account to Nabors Delaware without compensation therefor.

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     (C) Distributions to the Executive of the balance of his Account
pursuant to Section 3.1(b)(ii)(B) shall be made as one lump sum payment.
The Executive shall be solely responsible for all income taxes related to
distributions to him from the Account.

     (D) The provisions of this Section 3.1(b)(ii) shall be subject to the
provisions of the EDCP, which shall control in the event of any conflict
with the provisions of this Agreement; provided, however, that the vesting,
forfeiture and time of payment provisions of Section 3.1(b)(ii)(B) shall
control over any vesting, forfeiture and time of payment provisions of the
EDCP.

     (iii) Equity Awards. The Company may make additional equity awards
pursuant to any plan previously approved by the Company’s shareholders from time to
time as the Nabors Bermuda Board or Compensation Committee deems appropriate.

     (iv) General. The Executive shall be eligible to participate in other
annual or incentive programs of the Company on the same basis as other senior-level
executives of the Company, as the Nabors Bermuda Board or Compensation Committee
deems appropriate.

     (v) Special Bonus. Nabors Bermuda and Nabors Delaware may from time to
time provide a special non-recurring cash or stock-based bonus to the Executive for
certain extraordinary specific developments that materially enhance the value of the
Company.

     (vi) Confirmation of Outstanding Awards. Nabors Bermuda and Nabors
Delaware acknowledge that the Executive has previously been awarded stock options
and restricted stock, some of which are fully vested and some of which are not, and
Nabors Bermuda and Nabors Delaware hereby reaffirm their contractual commitments in
the agreements governing such equity awards, which shall continue to apply and be
construed so as not to change or modify any rights of the Executive set forth
therein.

     (vii) Acceleration of Vesting in the Event of a Change in Control. The
Executive’s unvested stock options, unvested restricted stock and any other equity
compensation awards shall become vested in connection with a Change in Control of
Nabors Bermuda. Notwithstanding the foregoing, vesting of equity awards shall be
accelerated only as permitted by the terms and conditions of the underlying stock
incentive plan pursuant to which they were granted.

     Section 3.2 Benefits. During the Term of Employment, the Executive shall be afforded
the following benefits as incidences of his employment:

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     (a) Executive Benefit Programs. The Executive and, to the extent applicable,
the Executive’s family, dependents and beneficiaries, shall be allowed to participate,
subject to applicable eligibility requirements, in all benefits, plans and programs,
including improvements or modifications of the same, which are now, or may hereafter be,
available to executive employees of the Company. Such benefits, plans and programs may
include, without limitation, pension, profit sharing, savings and other retirement plans or
programs, medical, dental, hospitalization, short-term and long-term disability plans, life
insurance plans, accidental death and dismemberment protection, travel accident insurance,
and any other pension or retirement plans or programs and any other executive welfare
benefit plans or programs that may be sponsored by the Company from time to time, including
any plans that supplement the above-listed types of plans or programs, whether funded or
unfunded. Executive shall be entitled to participate on a basis no less favorable than any
other executive of the Company. The Company shall not, however, by reason of this paragraph
be obligated to institute, maintain, or refrain from changing, amending or discontinuing,
any such benefit plan or program as it applies to the Executive, so long as such changes are
similarly applicable to all executive employees of the Company.

     (b) Life Insurance Benefits. Nabors Delaware and the Executive have heretofore
entered into those certain Split-Dollar Life Insurance Agreements dated September 14, 1995,
September 18, 1997 and November 20, 1997 (the “Split-Dollar Agreements”) pursuant to which
certain insurance policies were purchased (the “Policies”) as compensation solely for the
services performed by the Executive as an employee of Nabors Delaware. Nabors Bermuda is
not a party to the Split-Dollar Agreements, and no provision of this Agreement shall be
interpreted to provide otherwise. To the extent required under the Split-Dollar Agreements,
Nabors Delaware shall make contributions to the Policies in the amounts necessary to
maintain the face value of the insurance coverage as stated in each of the Policies. In the
event Nabors Delaware is not permitted by law to make such contributions to the Policies,
Nabors Delaware shall pay to the Executive for each calendar year a bonus, in addition to
the Annual Bonus paid to the Executive under Section 3.1(b), in an amount equal to the
amount required to permit the Executive to loan sufficient funds to the insurance trusts
which own the Policies to maintain the face value of the insurance coverage as stated in
each of the Policies, provided that the Executive is employed by Nabors Delaware during the
calendar year in which such contribution is owed under the terms of the Policies. Such
bonus shall be paid as a cash lump sum payment no later than two and one-half (2-1/2) months
after the end of the calendar year to which it relates. Such bonus shall be paid as
compensation solely for the services performed by the Executive as an employee of Nabors
Delaware. Provided that Nabors Delaware makes the payments required under this Section
3.2(b), the Executive waives and releases any claim for breach of the Split-Dollar
Agreements arising out of the Company’s failure to make premium payments under the
Split-Dollar Agreements.

     (c) Business and Entertainment Expenses. Subject to the Company’s standard
policies and procedures with respect to expense reimbursement as applied to its executive
employees, the Executive is authorized to incur reasonable expenses as determined in his

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judgment in carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all such business expenses incurred in connection
with carrying out the business of the Company. All expenses reimbursed shall be subject to
documentation and review in accordance with the Company’s policy; the Company shall have one
(1) year from the close of the fiscal year in which the expenses were reimbursed to review
such expenses and, thereafter, expenses reimbursed will be presumed conclusively to be
reimbursable.

     (d) Other Expenses; Perquisites.

     (i) The Executive shall be entitled to participate in the Company’s executive
fringe benefits, if any, in accordance with the terms and conditions of such
arrangements as are made available from time to time for the Company’s executives on
a basis no less favorable than any other executive. In particular, the Executive
shall continue to be entitled to receive, at his discretion, the executive fringe
benefits he was entitled to receive as of March 31, 2009.

     (ii) The Executive shall be entitled to establish a Company paid office for his
use at or near his principal residence, and/or at any other residence maintained by
him. The Executive shall be entitled to employ at the Company’s expense for each
such office an administrative assistant at appropriate compensation levels as
considered necessary by him.

     (e) Vacation. The Executive shall be entitled to six (6) weeks paid vacation
per year. Vacation shall be taken each fiscal year and, if not taken within six (6) months
after the end of the fiscal year, shall not be carried forward thereafter without approval
of the Nabors Bermuda Board.

     (f) Life Insurance for Company’s Benefit. Each of Nabors Bermuda and/or Nabors
Delaware may apply for and procure as owner and for its own benefit, insurance on the life
of the Executive, in such amount and in such forms as Nabors Bermuda or Nabors Delaware may
choose. The Executive shall have no interest whatsoever in any such policy or policies, but,
at the request of Nabors Bermuda and/or Nabors Delaware, shall submit to medical
examinations and supply such information and execute such documents as may reasonably be
required by the insurance company or companies to which Nabors Bermuda and/or Nabors
Delaware has applied for insurance.

ARTICLE IV

TERM AND TERMINATION OF EMPLOYMENT

     Section 4.1 Termination of Employment Prior to Expiration Date. Notwithstanding the
provisions of Section 2.1 of this Agreement, this Agreement and the Executive’s employment
hereunder may be terminated prior to the Expiration Date in the following events:

     (a) upon the Executive’s death;

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     (b) upon the Executive’s Disability, as defined in Article 1 of this Agreement;

     (c) by the Company for Cause, as defined in Article 1 of this Agreement;

     (d) by the Executive for Constructive Termination Without Cause, as defined in Article
1 of this Agreement;

     (e) by the Company for any reason not specified in Sections 4.1(a), 4.1(b) or 4.1(c)
above; and

     (f) by the Executive, upon written voluntary resignation by a notarized instrument
signed personally by the Executive to be delivered to the Chairman of the Compensation
Committee of Nabors Bermuda, provided that thirty (30) days’ advance written notice is
given.

     Section 4.2 Post-Termination Obligations. In the event of such termination, the
provisions of Articles V through VIII hereof shall continue to apply in accordance with their
terms.

ARTICLE V

EFFECT OF TERMINATION ON COMPENSATION

     Section 5.1 Termination of Agreement upon the Executive’s Death or Disability During Term
of Employment. In the event that the Executive’s employment is terminated on the basis of the
events described in Section 4.1(a) or 4.1(b), subject to the provisions of Section 8.2, Nabors
Delaware shall pay or provide, as applicable, to the Executive’s estate or his designated
beneficiaries, as the case may be, within thirty (30) days of the occurrence of such event (or such
earlier date as is provided below or required by applicable law), the following:

     (a) The fixed sum of Fifty Million Dollars ($50,000,000.00), representing a negotiated
amount taking into account the Executive’s entitlements under the Amended Employment
Agreement, the Executive’s concessions under this Agreement, and the anticipated term of
this Agreement; and

     (b) All restricted stock outstanding, whether or not vested, shall become immediately
and fully vested and transferable to the fullest extent possible at the time of termination,
subject to any limitations set forth in the applicable plan(s) governing the award of such
restricted stock; and

     (c) All outstanding stock options of any kind whatsoever shall become immediately and
fully vested and transferable to the fullest extent possible at the time of termination
without regard to any contingencies or conditions specified therein, for the remainder of
the original term of the option (or, if earlier, until 10 years from the date of grant),
subject to any limitations set forth in the applicable plan(s) governing the award of such
stock options; and

14

 

     (d) Any amounts previously earned, accrued or owing to the Executive under this
Agreement but not yet paid, including a prorated portion of the Annual Bonus up to the date
of termination, any earned but unpaid Base Salary, any outstanding expense reimbursements
and any other compensation owed solely based upon the terms of this Agreement (but, for sake
of clarity, not including any amounts owed pursuant to the terms of any employee benefit
plan, program or agreement of Nabors Delaware, the payment of which shall be subject to the
specific terms thereof); and

     (e) Continued participation for the Executive, if applicable, and the Executive’s
spouse to the extent she was covered at the date of termination in medical, dental and life
insurance coverage until the Executive, if applicable, or the Executive’s spouse receives
equivalent coverage and benefits under the plans and programs of a subsequent employer (such
coverage and benefits to be determined on a coverage-by-coverage or benefit-by-benefit
basis) or the later of the death of the Executive or the Executive’s spouse;
provided, however, that, in the event of a termination upon the Executive’s
Disability, costs related to such continued participation shall be subject to the Fair
Market Value Payment Requirement set forth in Section 8.2(f) below; and

     (f) Continued receipt of benefits pursuant to Section 3.2(d), as well as other or
additional benefits in accordance with applicable plans or programs of Nabors Delaware in
effect at the time of termination, through the later of March 31, 2013 or a period of three
(3) years after the date of termination.

For the purpose of avoiding confusion, payments under this Section 5.1 shall only be made in the
event of Executive’s death or Disability during the Term of Employment.

     Section 5.2 Termination of Agreement by the Executive for Constructive Termination Without
Cause; or by the Company Without Cause. In the event that the Executive’s employment is
terminated on the basis of the events described in Section 4.1(d) or Section 4.1(e), subject to the
provisions of Section 8.2, Nabors Delaware shall pay or provide, as applicable, to the Executive
(or his estate or his designated beneficiaries, as the case may be), within thirty (30) days, after
the occurrence of such event (or such earlier date provided below), the following:

     (a) Three (3) times the average of the Base Salary and Annual Bonus paid to the
Executive during each of the last three fiscal years; provided, however, that

     (i) for fiscal years prior to fiscal year 2009, the Annual Bonus amount for
purpose of this Section 5.2(a) shall be calculated for such years using the formula
set forth in Section 3.1(b)(i) of this Agreement; and

     (ii) for any termination on the basis of the events described in Section 4.1(d)
or Section 4.1(e) effective on or after April 1, 2015, this Section 5.2(a) shall be
automatically amended by replacing “Three (3) times” with “Two (2) times”; and

15

 

     (b) All restricted stock outstanding, whether or not vested, shall become immediately
and fully vested and transferable to the fullest extent possible at the time of termination,
subject to any limitations set forth in the applicable plan(s) governing the award of such
restricted stock; and

     (c) All outstanding stock options of any kind whatsoever shall become immediately and
fully vested and transferable to the fullest extent possible at the time of termination
without regard to any contingencies or conditions specified therein, for the remainder of
the original term of the option (or, if earlier, until 10 years from the date of grant),
subject to any limitations set forth in the applicable plan(s) governing the award of such
stock options; and

     (d) Any amounts previously earned, accrued or owing to the Executive under this
Agreement but not yet paid, including a prorated portion of the Annual Bonus up to the date
of termination, any earned but unpaid Base Salary, any outstanding expense reimbursements
and any other compensation owed solely based upon the terms of this Agreement (but, for sake
of clarity, not including any amounts owed pursuant to the terms of any employee benefit
plan, program or agreement of Nabors Delaware, the payment of which shall be subject to the
specific terms thereof); and

     (e) Continued participation for the Executive and, if he is married on the date of
termination, his spouse to the extent that she was covered at the date of termination in
medical, dental and life insurance coverage until the Executive or his spouse receives
equivalent coverage and benefits under the plans and programs of a subsequent employer (such
coverage and benefits to be determined on a coverage-by-coverage or benefit-by-benefit
basis) or death of the later of the Executive or his spouse;  provided, however,
that costs related to such continued participation shall be subject to the Fair Market Value
Payment Requirement set forth in Section 8.2(f) below;

     (f) Continued receipt of benefits pursuant to Section 3.2(d), as well as other or
additional benefits in accordance with applicable plans or programs of Nabors Delaware in
effect at the time of termination, through the later of March 31, 2013 or a period of three
(3) years after the date of termination.

     Section 5.3 Termination of Agreement by Company For Cause or by Written Voluntary
Resignation of the Executive. In the event the Executive’s employment is terminated on the
basis of events described in Section 4.1(c) or Section 4.1(f), subject to the provisions of
Section 8.2, Nabors Delaware shall pay or provide, as applicable, to the Executive, within
(60) days, upon occurrence of such event (or earlier to the extent required by law or provided
below), the following:

     (a) Base Salary through the date of the termination; and

     (b) All restricted stock that has vested on or prior to the date of termination, and
all unvested restricted stock that was granted in connection with the annual cash bonus
payment shall become immediately and fully vested and transferable to the fullest

16

 

extent possible at the time of termination, subject to any limitations set forth in the
applicable plan(s) governing the award of such restricted stock; and

     (c) Any outstanding stock option of any kind whatsoever vested on or prior to the date
of termination, as well as any unvested stock option which was granted in connection with
the annual cash bonus payment, shall become immediately and fully vested and transferable to
the fullest extent possible at the time of termination without regard to any contingencies
or conditions specified therein, for the remainder of the original term of the option (or,
if earlier, until 10 years from the date of grant), subject to any limitations set forth in
the applicable plan(s) governing the award of such stock options; and

     (d) Any amounts previously earned, accrued or owing to the Executive but not yet paid,
including a prorated portion of the Annual Bonus up to the date of termination or
resignation for the year in which termination or resignation occurs , any earned but unpaid
Base Salary, any outstanding expense reimbursements and any other compensation owed solely
based upon the terms of this Agreement (but, for sake of clarity, not including any amounts
owed pursuant to the terms of any employee benefit plan, program or agreement of Nabors
Delaware, the payment of which shall be subject to the specific terms thereof); and

     (e) Other or additional benefits in accordance with applicable plans of programs of
Nabors Delaware in effect at the time of termination.

     Section 5.4 Current Release. In exchange for the consideration received by the
Executive pursuant to this Agreement, the Executive on his own behalf, and on behalf of his
descendants, ancestors, dependents, heirs, executors, administrators, assigns, and successors, and
each of them, hereby covenants not to sue and voluntarily and knowingly waives, releases and
discharges Nabors Bermuda and Nabors Delaware, and each of their respective parents, predecessors,
successors, subsidiaries, and affiliate companies, past and present, as well as their officers,
directors , representatives, agents and attorneys from all claims, liabilities, demands and causes
of action, asserted or unasserted, fixed or contingent, whether in contract or in tort, relating to
or arising from the March 2006 notice to set expiration date by Nabors Bermuda to Executive with
respect to the then Amended Employment Agreement (including, but not limited to, any claims related
to termination without cause, constructive termination without cause, or change in control as used
in said agreement). The parties hereto acknowledge that the Amended Employment Agreement has now
been superseded by this Agreement, which is in force and binding on the parties hereto.

     Section 5.5 No Mitigation; No Offset. In the event of any termination of employment
under Article IV, the Executive shall be under no obligation to seek other employment and there
shall be no offset against amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that he may obtain except as specifically
provided in this Article V.

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     Section 5.6 Nature of Payments. Any amounts due under this Article 5 are in the nature
of severance payments considered to be reasonable by Nabors Delaware and are not in the nature of a
penalty. Nabors Bermuda hereby guarantees the payment obligations of Nabors Delaware pursuant to
Sections 5.1 through 5.3.

ARTICLE VI

CONFIDENTIAL INFORMATION, NON-COMPETITION, NON-SOLICITATION

     Section 6.1 Confidential Information; Non-Disclosure.

     (a) Company Provided Access to Confidential Information and Company
Relationships. In exchange for the Executive’s promises made in this Agreement, the
Company promises that it will disclose to the Executive and provide the Executive with
access to trade secret, proprietary, and confidential information of the Company
(collectively, “Confidential Information”). The Company also shall provide the Executive
access to and the opportunity to develop business relationships with the Company’s
customers, clients, vendors and business partners with whom the Company has developed
goodwill and to which the Executive would not otherwise have access (collectively, “Company
Relationships”).

     (b) Value of Confidential Information and Access to Company Relationships;
Non-Disclosure. The Executive acknowledges that the business of the Company is highly
competitive and that the Confidential Information and opportunity to develop relationships
with customers, clients, vendors and business partners promised by the Company are valuable,
special, and unique assets of the Company which the Company uses in its business to obtain a
competitive advantage over its competitors which do not know or use this information. The
Executive further acknowledges that protection of the Confidential Information and Company
Relationships against unauthorized disclosure and use is of critical importance to the
Company in maintaining its competitive position. Accordingly, the Executive hereby agrees
that he will not, at any time during employment or for a two-year period after the
termination of employment, make any unauthorized disclosure of any Confidential Information
or make any use thereof or of the Company Relationships, except for the benefit of, and on
behalf of, the Company, except (i) as such disclosure or use may be required or appropriate
in connection with his work as an executive of the Company, or (ii) when required to do so
by a court of law, by any governmental agency having supervisory authority over the business
of the Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction to order him to divulge, disclose or make accessible
such information; provided, however, that no trade secret or proprietary or confidential
information shall be required to be treated as such to the extent such portions of such
information are or become generally available to the public other than as a result of a
disclosure by the Executive or other Company representative bound by an agreement or duty of
confidentiality.

     (c) Third-Party Information. The Executive acknowledges that, as a result of
his employment, he will have access to, or knowledge of, confidential business

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information or trade secrets of third parties, such as customers, clients, vendors,
suppliers, partners, joint venturers, business partners and the like, of the Company. The
Executive agrees to preserve and protect the confidentiality of such third-party
confidential information and trade secrets to the same extent, and on the same basis, as the
Confidential Information.

     (d) Return of Documents and Electronic Data. All written or electronic or
other data or materials, records and other documents made by, or coming into the possession
of, the Executive which contain or disclose the Confidential Information and/or Company
Relationships shall be and remain the property of the Company. Upon request, and in any
event without request upon termination of the Executive’s employment, for any reason, he
promptly shall deliver the same, and all copies, derivatives and extracts thereof, to the
Company, or certify the destruction thereof. The Company acknowledges that for convenience
of Executive and to maximize his time at the office, Executive may during the course of his
employment retain at Company premises certain written or electronic or other data or
materials, records or other documents that relate to Executive’s activities described in
Sections 2.3(i), 2.3(ii) or 2.3(iii). To the extent such material is located at Company
premises, Company recognizes it shall be treated as confidential and recognize Executive’s
expectation and right of privacy, and right to access or remove such material at any time
without any interference, subject to applicable law. In the event Company becomes under
control or possession of any such material, it will promptly notify Executive immediately
and deliver same and any and all copies or extracts thereof.

     (e) Breach of this Article. The Executive understands and agrees that the
restrictions in this Section 6.1 do not terminate when the Executive’s employment under this
Agreement terminates. The Executive acknowledges that money damages would not be sufficient
remedy for any breach of this Section 6.1 by the Executive, and the Company shall be
entitled to enforce the provisions of this Section 6.1 through specific performance and
injunctive relief as remedies for such breach or any threatened breach. Such remedies shall
not be deemed the exclusive remedies for a breach of this Section 6.1, but shall be in
addition to all remedies available at law or in equity to the Company.

     Section 6.2 Non-Competition; Non-Solicitation.

     (a) The restrictive covenants contained in this Section 6.2 are supported by
consideration to the Executive from Nabors Bermuda and Nabors Delaware as specified in this
Agreement, including, but not limited to, the consideration provided in Section 5.1(a),
5.2(a) and 6.1 of this Agreement. In exchange for the consideration specified herein and as
a material incentive for Nabors Bermuda and Nabors Delaware to enter into this Agreement,
and to enforce the Executive’s obligations under Section 6.1 hereof, the Executive hereby
agrees that, in the event his employment is terminated pursuant to Sections 4.1(c), (d), (e)
or (f), unless such termination arises in connection with a Change in Control, he will not
for the period commencing on the date of termination of his employment and continuing until
the expiration of two (2) years (the “Non-Competition

19

 

Period”), directly or indirectly, for himself or for others, anywhere in the world,
engage, directly or indirectly, in any activity, work, business, or investment related to
the Business, including any attempted or actual activity as a principal, investor, employee,
officer, director, shareholder, consultant, independent contractor, partner, joint venturer,
manager, representative, agent, or broker in the Business; provided, however, that the
Executive’s investment interest of less than five percent (5%) in any publicly-traded
company shall in all events be permitted.

The foregoing shall not prohibit: (x) the Executive from owning investments of less than 5%
in stock, bonds or other securities of any entity that is engaged in the Business, provided
such investment is passive and the Executive does not exercise control over the day to day
management of such business; (y) the Executive from working for or providing services to an
investment fund or other investment entity with ownership interests in a company that is
engaged in the Business, provided the Executive is not actively involved in the management
of the competing company; or (z) the Executive’s continued participation in those activities
in which he is engaged on the date hereof or on the date of termination of his employment
and which have been disclosed to Nabors Bermuda or Nabors Delaware and which have been
approved in writing by the Nabors Bermuda Board or Nabors Delaware Board.

     (b) During the Non-Competition Period, the Executive shall not, on his own behalf or on
behalf of any other person, partnership, entity, association, or corporation, solicit or
hire any current or former employee of the Company or in any other manner attempt directly
or indirectly to influence, induce, or encourage any employee of the Company to leave the
employment of the Company, nor shall the Executive use or disclose to any person,
partnership, entity, association, or corporation any information concerning the names,
addresses or personal telephone numbers of any employees of the Company.

     (c) The Executive understands that the foregoing restrictions may limit his ability to
engage in a business similar to the business of Nabors Bermuda and Nabors Delaware for the
Non-Competition Period, but acknowledges that he will receive sufficient monetary and other
consideration from the Company hereunder to justify such restriction. The Executive
acknowledges that money damages would not be sufficient remedy for any breach of this
Section 6.2 by the Executive, and that the Company shall be entitled to specific performance
and injunctive relief as remedies for such breach or any threatened breach. Such remedies
shall not be deemed the exclusive remedies for a breach of this Section 6.2, but shall be in
addition to all remedies available at law or in equity to the Company.

     (d) It is expressly understood and agreed that Nabors Bermuda, Nabors Delaware and the
Executive consider the restrictions contained in this Section 6.2 to be reasonable and
necessary for the purposes of preserving and protecting the Confidential Information,
Company Relationships, goodwill, and legitimate business and economic interests of Nabors
Bermuda and Nabors Delaware. Nevertheless, if any of the aforesaid restrictions is found by
a court having jurisdiction to be unreasonable, over broad as to

20

 

geographic area, time, scope of activity restrained, or otherwise unenforceable, the
Parties intend for the restrictions therein set forth to be modified by such court so as to
be reasonable and enforceable and, as so modified by the court, to be fully enforced.

ARTICLE VII

INDEMNIFICATION

     Section 7.1 Indemnification.

     (a) Defined Terms. For purposes of Article VII, the following terms shall have
the meaning given here:

     (i) “Corporate Status” shall mean the status of a person who is or was a
director, officer or fiduciary of the Company or of any other corporation,
partnership, joint venture, trust, executive benefit plan or other enterprise which
such person is or was serving at the express written request of the Company.

     (ii) “Disinterested Director” shall mean a director of the Company who is not
and was not a party to the Proceeding in respect of which indemnification is sought
by the Executive.

     (iii) “Enterprise” shall mean Nabors Bermuda, Nabors Delaware and any other
corporation, partnership, joint venture, trust, benefit plan or other enterprise
which the Executive is or was serving as a director, officer or fiduciary at the
express written request of the Company.

     (iv) “Expenses” shall include all reasonable attorneys’ fees and costs,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, appealing, settling, investigating or being or preparing to be
a witness in a Proceeding.

     (v) “Good Faith” shall mean the Executive’s having acted in good faith and in a
manner the Executive reasonably believed to be in, or not opposed to, the best
interests of the Corporation, and, with respect to any criminal Proceeding, having
had no reasonable cause to believe his conduct was unlawful.

     (vi) “Independent Counsel” means a law firm, or a member of a law firm, that is
experienced in matters of corporate law and neither presently is, and has not in the
past five (5) years has been, retained to represent: (i) the Company or the
Executive in any matter for either party, or (ii) any other party to the Proceeding
giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing,
the term “Independent Counsel” shall not include any person who, under the
applicable standards of professional conduct then prevailing, would

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have a conflict of interest in representing either the Company or the Executive
in an action to determine the Executive’s rights under this Agreement.

     (vii) “Proceeding” includes any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other actual,
threatened or completed proceeding, whether civil, criminal, administrative or
investigative, other than one initiated by or on behalf of the Executive.

     (b) In General. In connection with any Proceeding, the Company shall indemnify
and advance Expenses, judgments, penalties, fines and amounts paid in settlement or actually
and reasonably incurred by the Executive or on the Executive’s behalf in connection with
such Proceeding or any claim, issue or matter therein if the Executive acted in Good Faith
to the Executive as provided in this Agreement to the fullest extent permitted by applicable
law in effect on the Effective Date and to such greater extent as applicable law may
thereafter from time to time permit.

     (c) Proceedings Other Than Proceedings by or in the Right of Company. If, by
reason of the Executive’s Corporate Status (or any action or inaction by Executive in
connection therewith at any time before, during or after the term hereof), the Executive is
or is threatened to be made a party to any Proceeding other than a Proceeding by or in the
right of the Company, the Company shall indemnify the Executive against Expenses, judgments,
penalties, fines and amounts paid in settlement or actually and reasonably incurred by the
Executive or on the Executive’s behalf in connection with such Proceeding or any claim,
issue or matter therein if the Executive acted in Good Faith.

     (d) Proceedings by or in the Right of Company. If, by reason of the Executive’s
Corporate Status (or any action or inaction by Executive in connection therewith at any time
before, during or after the term hereof), the Executive is, or is threatened to be made a
party to any Proceeding brought by or in the right of the Company to procure a judgment in
its favor, the Executive shall be indemnified against Expenses judgments, penalties, fines
and amounts paid in settlement or actually and reasonably incurred by the Executive or on
the Executive’s behalf in connection with such Proceeding or any claim, issue or matter
therein if the Executive acted in Good Faith. Notwithstanding the foregoing, no such
indemnification shall be made in respect of any claim, issue or matter in such Proceeding as
to which the Executive shall have been adjudged to be liable to the Company if applicable
law prohibits such indemnification; provided, however, that if applicable law so permits,
indemnification shall nevertheless be made by the Company in such event if and only to the
extent that a court of competent jurisdiction shall determine.

     (e) Indemnification of a Party who is Wholly or Partly Successful.
Notwithstanding any other provision of this Agreement, to the extent that the Executive is,
by reason of the Executive’s Corporate Status (or any action or inaction by Executive in
connection therewith at any time before, during or after the term hereof), a party to and is
successful on the merits or otherwise, as to one or more but less than all claims, issues

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or matters in any Proceeding the Company shall indemnify the Executive against all
Expenses judgments, penalties, fines and amounts paid in settlement or actually and
reasonably incurred by the Executive or on the Executive’s behalf in connection with each
successfully resolved claim, issue or matter, except as permitted by law. For purposes of
this Section 7.1(e) and without limitation, the termination of any claim, issue or matter,
in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter, so long as there has been no finding
(either adjudicated or pursuant to Section 7.3) that the Executive did not act in Good
Faith.

     (f) Indemnification for Expenses of a Witness. Notwithstanding any other
provision of this Agreement, to the extent that the Executive is, by reason of the
Executive’s Corporate Status, a witness in any Proceeding, the Executive shall be
indemnified against all Expenses actually and reasonably incurred by the Executive or on the
Executive’s behalf in connection therewith.

     (g) Successors. The indemnification and advancement of expenses provided by, or
granted pursuant to, this Agreement shall continue as to the Executive and shall inure to
the benefit of the heirs, executors and administrators of the Executive.

     Section 7.2 Advancement of Expenses. Notwithstanding any provision to the contrary in
this Agreement, the Company shall advance all reasonable Expenses, which, by reason of the
Executive’s Corporate Status (or any action or inaction by Executive in connection therewith at any
time before, during or after the term hereof), were incurred by or on behalf of the Executive in
connection with any Proceeding, within twenty (20) days after the receipt by the Company of a
statement or statements from the Executive requesting such advance or advances, whether prior to or
after final disposition of such Proceeding. Such statement or statements shall reasonably evidence
the Expenses incurred by the Executive and shall include or be preceded or accompanied by an
undertaking by or on behalf of the Executive to repay any Expenses if it shall ultimately be
determined that the Executive is not entitled to be indemnified against such Expenses. Any advance
and undertakings to repay pursuant to this Section 7.2 shall be unsecured and interest-free. All
advances requested hereunder shall be timely paid as specified herein unless and until there is a
final determination pursuant to the provisions of Section 7.3 that the Executive is not entitled to
indemnification hereunder.

     Section 7.3 Procedures for Determination of Entitlement to Indemnification.

     (a) Initial Request. To obtain indemnification under this Agreement, the
Executive shall submit to Nabors Bermuda and Nabors Delaware a written request, including
therein or therewith such documentation and information as is reasonably available to the
Executive and which is reasonably necessary to determine whether and to what extent the
Executive is entitled to indemnification. The Secretary of Nabors Bermuda shall promptly
advise the Nabors Bermuda Board in writing that the Executive has requested indemnification.

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     (b) Method of Determination. If required by applicable law, a determination
with respect to the Executive’s entitlement to indemnification shall be made as follows:

     (i) if a Change in Control has occurred, unless the Executive shall request in
writing that such determination be made in accordance with Section 7.3(b)(ii), the
determination shall be made by Independent Counsel in a written opinion to the
Nabors Bermuda Board, a copy of which shall be delivered to the Executive;

     (ii) if a Change in Control has not occurred, the determination shall be made
by the Nabors Bermuda Board by a majority vote of a quorum consisting of
Disinterested Directors. In the event that a quorum of the Nabors Bermuda Board
consisting of Disinterested Directors is not obtainable or, even if obtainable, such
quorum of Disinterested Directors so directs, the determination shall be made by
Independent Counsel in a written opinion to the Nabors Bermuda Board, a copy of
which shall be delivered to the Executive.

     (c) Selection; Payment and Discharge of Independent Counsel. In the event the
determination of entitlement to indemnification is to be made by Independent Counsel
pursuant to Section 7.3(b) of this Agreement, the Independent Counsel shall be selected,
paid and discharged in the following manner:

     (i) If a Change in Control has not occurred, the Independent Counsel shall be
selected by the Nabors Bermuda Board and Nabors Bermuda shall give written notice to
the Executive advising the Executive of the identity of the Independent Counsel so
selected, subject to the reasonable consent of the Executive.

     (ii) If a Change in Control has occurred, the Independent Counsel shall be
selected by the Executive (unless the Executive shall request that such selection be
made by the Nabors Bermuda Board, in which event clause (i) of this Section 7.3(c)
shall apply), and the Executive shall give written notice to Nabors Bermuda advising
it of the identity of the Independent Counsel so selected.

     (iii) Following the initial selection described in clauses (i) and (ii) of this
Section 7.3(c), the Executive or Nabors Bermuda, as the case may be, may, within
seven (7) days after such written notice of selection has been given, deliver to the
other party a written objection to such selection. Such objection may be asserted
only on the ground that the Independent Counsel so selected does not meet the
requirements of “Independent Counsel” and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and timely
objection, the person so selected shall act as Independent Counsel. If such written
objection is made, the Independent Counsel so selected may not serve as Independent
Counsel unless and until a court has determined that such objection is without
merit.

24

 

     (iv) Either Nabors Bermuda or the Executive may petition the Court of Chancery
of the State of Delaware or other court of competent jurisdiction if the parties
have been unable to agree on the selection of Independent Counsel within twenty
(20) days after submission by the Executive of a written request for indemnification
pursuant to Section 7.3(a) of this Agreement. Such petition may request a
determination whether an objection to the party’s selection is without merit and/or
seek the appointment as Independent Counsel of a person selected by the Court shall
designate. A person so appointed shall act as Independent Counsel under
Section 7.3(b) of this Agreement.

     (v) Nabors Bermuda shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in connection with acting
pursuant to this Agreement, and Nabors Bermuda shall pay all reasonable fees and
expenses incident to the procedures of this Section 7.3(c), regardless of the manner
in which such Independent Counsel was selected or appointed.

     (vi) Upon the due commencement of any judicial proceeding or arbitration
pursuant to Section 7.5(b) of this Agreement, Independent Counsel shall be
discharged and relieved of any further responsibility in such capacity (subject to
the applicable standards of professional conduct then prevailing).

     (d) Cooperation. The Executive shall cooperate with the person, persons or
entity making the determination with respect to the Executive’s entitlement to
indemnification under this Agreement, including providing to such person, persons or entity
upon reasonable advance request any documentation or information which is not privileged or
otherwise protected from disclosure and which is reasonably available to the Executive and
reasonably necessary to, such determination. Any costs or expenses (including attorneys’
fees and disbursements) incurred by the Executive in so cooperating with the person, persons
or entity making such determination shall be borne by the Company (irrespective of the
determination as to the Executive’s entitlement to indemnification) and the Company hereby
indemnifies and agrees to hold the Executive harmless therefrom.

     (e) Payment. If it is determined that the Executive is entitled to
indemnification, payment to the Executive shall be made within ten (10) days after such
determination.

     Section 7.4 Presumption and Effect of Certain Proceedings.

     (a) Burden of Proof. In making a determination with respect to entitlement of
indemnification hereunder, the person or persons or entity making such determination shall
presume that the Executive is entitled to indemnification under this Agreement if the
Executive has submitted a request for indemnification in accordance with Section 7.3(a) of
this Agreement, and the Company shall have the burden of proof to

25

 

overcome that presumption in connection with the making of any person, persons or
entity of any determination contrary to that presumption.

     (b) Effect of Other Proceedings. The termination of any Proceeding or of any
claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea
of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in
this Agreement) of itself adversely affect the right of the Executive to indemnification or
create a presumption that the Executive did not act in Good Faith.

     (c) Reliance as Safe Harbor. For purposes of any determination of Good Faith,
the Executive shall be deemed to have acted in Good Faith if the Executive’s action is based
on the records or books of account of the Enterprise, including financial statements, or on
information supplied to the Executive by the officers of the Enterprise in the course of
their duties, or on information or records given or reports made to the Enterprise by an
independent certified public accountant or by an appraiser or other expert selected with
reasonable care by the Enterprise. The provisions of this Section 7.4(c) shall not be deemed
to be exclusive or to limit in any way the other circumstances in which the Executive may be
deemed to have met the applicable standard of conduct set forth in this Agreement.

     (d) Actions of Others. The knowledge and/or actions, or failure to act, of any
director, officer, agent or the Executive of the Enterprise shall not be imputed to the
Executive for purposes of determining the right to indemnification under this Agreement.

     Section 7.5 Remedies of the Executive.

     (a) Application. This Section 7.5 shall apply in the event of a dispute. For
purposes of this Section, “Dispute” shall mean any of the following events:

     (i) a determination is made pursuant to Section 7.3 of this Agreement that the
Executive is not entitled to indemnification under this Agreement;

     (ii) advancement of Expenses is not timely made pursuant to Section 7.2 of this
Agreement;

     (iii) the determination of entitlement to be made pursuant to Section 7.3(b) of
this Agreement has not been made within ninety (90) days after receipt by Nabors
Bermuda of the request for indemnification;

     (iv) payment of indemnification is not made pursuant to Section 7.1(f) of this
Agreement within ten (10) days after receipt by Nabors Bermuda of a written request
therefor; or

     (v) payment of indemnification is not made within ten (10) days after a
determination has been made that the Executive is entitled to indemnification or

26

 

such determination is deemed to have been made pursuant to Section 7.3 of this
Agreement.

     (b) Adjudication. In the event of a Dispute, the Executive shall be entitled to
adjudication in an appropriate court of the State of Delaware, or in any other court of
competent jurisdiction, of the Executive’s entitlement to such indemnification or
advancement of Expenses. Alternatively, the Executive at the Executive’s option may seek an
award in arbitration to be conducted by a three person arbitration panel pursuant to the
rules then obtaining of the American Arbitration Association. The Executive shall commence
such proceeding seeking adjudication or an award in arbitration within one hundred eighty
(180) days following the date on which the Executive first has the right to commence such
proceeding pursuant to this Section 7.5(b). Nabors Bermuda shall not oppose the Executive’s
right to seek any such adjudication or award in arbitration

     (c) De Novo Review. In the event that a determination shall have been made
pursuant to Section 7.3 of this Agreement that the Executive is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to this
Section 7.5 shall be conducted in all respects as a de novo trial, or arbitration, on the
merits and the Executive shall not be prejudiced by reason of that adverse determination. In
any such proceeding or arbitration, the Company shall have the burden of proving that the
Executive is not entitled to indemnification or advancement of Expenses, as the case may be.

     (d) Nabors Bound. If a determination shall have been made or deemed to have
been made pursuant to Section 7.3 of this Agreement that the Executive is entitled to
indemnification, the Company shall be bound by such determination in any judicial proceeding
or arbitration absent (i) a misstatement by the Executive of a material fact, or a failure
to disclose facts which would make the Executive’s statement not materially misleading, in
connection with the request for indemnification or (ii) a prohibition of such
indemnification under applicable law.

     (e) Procedures Valid. The Company shall be precluded from asserting in any
judicial proceeding or arbitration commenced pursuant to this Section 7.5 that the
procedures and presumptions of Sections 7.3 and 7.4 are not valid, binding and enforceable
and shall stipulate in any such court or before any such arbitrators that the Company is
bound by all the provisions of this Agreement.

     (f) Expenses of Adjudication. In the event that the Executive, pursuant to this
Section 7.5, seeks a judicial adjudication of or an award in arbitration to enforce the
Executive’s rights under, or to recover damages for breach of, this Agreement, the Executive
shall be entitled to recover from the Company, and shall be indemnified by the Company
against, any and all Expenses actually and reasonably incurred by the Executive in such
adjudication or arbitration, but only if and to the extent that the Executive prevails
therein.

27

 

     Section 7.6 Non-Exclusivity; Subrogation.

     (a) Non-Exclusivity. The rights of the Executive to be indemnified and to
receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive
of any other rights to which the Executive may at any time be entitled under applicable law,
the Certificate of Incorporation, the By-Laws, any agreement, a vote of stockholders, a
resolution of directors or otherwise. No amendment, alteration, rescission or replacement of
this Agreement or any provision hereof shall be effective as to the Executive with respect
to any action taken or omitted by such the Executive in the Executive’s Corporate Status
prior to such amendment, alteration, rescission or replacement.

     (b) Subrogation. In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of recovery of the
Executive, who shall execute all papers required and take all action necessary to secure
such rights, including execution of such documents as are necessary to enable the Company to
bring suit to enforce such rights.

     (c) No Duplicative Payment. Neither Nabors Bermuda nor Nabors Delaware shall be
liable under this Article VII to make any payment of amounts otherwise actually received by
the Executive under any insurance policy, contract, agreement or otherwise.

ARTICLE VIII

MISCELLANEOUS

     Section 8.1 Director and Officer Insurance. Nabors Bermuda and Nabors Delaware agree
to continue and maintain a directors and officers’ liability insurance policy covering the
Executive to the extent Nabors Bermuda and Nabors Delaware provide such coverage for their other
executive officers.

     Section 8.2 Application of Section 409A of the Code.

     (a) General. To the extent applicable, it is intended that this
Agreement comply with the provisions of Section 409A of the Code, so as to prevent
inclusion in gross income of any amounts payable or benefits provided hereunder in a
taxable year that is prior to the taxable year or years in which such amounts or
benefits would otherwise actually be distributed, provided or otherwise made
available to the Executive. This Agreement shall be construed, administered, and
governed in a manner consistent with this intent and the following provisions of
this Section 8.2 shall, with respect to timing of payments owed under this
Agreement, control over any contrary provisions of the Agreement. Nothing in this
Section 8.2 shall reduce or diminish the amounts otherwise owed under this
Agreement.

     (b) Delayed Payment Restriction. Notwithstanding any provision in this
Agreement to the contrary, if any payment or benefit provided for herein or pursuant
to any other agreement or plan of the Company to which the Executive is

28

 

entitled to any payment or benefit would be subject to additional taxes and interest
under Section 409A of the Code if the Executive’s receipt of such payment or benefit
is not delayed until the Section 409A Payment Date, then such payment or benefit
shall not be provided to the Executive (or the Executive’s estate, if applicable)
until the Section 409A Payment Date (and, at that time, the Executive shall also
receive interest thereon from the date such payment or benefit would have been
provided in the absence of this paragraph until the date of receipt of such payment
or benefit at the short term applicable federal rate as in effect as of the
termination date). The payment and benefit delay requirement described in this
paragraph (the “Delayed Payment Restriction”) shall not apply to any payment or
benefit otherwise described in the first sentence of this paragraph if another
provision of this Agreement is intended to cause the Executive’s receipt of such
payment or benefit to satisfy the requirements of Section 409A(a)(2)(B)(i) of the
Code. For purposes of this Agreement, “Section 409A Payment Date” shall mean the
earlier of (1) the date of the Executive’s death or (2) the date which is six months
after the date of termination of the Executive’s employment with the Company.

     (c) Separation from Service. Amounts payable hereunder upon the
Executive’s termination or severance of employment with the Company that constitute
deferred compensation under Section 409A of the Code shall be paid upon the
Executive’s “separation from service” within the meaning of Section 409A of the
Code.

     (d) Separate Payments and Benefits. Any rights to payments and
benefits under this Agreement shall be treated as rights to separate payments for
purposes of Section 409A of the Code.

     (e) Reimbursements and In-Kind Benefits. All reimbursements and
in-kind benefits provided under this Agreement that constitute nonqualified deferred
compensation under Section 409A of the Code, including, without limitation,
continued medical, dental and life coverages, indemnification rights (but only to
the extent such rights exceed the indemnification rights that are exempt from
Section 409A of the Code), Company advance of any non-indemnifiable expenses,
Company-paid Independent Counsel, expenses of adjudication of indemnification and
reimbursement rights disputes, and expenses for resolution of Disputes shall be made
or provided in accordance with the requirements of Section 409A of the Code,
including, where applicable, the requirements that:

     (i) any reimbursement for expenses incurred or provision of in-kind
benefits is during the lifetime of the Executive and/or the lifetime of the
Executive’s spouse, if applicable or such shorter period of time as is
provided with respect to each particular right to reimbursement in-kind
benefits pursuant to the preceding provisions of this Agreement;

29

 

     (ii) the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during a calendar year may not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any other
calendar year (except as otherwise permitted under the regulations
promulgated pursuant to Section 409A of the Code for reimbursement
arrangements that are subject to Section 105(b) of the Code (relating to
medical care reimbursements));

     (iii) the reimbursement of an eligible expense will be made on or
before the last day of the next full calendar year following the year in
which the expense is incurred; and

     (iv) the right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.

With respect to any rights to reimbursements or in-kind benefits that are triggered
by the Executive’s separation from service and are subject to Section 409A of the
Code, except any in-kind benefits to which the Fair Market Value Payment Requirement
applies, such reimbursements or in-kind benefits shall also be subject to the
Delayed Payment Restriction to the extent applicable under Section 8.2(b).

     (f) Fair Market Value Payment Requirement. To the extent that any
benefits required to be continued pursuant to Section 5.1(e) (but only in the event
of the Executive’s termination in the event of his Disability) or 5.2(e) that are
provided to the Executive and his spouse during the first six months following the
Executive’s termination of employment have an aggregate value in excess of the
applicable dollar amount under Section 402(g)(1)(B) of the Code for the year in
which such termination occurs, the Executive shall pay to the Company, at the time
such benefits are provided, the fair market value of such benefits (such payment
obligation of the Executive, the “Fair Market Value Payment Requirement”) and the
Company shall reimburse the Executive (with interest thereon at the short term
applicable federal rate in effect as of the termination date) for any such
payment(s) not later than the fifth day following the expiration of such six month
period.

     (g) Period of Payment. In the event that a payment under this
Agreement is due within a period of time following a stated event, the Executive
shall not be permitted, directly or indirectly, to designate the taxable year of
payment.

     (h) Restricted Stock Dividends. Notwithstanding anything to the
contrary in any agreement relating to awards of restricted Stock, any dividends
relating to shares of restricted Stock that are subject to vesting requirements
shall be paid by the 15th day of the third month following the date that
the right to such dividends vests.

30

 

     (i) References to Section 409A. References in this Agreement to
Section 409A of the Code include both that section of the Code itself and any
regulations and authoritative guidance promulgated thereunder.

     Section 8.3 Section 457A of the Code. Notwithstanding that both Nabors Delaware and
Nabors Bermuda are parties to this Agreement, certain portions of the Executive’s compensation
provided under this Agreement, as specifically identified within the provisions of this Agreement
(including, without limitation, all compensation that may be provided pursuant to Article V of this
Agreement) (the “Nabors Delaware Compensation”), are solely provided by Nabors Delaware as
compensation for the Executive’s services to Nabors Delaware, with the intent that Nabors Delaware
be the sole “sponsor” of such compensation within the meaning of Section 457A of the Code and the
authoritative guidance promulgated thereunder. The Nabors Delaware Compensation shall be solely
the obligation of Nabors Delaware and Nabors Bermuda shall not be obligated to provide, nor shall
it be the guarantor of or otherwise responsible for, any of the Nabors Delaware Compensation.
Further, notwithstanding anything to the contrary in Section 3.1(b)(iv), Section 3.2(a) or Section
3.2(d)(i), any compensation that would potentially be subject to Section 457A of the Code were such
compensation to be provided by Nabors Bermuda or any entity that is a nonqualified entity within
the meaning of Section 457A of the Code shall be provided solely by Nabors Delaware and, if
necessary to support an allocation of such compensation to Nabors Delaware for U.S. federal income
tax principles, Nabors Bermuda shall be allocated and become obligated to provide a portion of
compensation otherwise payable by Nabors Delaware under this Agreement that does not constitute
nonqualified deferred compensation within the meaning of Section 457A of the Code, which has a
value equal to the value of the benefit that Nabors Bermuda would otherwise have provided. Nabors
Delaware and Nabors Bermuda shall cooperate to conform the allocation for tax purposes of the
compensation payable pursuant to this Agreement to the intent described in this Section 8.3.

     Section 8.4 Assignability; Binding Nature. This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors, heirs (in the case of the
Executive), and assigns. No rights or obligations of Nabors Bermuda or Nabors Delaware under this
Agreement may be assigned or transferred by Nabors Bermuda or Nabors Delaware except that such
rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which
Nabors Bermuda and/or Nabors Delaware, as applicable, is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of Nabors Bermuda or Nabors Delaware,
provided that the assignee or transferee is the successor to all or substantially all of the assets
of Nabors Bermuda or Nabors Delaware, as applicable, and such assignee or transferee assumes the
liabilities, obligations and duties of Nabors Bermuda and Nabors Delaware, as contained in this
Agreement, by written contract. Nabors Bermuda and Nabors Delaware each further agree that, in the
event of a sale of assets or liquidation as described in the preceding sentence, they shall take
whatever action it legally can in order to cause such assignee or transferee to expressly assume
the liabilities, obligations and duties of each of Nabors Bermuda and Nabors Delaware hereunder.
No rights or obligations of the Executive under this Agreement may be assigned or transferred by
the Executive other than his rights to compensation and benefits.

     Section 8.5 Representation. Each of Nabors Bermuda and Nabors Delaware represent and
warrant that it is fully authorized and empowered to enter into this Agreement and that the

31

 

performance of its obligations under this Agreement will not violate any agreement between it
or and any other person, firm or organization. The Executive represents that no agreement between
him and any other person, firm or organization would be violated by the performance of his
obligations under this Agreement.

     Section 8.6 Entire Agreement. This Agreement contains the entire understanding and
agreement between the Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether written or oral,
between the Parties with respect thereto. This Agreement hereby amends and replaces the Amended
Employment Agreement.

     Section 8.7 Amendment or Waiver. No provision in this Agreement may be amended unless
such amendment is agreed to in writing and signed by the Executive and an authorized officer of
each of Nabors Bermuda and Nabors Delaware. No waiver by either Party of any breach by the other
Party of any condition or provision contained in this Agreement to be performed by such other Party
shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior
or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized
officer of each of Nabors Bermuda and Nabors Delaware, as the case may be.

     Section 8.8 Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full
force and effect to the fullest extent permitted by law.

     Section 8.9 Survivorship. The respective rights and obligations of the Parties
hereunder shall survive any termination of this Agreement pursuant to their terms.

     Section 8.10 Beneficiaries/References. The Executive shall be entitled, to the extent
permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive’s death by giving the Company
written notice thereof. In the event of the Executive’s death or a judicial determination of his
incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to
refer to his beneficiary, estate or other legal representative.

     Section 8.11 Governing Law/Jurisdiction. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of Delaware without reference to principles
of conflict of laws.

     Section 8.12 Resolution of Disputes. Any disputes arising under or in connection with
this Agreement (including any action by the Executive to enforce compliance or specific performance
with respect to this Agreement) shall at the election of the Executive or the Company, be resolved
by binding arbitration, to be held in New York, New York in accordance with the rules and
procedures of the American Arbitration Association before three arbitrators. Judgment upon the
award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Nothing
herein shall preclude either party from seeking provisional remedies

32

 

in aid of arbitration, such as a temporary restraining order or preliminary injunction, from a
court of competent jurisdiction. Costs of the arbitration or litigation, including, without
limitation, reasonable attorneys’ fees of both Parties, shall be borne equally by the Company and
the Executive. Pending the resolution of any arbitration or court proceeding, the Company shall
continue payment of all amounts due the Executive under this Agreement consistent with past
practice and all benefits to which the Executive is entitled at the time the dispute arises.

     Section 8.13 Notices. Any notice given to a Party shall be in writing and shall be
deemed to have been given when delivered personally or sent by certified or registered mail,
postage prepaid, return receipt requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may subsequently give such notice of:

If to Nabors Bermuda:

Nabors Industries Ltd.

P.O. Box HM3349

Hamilton, HMPX

Bermuda

Attention: Secretary

If to Nabors Delaware:

Nabors Industries, Inc.

515 West Greens Road, Suite 1200

Houston, Texas 77067

Attention: Secretary

If to the Executive:

Mr. Anthony G. Petrello

c/o Employee’s current home address

as reflected in Executive’s personnel file

     Section 8.14 Headings. The headings of the sections contained in this Agreement are
for convenience only and shall not be deemed to control or affect the meaning or construction of
any provision of this Agreement.

     Section 8.15 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 Agreement.

     Section 8.16 Withholding of Taxes and Other Items. The Company may withhold from any
compensation or benefits payable under this Agreement all federal, state, city or other taxes as
may be required pursuant to any law or governmental regulation or ruling.

[Remainder of this page left blank intentionally]

33

 

     IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the Effective Date.

	 	 	 	 	 
	 	NABORS INDUSTRIES LTD.

 	 
	 	By:  	 /s/ Martin J. Whitman	 
	 
	 	NABORS INDUSTRIES, INC.

 	 
	 	By:  	 /s/ Laura W.
Doerre	 
	 	  	Its: Secretary	 

	 	 	 	 	 
	 

	EXECUTIVE	 	 
	 
	 	 	 	 
	 

	 	/s/ Anthony G. Petrello 

Anthony G. Petrello
	 	 

34exv4w1

Exhibit 4.1

(FACE OF NOTE)

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY. UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM IN ACCORDANCE WITH THE PROVISIONS
OF THE INDENTURE AND THE TERMS OF THE SECURITIES, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (“DTC”), TO AT&T INC., OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE
& CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

AT&T INC.

5.875% Global Notes due 2017

CUSIP NO. 00206R AT9

No. DTC-1

     AT&T Inc., a corporation duly organized and existing under the laws of the State of Delaware
(herein called “AT&T”, which term includes any successor Person under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of sterling appearing on the attached Schedule of Increases and Decreases on April
28, 2017 (the “Maturity Date”), and to pay interest on said principal sum from April 30, 2009 or
from the most recent Interest Payment Date to which interest has been paid or duly provided for,
annually in arrears on April 28 in each year, commencing on April 28, 2010 (each an “Interest
Payment Date”) and on the Maturity Date, at the interest rate of 5.875% per annum, until the
principal hereof is paid or made available for payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Note (or one or more

 

 

Predecessor Notes) is registered at the close of business on the Regular Record Date for such
interest, which shall be the close of business on April 15 (the “Regular Record Date”) next
preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided
for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Note (or one or more Predecessor Notes) is registered at the
close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof shall be given to Holders of Notes not less than 15 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said Indenture.

     Any money that AT&T deposits with the Trustee or any Paying Agent for the payment of principal
or any interest on this Note that remains unclaimed for two years after the date upon which the
principal and interest are due and payable, will be repaid to AT&T upon AT&T’s request unless
otherwise required by mandatory provisions of any applicable unclaimed property law. After that
time, unless otherwise required by mandatory provisions of any unclaimed property law, the Holder
of this Note will be able to seek any payment to which such Holder may be entitled to collect only
from AT&T.

     If the Notes are issued in definitive form, payment of the principal and interest on this Note
due at the Maturity Date or upon redemption will be made at the Maturity Date or upon redemption,
as the case may be, upon presentation of this Note, in immediately available funds, at the office
of The Bank of New York Mellon, the Paying and Transfer Agent and Registrar for the Notes,
currently located at 101 Barclay Street, New York, New York 10286.

     Payment of interest on this Note due on an Interest Payment Date, other than interest at
maturity or upon redemption, may be paid by check mailed to the address of the Holder entitled
thereto as such address shall appear in the Note register. Notwithstanding the foregoing, (1) the
Depository as Holder of the Notes or (2) a Holder of more than £5,000,000 in aggregate principal
amount of Notes in definitive form is entitled to require the Paying Agent to make payments of
interest, other than interest due at maturity or upon redemption, by wire transfer of immediately
available funds into an account maintained by the Holder, by sending appropriate wire transfer
instructions as long as the Paying Agent receives the instructions not less than ten days prior to
the applicable Interest Payment Date. The principal and interest payable in sterling on any of the
Notes at maturity, or upon redemption, will be paid by wire transfer of immediately available funds
against presentation of a Note at the office of the Paying Agent.

     Reference is hereby made to the further provisions of this Note set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as if set forth at
this place.

2

 

     Unless the certificate of authentication hereon has been executed by the Trustee referred to
on the reverse hereof by manual signature, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.

3

 

     IN WITNESS WHEREOF, AT&T INC. has caused this instrument to be signed in its corporate name,
manually or by facsimile, by its duly authorized officers and has caused its corporate seal to be
imprinted hereon.

	 	 	 	 	 	 	 
	Dated: April 30, 2009	 	AT&T INC.	 	 
	 
	 	 	 	 	 	 
	[SEAL]
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard G. Lindner
 

Richard G. Lindner
	 	 
	 

	 	 	 	Senior Executive Vice President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jonathan P. Klug	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Jonathan P. Klug	 	 
	 

	 	 	 	Senior Vice President and Treasurer	 	 

Trustee’s Certificate of Authentication

This is one of the 5.875% Global Notes due 2017

of the series designated herein referred to

in the within-mentioned Indenture.

THE BANK OF NEW YORK MELLON, as Trustee

	 	 	 	 	 
	By:

	 	/s/ Mary Miselis
 

Authorized Signatory
	 	 

 

 

REVERSE OF NOTE

     This Note is one of a duly authorized issue of debt securities of AT&T issued under and
pursuant to an Indenture, dated as of November 1, 1994, between AT&T and The Bank of New York
Mellon, as Trustee (the “Trustee,” which term includes any successor Trustee under the Indenture),
to which indenture and all indentures supplemental thereto (collectively, the “Indenture”)
reference is hereby made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, AT&T and the Holders of the Notes and of the terms
upon which the Notes are, and are to be, authenticated and delivered. The Notes will be issued in
fully registered form only and in denominations of £50,000 and integral multiples of £50,000 in
excess thereof. This Note is one of the series designated on the face hereof initially limited in
aggregate principal amount to £750,000,000.

     The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of AT&T and the rights of the Holders of the Notes
under the Indenture at any time by AT&T and the Trustee with the consent of the Holders of a
majority in principal amount of the Notes at the time outstanding. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount of the Notes at the
time outstanding to waive compliance by AT&T with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note shall be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon this Note.

     No reference herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of AT&T, which is absolute and unconditional, to pay the principal
of and interest on this Note at the times, place and rate, and in the coin or currency, herein
prescribed.

     Principal and interest payments in respect of the Notes are payable by AT&T in sterling, but
holders of beneficial interests in Global Notes held through The Depository Trust Company (“DTC”),
other than Euroclear and Clearstream, will receive payments in U.S. dollars unless they elect to
receive payments in sterling. If a Holder through DTC has not made such an election, payments to
the Holder will be converted to U.S. dollars by the exchange agent. All costs of conversion will be
borne by the Holder by deduction from the payments. The U.S. dollar amount of any payment in
respect of principal or interest received by a Holder not electing payment in sterling will be the
amount of sterling otherwise payable exchanged into U.S. dollars at the sterling/ U.S.$ rate of
exchange prevailing as at 11:00 a.m. (New York City time) on the day which is two Business Days
prior to the relevant payment date, less any costs incurred by the exchange agent for the
conversion (to be shared pro rata among the holders of beneficial interests in the Global Notes
accepting U.S. dollar payments in proportion to their respective holdings), all in accordance with
the Indenture and the Notes.

4

 

     If an exchange rate bid quotation is not available, the Trustee will obtain a bid quotation
from a leading foreign exchange bank in The City of New York, which may be the Trustee or selected
by the Trustee for that purpose after consultation with AT&T. If no bid quotation from a leading
foreign exchange bank is available, payment will be made in sterling to the account or accounts
specified by DTC to the Trustee unless sterling is unavailable due to the imposition of exchange
controls or other circumstances beyond AT&T’s control. If payment in respect of the Notes is
required to be made in a currency other than U.S. dollars and such currency is unavailable to AT&T
due to the imposition of exchange controls or other circumstances beyond AT&T’s control or is no
longer used by the government of the relevant country or for the settlement or transactions by
public institutions of or within the international banking community, then all payments in respect
of the Notes will be made in U.S. dollars until such currency is again available to AT&T or so
used. The amount payable on any date in such currency will be converted into U.S. dollars on the
basis of the most recently available market exchange rate for such currency. Any payment in
respect of the Notes so made in U.S. dollars will not constitute an event of default under the
Indenture.

     The holder of a beneficial interest in the Global Notes held through a participant of DTC
(other than Euroclear or Clearstream) may elect to receive payment or payments under a Global Note
in sterling by notifying the DTC participant through which its Notes are held on or prior to the
applicable Regular Record Date of (1) the investor’s election to receive all or a portion of the
payment in sterling and (2) wire transfer instructions to a sterling account located outside of the
United States. DTC must be notified of an election and wire transfer instructions (1) on or prior
to the third New York Business Day (as defined below) after the Record Date for any payment of
interest and (2) on or prior to the fifth New York Business Day prior to the date for any payment
of principal. DTC will notify the Trustee of an election and wire transfer instructions (1) on or
prior to 5:00 p.m., New York City time, on the fifth New York Business Day after the Record Date
for any payment of interest and (2) on or prior 5:00 p.m., New York City time, on the third New
York Business Day prior to the date for any payment of principal. If complete instructions are
forwarded to and received by DTC through DTC participants and forwarded by DTC to the Trustee and
received on or prior to such dates, such investor will receive payment in sterling outside DTC;
otherwise, only U.S. dollar payments will be made by the Trustee to DTC. All costs of conversion
will be borne by holders of beneficial interests in the Global Notes receiving U.S. dollars by
deduction from those payments.

     Interest will be computed on the basis of the actual number of days in the period for which
interest is being calculated and the actual number of days from and including the last date on
which interest was paid on the Notes (or April 30, 2009 if no interest has been paid on the Notes),
to but excluding the next scheduled interest payment date. This payment convention is referred to
as ACTUAL/ACTUAL (ICMA) as defined in the rulebook of the International Capital Market Association.

5

 

     Optional Redemption by AT&T

     The Notes will be redeemable, as a whole or in part, at AT&T’s option, at any time on at least
30 days’, but not more than 60 days’, prior notice mailed to the registered address of each Holder
of the Notes. The redemption price will be equal to the greater of (1) 100% of the principal
amount of the Notes to be redeemed or (2) the sum of the present values of the Remaining Scheduled
Payments discounted to the redemption date, on an annual basis (actual/actual (ICMA)), at a rate
equal to the Treasury Rate and 25 basis points. In either case, accrued interest will be payable
to the redemption date.

     “Treasury Rate” means the price, expressed as a percentage (rounded to three decimal places,
0.0005 being rounded upwards), at which the gross redemption yield (as calculated by the Trustee)
on the Notes, if they were to be purchased at such price on the third dealing day prior to the date
fixed for redemption, would be equal to the gross redemption yield on such dealing day of the
Reference Bond on the basis of the middle market price of the Reference Bond prevailing at 11:00
a.m. (London time) on such dealing day as determined by the Trustee.

     “Reference Bond” means, in relation to any Treasury Rate calculation, at the discretion of the
Trustee, a United Kingdom government bond whose maturity is closest to the maturity of the Notes,
or if the Trustee in its discretion considers that such similar bond is not in issue, such other
United Kingdom government bond as the Trustee may, with the advice of three brokers of, and/or
market makers in, United Kingdom government bonds selected by the Trustee, determine to be
appropriate for determining the Treasury Rate.

     “Remaining Scheduled Payments” means, with respect to each Note to be redeemed, the remaining
scheduled payments of principal of and interest on the Note that would be due after the related
redemption date but for the redemption. If that redemption date is not an interest payment date
with respect to a Note, the amount of the next succeeding scheduled interest payment on the Note
will be reduced by the amount of interest accrued on the Note to the redemption date.

     On and after the redemption date, interest will cease to accrue on the Notes or any portion of
the Notes called for redemption, unless AT&T defaults in the payment of the redemption price and
accrued interest. On or before the redemption date, AT&T will deposit with a Paying Agent or the
Trustee money sufficient to pay the redemption price of and accrued interest on the Notes to be
redeemed on that date. If less than all of the Notes of any series are to be redeemed, the Notes
to be redeemed shall be selected by the Trustee by lot or by such other method as the Trustee in
its sole discretion deems to be fair and appropriate.

     Payment Without Withholding

     All payments in respect of the Notes by or on behalf of AT&T shall be made without withholding
or deduction for, or on account of, any present or future taxes, duties, assessments or
governmental charges of whatever nature (“Taxes”) imposed, collected, withheld, assessed or levied
by or on behalf of the Relevant Jurisdiction (as defined herein), unless the withholding or

6

 

deduction of the Taxes is required by law. In that event, AT&T will pay such additional
amounts to a Holder who is a United States Alien (as defined herein) as may be necessary in order
that the net amounts received by the Holder after the withholding or deduction shall equal the
respective amounts which would have been receivable in respect of the Notes in the absence of the
withholding or deduction; except that no such additional amounts shall be payable in relation to
any payment in respect of any Note:

(a) where such withholding or deduction would not have been so imposed but for:

(i) in the case of payment by AT&T, the existence of any present or former
connection between the Holder (or between a fiduciary, settlor, shareholder,
beneficiary or member of the Holder, if such Holder is an estate, a trust, a
corporation or a partnership) and the United States, including, without limitation,
such Holder (or such fiduciary, settlor, shareholder, beneficiary or member) being
or having been a citizen or resident or treated as a resident thereof, or being or
having been engaged in trade or business or presence therein, or having or having
had a permanent establishment therein;

(ii) in the case of payment by AT&T, the present or former status of the Holder as a
personal holding company, a foreign personal holding company, a passive foreign
investment company, or a controlled foreign corporation for United States federal
income tax purposes or a corporation which accumulates earnings to avoid United
States federal income tax;

(iii) in the case of payment by AT&T, the past or present or future status of the
Holder as the actual or constructive owner of 10% or more of either the total
combined voting power of all classes of stock of AT&T entitled to vote if AT&T was
treated as a corporation, or the capital or profits interest in AT&T, if AT&T is
treated as a partnership for United States federal income tax purposes or as a bank
receiving interest described in Section 881(c) (3) (A) of the Internal Revenue Code
of 1986, as amended; or

(iv) the failure by the Holder to comply with any certification, identification or
other reporting requirements concerning the nationality, residence, identity or
connection with the United States (in the case of payment by AT&T) of such Holder,
if compliance is required by statute or by regulation as a precondition to exemption
from such withholding or deduction;

(b) in the case of payment by AT&T to any United States Alien, if such person is a fiduciary
or partnership or other than the sole beneficial owner of any such payment, to the extent
that a beneficiary or settlor with respect to such fiduciary, a member of such partnership
or the beneficial owner would not have been entitled to the additional amounts had such
beneficiary, settlor, member or beneficial owner been the bearer of such Note. As used
herein, “United States Alien” means any person who, for United

7

 

States federal income tax purposes, is a foreign corporation, a non-resident alien
individual, a non-resident alien fiduciary of a foreign estate or trust, or a foreign
partnership one or more of the members of which is, for United States federal income tax
purposes, a foreign corporation, a non-resident alien individual or a non-resident alien
fiduciary of a foreign estate or trust;

(c) to the extent that the withholding or deduction is as a result of the imposition of any
gift, inheritance, estate, sales, transfer, personal property or any similar tax, assessment
or other governmental charge;

(d) to, or to a third party on behalf of, a Holder who is liable for the Taxes in respect of
the Note by reason of his having any or some present or former connection, including but not
limited to fiscal residency, fiscal deemed residency and substantial interest shareholdings,
with the Relevant Jurisdiction, other than the mere holding of the Note;

(e) presented for payment more than 30 days after the Relevant Date except to the extent
that a Holder would have been entitled to additional amounts on presenting the relevant Note
for payment on the last day of the period of 30 days assuming that day to have been an
Interest Payment Date;

(f) any tax, assessment or other governmental charge required to be withheld by any paying
agent from any payment of principal or of interest on any Note, if such payment can be made
without withholding by any other paying agent;

(g) any tax, assessment or governmental charge that is imposed or withheld solely because
the beneficial owner or any other person failed to comply with certification, identification
or information reporting requirements concerning the nationality, residence, identity or
connection with the United States of the holder or beneficial owner of AT&T’s Notes, if
compliance is required by statute, by regulation of the United States Treasury Department or
by an applicable income tax treaty to which the United States is a party as a precondition
to exemption from such tax, assessment or other governmental charge;

(h) any tax, assessment or governmental charge that is imposed or withheld solely because of
a change in law, regulation, or administrative or judicial interpretation that becomes
effective after the day on which the payment becomes due or is duly provided for, whichever
occurs later; or

(i) any combination of (a), (b), (c), (d), (e), (f), (g) or (h) immediately above.

     Redemption for Taxation Reasons

     If (a) as a result of any change in, or amendment to, the laws or regulations of a Relevant
Jurisdiction, or any change in the official interpretation of the laws or regulations of a Relevant
Jurisdiction, which change or amendment becomes effective after April 24, 2009, on the next

8

 

Interest Payment Date AT&T would be required to pay additional amounts as provided or
referred to above under “Payment Without Withholding” and (b) the requirement cannot be
avoided by AT&T’s taking reasonable measures available to it, AT&T may at its option, having given
not less than 30 nor more than 60 calendar days’ notice to the Holders (which notice shall be
irrevocable), redeem all the Notes, but not some only, at any time at their principal amount
together with interest accrued to, but excluding, the date of redemption provided that no such
notice of redemption shall be given earlier than 90 days prior to the earliest date on which AT&T
would be obliged to pay such additional amounts were a payment in respect of the Notes then due.
Prior to the publication of any notice of redemption pursuant to this paragraph, AT&T shall deliver
to the Trustee a certificate signed by two executive officers of AT&T stating that the requirement
referred to in (a) above will apply on the next Interest Payment Date and setting forth a statement
of facts showing that the conditions precedent to the right of AT&T so to redeem have occurred,
cannot be avoided by AT&T taking reasonable measures available to it and an opinion of independent
legal advisers of recognized international standing to the effect that AT&T has or will become
obliged to pay such additional amounts as a result of the change or amendment, in each case to be
held by the Trustee and made available for viewing at the offices of the Trustee on request by any
Holder.

     “Relevant Date” means the date on which the payment first becomes due but, if the full amount
of the money payable has not been received by the Trustee on or before the due date, it means the
date which is seven days after the date on which, the full amount of the money having been so
received, notice to that effect shall have been duly given to the Holders by AT&T.

     “Relevant Jurisdiction” means the State of Delaware and the United States or any political
subdivision or any authority thereof or therein having power to tax or any other jurisdiction or
any political subdivision or any authority thereof or therein having power to tax to which AT&T
becomes subject in respect of payments made by it of principal and interest on the Notes.

     Any reference in the terms of the Notes to any amounts in respect of the Notes shall be deemed
also to refer to any additional amounts which may be payable herein.

     Registrar and Paying Agent

     AT&T shall maintain in the Borough of Manhattan, The City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange (“Registrar”) and an office
or agency where Notes may be presented for payment or for exchange (“Paying Agent”). AT&T has
initially appointed the Trustee, The Bank of New York Mellon, as its Registrar and Paying Agent.
AT&T may vary or terminate the appointment of any of its paying or transfer agencies, and may
appoint additional paying or transfer agencies.

     Further Issues

     AT&T reserves the right from time to time, without notice to or the consent of the Holders of
the Notes, to create and issue further notes ranking equally and ratably with the Notes

9

 

in all
respects, or in all respects except for the payment of interest accruing prior to the issue date
or except for the first payment of interest following the issue date of those further notes.
Any further notes will have the same terms as to status, redemption or otherwise as the Notes. Any
further notes shall be issued pursuant to a resolution of the board of directors of AT&T, a
supplement to the Indenture, or under an officers’ certificate pursuant to the Indenture.

     Notes in Definitive Form

     If (1) an Event of Default has occurred with regard to the Notes represented by this Note and
has not been cured or waived in accordance with the Indenture, or (2) the Depository is at any time
unwilling or unable to continue as depository and a successor depository is not appointed by AT&T
within 90 days, AT&T may issue notes in definitive form in exchange for this Note. In either
instance, an owner of a beneficial interest in the Notes will be entitled to the physical delivery
in definitive form in exchange for this Note, equal in principal amount to such beneficial interest
and to have such Notes registered in its name.

     Notes so issued in definitive form will be issued as registered notes in minimum denominations
of £50,000 and integral multiples of £50,000, unless otherwise specified by AT&T.

     Notes so issued in definitive form may be transferred by presentation for registration to the
Registrar at its New York office and must be duly endorsed by the Holder or the Holder’s attorney
duly authorized in writing, or accompanied by a written instrument or instruments of transfer in
form satisfactory to AT&T or the Trustee duly executed by the Holder or his attorney duly
authorized in writing.

     AT&T may require payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any exchange or registration of transfer of definitive
Notes.

     Default

     In case an Event of Default, as defined in the Indenture, shall have occurred and be
continuing, the principal hereof may be declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided in the Indenture.

     Miscellaneous

     For purposes of the Notes, the term “Business Day” means any day other than a Saturday or
Sunday or a day on which banking institutions in The City of New York or the City of London are
authorized or required by law or executive order to close. The term “New York Business Day” means
any day other than a Saturday or Sunday or a day on which banking institutions in The City of New
York are authorized or required by law or executive order to close.

10

 

     No director, officer, employee or stockholder, as such, of AT&T shall have any liability for
any obligations of AT&T under this Note, the Indenture or for any claim based on, in respect of or
by reason of such obligations or their creation. Each Holder by accepting this Note waives and
releases all such liability. The waiver and release are part of the consideration for the issue of
this Note.

     The Notes are the unsecured and unsubordinated obligations of AT&T and will rank pari
passu with all other evidences of indebtedness issued in accordance with the Indenture.

     Notices to Holders of the Notes will be published in authorized newspapers in The City of New
York and in London. AT&T is deemed to have given the notice on the date of each publication or, if
published more than once, on the date of the first publication.

     Prior to due presentment of this Note for registration of transfer, AT&T, the Trustee and any
agent of AT&T or the Trustee may treat the Person in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither AT&T, the Trustee
nor any such agent shall be affected by notice to the contrary.

     All terms used in this Note which are defined in the Indenture shall have the meanings
assigned to them in the Indenture. 

     The Indenture and this Note shall be governed by and construed in accordance with the laws of
the State of New York.

11

 

SCHEDULE OF INCREASES OR DECREASES

     The initial principal amount of this Global Note is £0. The following increases or decreases
in this Global Note have been made:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Signature of
	 	 	Amount of	 	Amount of	 	Principal amount	 	authorized
	 	 	decrease in	 	increase in	 	of this Global	 	signatory of
	 	 	Principal	 	Principal	 	Note following	 	Trustee or
	Date of	 	Amount of this	 	Amount of this	 	such decrease or	 	Securities
	Exchange	 	Global Note	 	Global Note	 	increase	 	Custodian
	 
	 	 	 	 	 	 	 	 

12

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