<DOCUMENT>

<TYPE>S-4/A

<SEQUENCE>1

<FILENAME>h93209a4s-4a.txt

<DESCRIPTION>AMENDMENT NO. 4 TO FORM S-4

<TEXT>

<PAGE>

 

 

      AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 10, 2002

 

                                                      REGISTRATION NO. 333-76198

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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                             ---------------------

 

                         PRE-EFFECTIVE AMENDMENT NO. 4

 

                                       TO

 

                                    FORM S-4

            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                             ---------------------

 

                             NABORS INDUSTRIES LTD.

             (Exact Name of Registrant as Specified in its Charter)

 

<Table>

<S>                                <C>                                <C>

             BERMUDA                              1381                          NOT APPLICABLE

 (State or Other Jurisdiction of      (Primary Standard Industrial             (I.R.S. Employer

  Incorporation or Organization)      Classification Code Number)            Identification No.)

</Table>

 

<Table>

<S>                                                 <C>

                                                                    KATHERINE P. ELLIS

        C/O THE CORPORATE SECRETARY LIMITED                           GENERAL COUNSEL

                  WHITEPARK HOUSE                             NABORS CORPORATE SERVICES, INC.

                  WHITE PARK ROAD                            515 WEST GREENS ROAD, SUITE 1200

               BRIDGETOWN, BARBADOS                                HOUSTON, TEXAS 77067

                  (246) 427-8617                                 TELEPHONE: (281) 874-0035

(Address, Including Zip Code, and Telephone Number,  (Name, Address, Including Zip Code, and Telephone

  Including Area Code, of Registrant's Principal                          Number,

                 Executive Offices)                      Including Area Code of Agent for Service)

</Table>

 

                             ---------------------

 

                                WITH COPIES TO:

 

                             MICHAEL P. ROGAN, ESQ.

                    SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP

                           1440 NEW YORK AVENUE, N.W.

                          WASHINGTON, D.C. 20005-2111

                                 (202) 371-7000

 

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as

practicable after this Registration Statement becomes effective and all other

conditions to the merger contemplated by the Agreement and Plan of Merger

described in the enclosed proxy statement/prospectus have been satisfied or

waived.

 

    If the securities being registered on this form are being offered in

connection with the formation of a holding company and there is compliance with

General Instruction G, check the following box.  [ ]

 

    If this form is filed to register additional securities for an offering

pursuant to Rule 462(b) under the Securities Act, check the following box and

list the Securities Act registration statement number of the earlier effective

registration statement for the same offering.  [ ]

 

    If this form is a post-effective amendment filed pursuant to Rule 462(d)

under the Securities Act, check the following box and list the Securities Act

registration statement number of the earlier effective registration statement

for the same offering.  [ ]

                             ---------------------

 

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR

DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL

FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION

STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF

THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT

SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,

ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

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<PAGE>

 

                                  NABORS LOGO

 

 

                                                                    May 10, 2002

 

 

Dear Nabors Stockholder:

 

     We are pleased to present for your approval a proposal for reorganizing

your company and changing its place of incorporation from Delaware to Bermuda.

If the reorganization is completed, the shares you own of Nabors Industries,

Inc. (which we refer to as Nabors Delaware) will automatically be converted into

the right to receive common shares of Nabors Industries Ltd., a Bermuda exempted

company that we recently formed (which we refer to as Nabors Bermuda). The

number of Nabors Bermuda shares you will own will be the same as the number of

Nabors Delaware shares you own immediately prior to the completion of the

reorganization, and your relative economic ownership in the company will remain

unchanged. After completion of the reorganization, Nabors Bermuda and its

subsidiaries will continue to conduct the business now conducted by Nabors

Delaware and its subsidiaries.

 

     We believe this reorganization will facilitate the growth of your company

by enabling it to gain business, financial and strategic advantages that are not

available under our current corporate structure. The reorganization should

enhance our access to international capital markets and our competitiveness

regarding international opportunities. It should also increase our operational

flexibility and improve our global tax position and cash flow. Additionally, the

company should be a more attractive investment alternative to a wider range of

investors.

 

     Nabors Delaware common stock is currently traded on the American Stock

Exchange under the symbol "NBR" and, immediately following the reorganization,

Nabors Bermuda common shares will be traded on the American Stock Exchange under

the same symbol.

 

     Generally, for U.S. federal income tax purposes, stockholders of Nabors

Delaware who are U.S. persons, will recognize gain, if any, but not loss, on the

receipt of Nabors Bermuda common shares in exchange for Nabors Delaware common

stock pursuant to the reorganization. Further, the holding period for any Nabors

Bermuda common shares received by a U.S. holder recognizing gain with respect to

the reorganization should begin the day after the effective date of the

reorganization. WE STRONGLY URGE YOU TO CONSULT YOUR OWN TAX ADVISORS REGARDING

YOUR PARTICULAR TAX CONSEQUENCES OF THE REORGANIZATION.

 

     This proxy statement/prospectus provides you with detailed information

regarding the reorganization. We encourage you to read this entire document

carefully. PLEASE CONSIDER THE RISK FACTORS BEGINNING ON PAGE 13.

 

     The reorganization cannot be completed unless the holders of a majority of

our outstanding shares of common stock on April 17, 2002 approve it. The

reorganization will be accomplished through a merger of a newly formed

acquisition company into Nabors Delaware, which will be the surviving company

and continue to exist. Nabors Bermuda will become the indirect parent holding

company of Nabors Delaware. Your Board of Directors has unanimously approved the

Agreement and Plan of Merger to facilitate the reorganization, and it recommends

that you vote "FOR" its adoption.

 

     Whether or not you plan on attending the special meeting in person, it is

important that your shares be represented and voted. After reading the enclosed

notice of special meeting and proxy statement, please sign, date and return the

enclosed proxy card. We urge you to join us in supporting this important

opportunity.

 

                                         Sincerely yours,

 

                                         /s/ Eugene M. Isenberg

                                         EUGENE M. ISENBERG

                                         Chairman of the Board

 

     THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES

AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE

SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED

UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY

REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

 

     This proxy statement/prospectus is dated May 10, 2002 and is first being

mailed to stockholders on or about May 16, 2002.

 

<PAGE>

 

                         [NABORS INDUSTRIES, INC. LOGO]

                            NABORS INDUSTRIES, INC.

 

                             ---------------------

 

                   NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

                      TO BE HELD ON FRIDAY, JUNE 14, 2002

 

 

                             ---------------------

 

To the Stockholders of Nabors Industries, Inc.:

 

 

     NOTICE IS HEREBY GIVEN that a Special Meeting of the Stockholders of Nabors

Industries, Inc. will be held at the Sofitel Hotel, 425 N. Sam Houston Parkway

E., Houston, Texas 77060 on Friday, June 14, 2002, at 11:00 a.m. for the

following purposes:

 

 

          1. To adopt the Agreement and Plan of Merger, substantially in the

     form attached to the accompanying proxy statement/prospectus as annex I,

     among Nabors Industries, Inc., Nabors Acquisition Corp. VIII, Nabors

     Industries Ltd., a Bermuda exempted company, and Nabors US Holdings Inc.,

     whereby the company will effectively change its place of incorporation from

     Delaware to Bermuda by merging Nabors Acquisition Corp. VIII with Nabors

     Industries, Inc., which will be the surviving entity and become a

     wholly-owned, indirect subsidiary of Nabors Industries Ltd., and pursuant

     to which each share of Nabors Industries, Inc. will automatically be

     converted into the right to receive a share of Nabors Industries Ltd. and

     all current stockholders of Nabors Industries, Inc. will become

     shareholders of Nabors Industries Ltd.; and

 

          2. To transact such other business as may properly come before the

     special meeting.

 

     The board of directors has fixed the close of business on April 17, 2002,

as the record date for determination of stockholders entitled to notice of, and

to vote at, the special meeting and any adjournments or postponements thereof.

 

     YOUR VOTE IS VERY IMPORTANT. TO ENSURE THAT YOUR SHARES ARE REPRESENTED,

YOU SHOULD VOTE YOUR PROXY BY COMPLETING, SIGNING AND DATING THE ENCLOSED PROXY

CARD AND RETURNING IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU

EXPECT TO ATTEND THE SPECIAL MEETING. YOU MAY REVOKE YOUR PROXY AND VOTE IN

PERSON IF YOU DECIDE TO ATTEND THE MEETING.

 

                                          BY ORDER OF THE BOARD OF DIRECTORS,

 

                                          /s/ DANIEL MCLACHLIN

 

                                          DANIEL MCLACHLIN

                                          Corporate Secretary

 

 

May 10, 2002

 

<PAGE>

 

                               TABLE OF CONTENTS

 

<Table>

<Caption>

                                                               PAGE

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<S>                                                           <C>

ADDITIONAL INFORMATION......................................       iv

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS...       iv

QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION..............        1

SUMMARY.....................................................        5

  Parties to the Merger.....................................        5

  Recent Developments.......................................        6

  The Reorganization........................................        6

  Reasons for the Reorganization............................        7

  Conditions to Consummation of the Merger..................        7

  Regulatory Approvals......................................        7

  Credit Facilities.........................................        8

  U.S. Federal Income Tax Consequences to Stockholders......        8

  Rights of Stockholders....................................        9

  Stock Exchange Listing; Recent Stock Prices...............        9

  No Rights of Dissenting Stockholders......................        9

  Accounting Treatment of the Reorganization................        9

  Special Meeting...........................................        9

  Recommendation of the Board of Directors..................        9

  Vote Required.............................................        9

  Proxies...................................................       10

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA.............       11

SUMMARY PRO FORMA FINANCIAL INFORMATION.....................       12

RISK FACTORS................................................       13

  Certain Nabors Delaware stockholders will recognize a

     taxable gain as a result of the reorganization.........       13

  Nabors Bermuda and its subsidiaries could incur a material

     amount of taxes if there are unfavorable changes in, or

     interpretations of, tax laws...........................       13

  The reorganization could result in a material amount of

     taxes to Nabors Delaware...............................       13

  Nabors Bermuda may become subject to U.S. corporate income

     tax....................................................       14

  The enforcement of judgments in stockholder suits against

     Nabors Bermuda may be more difficult...................       14

  Anti-takeover provisions in Nabors Bermuda's bye-laws will

     maintain certain existing anti-takeover provisions of

     Nabors Delaware which could discourage or make more

     difficult unsolicited takeover bids from third parties

     or the removal of incumbent management of Nabors

     Bermuda................................................       14

  Your rights as a stockholder will change as a result of

     the reorganization.....................................       15

THE REORGANIZATION..........................................       15

  Structure of the Reorganization...........................       15

  Background and Reasons for the Reorganization.............       15

  The Merger Agreement......................................       17

  Conditions to Consummation of the Merger..................       17

  Regulatory Approvals......................................       18

  Effective Time............................................       18

  Amendment or Termination..................................       19

</Table>

 

                                        i

<PAGE>

 

<Table>

<Caption>

                                                               PAGE

                                                              -------

<S>                                                           <C>

  Share Conversion; Exchange of Shares......................       19

  Management of Nabors Bermuda..............................       20

  Required Vote for the Reorganization......................       20

  No Rights of Dissenting Stockholders......................       20

  Dividends.................................................       20

  Stock Compensation Plans and Employment Agreements........       20

  Stock Exchange Listing....................................       21

  Accounting Treatment of the Reorganization................       21

  Credit Facilities.........................................       21

RECENT DEVELOPMENTS.........................................       21

THE SPECIAL MEETING.........................................       22

  When and Where the Special Meeting Will Be Held...........       22

  What Will Be Voted Upon...................................       22

  Only Nabors Delaware Stockholders of Record on April 17,

     2002

       Are Entitled to Vote.................................       23

  Majority of Outstanding Shares Must Be Represented for a

     Vote to Be Taken.......................................       23

  Vote Required for Approval................................       23

  Voting Your Shares and Changing Your Vote.................       23

  How Proxies Are Counted...................................       24

  Cost of Solicitation......................................       24

DESCRIPTION OF AUTHORIZED SHARES OF NABORS INDUSTRIES

  LTD. .....................................................       24

  Authorized Share Capital..................................       24

  Voting....................................................       24

  Dividend Rights...........................................       25

  Redemption and Conversion.................................       25

  Stock Exchange Listing....................................       25

  Changes to Rights of a Class or Series....................       25

  Quorum for General Meetings...............................       25

  Rights upon Liquidation...................................       25

  Sinking Fund..............................................       26

  Liability for Further Calls or Assessments................       26

  Preemptive Rights.........................................       26

  Repurchase Rights.........................................       26

  Compulsory Acquisition of Shares Held by Minority

     Holders................................................       26

  Transfer Agent............................................       27

  Preferred Shares..........................................       27

  Anti-takeover Provisions..................................       27

COMPARISON OF RIGHTS OF STOCKHOLDERS........................       28

  Comparison of Corporate Governance Provisions.............       30

INCOME TAX CONSEQUENCES OF THE REORGANIZATION...............       40

  U.S. Federal Income Tax Consequences to Stockholders......       40

</Table>

 

                                        ii

<PAGE>

 

<Table>

<Caption>

                                                               PAGE

                                                              -------

<S>                                                           <C>

  Bermuda Income Tax Consequences of the Reorganization.....       43

  Barbados Income Tax Consequences of the Reorganization....       44

EXPERTS.....................................................       44

LEGAL MATTERS...............................................       44

SHAREHOLDER PROPOSALS AND NOMINATIONS.......................       44

WHERE YOU CAN FIND MORE INFORMATION.........................       45

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............       46

     ANNEX I -- AGREEMENT AND PLAN OF MERGER................    A-I-1

     ANNEX II -- MEMORANDUM OF ASSOCIATION..................   A-II-1

     ANNEX III -- AMENDED AND RESTATED BYE-LAWS.............  A-III-1

</Table>

 

                                       iii

<PAGE>

 

                             ADDITIONAL INFORMATION

 

 

     THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE IMPORTANT

BUSINESS AND FINANCIAL INFORMATION ABOUT NABORS WHICH IS NOT INCLUDED IN OR

DELIVERED WITH THIS DOCUMENT. COPIES OF THE INCORPORATED DOCUMENTS (OTHER THAN

EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED

BY REFERENCE THEREIN) WILL BE FURNISHED UPON WRITTEN OR ORAL REQUEST WITHOUT

CHARGE TO EACH PERSON TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED.

REQUESTS SHOULD BE MADE BY JUNE 7, 2002 AND SHOULD BE DIRECTED TO NABORS

INDUSTRIES, INC., 515 WEST GREENS ROAD, SUITE 1200, HOUSTON, TEXAS 77067,

ATTENTION: INVESTOR RELATIONS, OR YOU MAY TELEPHONE (281) 874-0035, OR VISIT OUR

WEBSITE "HTTP://WWW.NABORS.COM". WEBSITE MATERIALS ARE NOT PART OF THIS PROXY

STATEMENT/PROSPECTUS.

 

 

     See "Where You Can Find More Information" on page 45.

 

           CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

     This document contains or incorporates by reference forward-looking

statements within the meaning of the Private Securities Litigation Reform Act of

1995, with respect to the reorganization and our financial condition, results of

operations and business. This Act protects public companies from liability for

forward-looking statements in private securities actions if the forward-looking

statement is identified and is accompanied by meaningful cautionary statements

identifying important factors that could cause actual results to differ

materially. Forward-looking statements by their nature involve a degree of

uncertainty. All statements regarding the expected benefits of the

reorganization are forward-looking statements. The forward-looking statements

may include statements for the period following completion of the

reorganization. You can find many of these statements by looking for words such

as "believes," "expects," "anticipates," "estimates," "continues," "may,"

"intends," "plans," or similar expressions in this document or in the documents

incorporated by reference. Any forward-looking statements, including statements

regarding the intent, belief or current expectations of Nabors or its

management, are not guarantees of future performance and involve uncertainties

and assumptions about us, the reorganization and the industry in which we

operate, including, among other things:

 

     - an inability to realize expected benefits of the reorganization within

       the anticipated time frame, or at all;

 

     - changes in tax laws, tax treaties or tax regulations and the

       interpretation or enforcement thereof or differing interpretation or

       enforcement of applicable law by the U.S. Internal Revenue Service (the

       "IRS") or other taxing authority;

 

     - an inability to execute our business strategy;

 

     - costs or difficulties related to the reorganization and related

       transactions, which could be greater than expected;

 

     - fluctuations in worldwide prices and demand for oil and gas;

 

     - fluctuations in levels of oil and gas exploration and development

       activities;

 

     - fluctuations in the demand for contract drilling and workover services;

 

     - the existence of operating risks inherent in the industry;

 

     - changes in the rate of economic growth in the United States and other

       major international economies;

 

     - changes in trade, monetary and fiscal policies worldwide;

 

     - currency fluctuations;

 

     - outcomes of pending and future litigation;

 

     - the existence of competitors, technological changes and developments in

       the industry;

 

     - changes in capital needs;

                                        iv

<PAGE>

 

     - the existence of regulatory uncertainties and the possibility of

       political instability in any of the countries in which Nabors does or

       will do business; and

 

     - changing rates of inflation and other economic or business conditions.

 

     Actual results may differ materially from those expressed or implied by

forward-looking statements. As you make your decision how to vote, please take

into account that forward-looking statements speak only as of the date of this

document or, in the case of documents incorporated by reference, the date of any

such document and we do not intend to update or revise any of such

forward-looking statements, whether as a result of new information, future

events or otherwise.

 

                                        v

<PAGE>

 

                 QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION

 

WHAT AM I BEING ASKED TO VOTE ON?

 

     You are being asked to vote in favor of a merger by which Nabors Delaware

will become a wholly-owned, indirect subsidiary of a new holding company, Nabors

Bermuda. Your shares of Nabors Delaware common stock will automatically be

converted into the right to receive an identical number of Nabors Bermuda common

shares.

 

HOW WILL THE REORGANIZATION BE ACCOMPLISHED?

 

     A new Delaware company, Nabors Acquisition Corp. VIII, which has been

formed specifically for the merger, will merge into Nabors Delaware. Nabors

Delaware will be the surviving company in the merger and become a wholly-owned,

indirect subsidiary of Nabors Bermuda. As a result of the merger, each share of

Nabors Delaware outstanding immediately prior to the effective time of the

merger will automatically convert into the right to receive a common share of

Nabors Bermuda. This procedure allows you to become a shareholder in Nabors

Industries Ltd., the new Bermuda parent company of the entire Nabors Industries

group of companies. After this merger, you will own an interest in a Bermuda

holding company which, together with its subsidiaries, will continue to be

engaged in the same business that Nabors Delaware and its subsidiaries were

engaged in before the merger. The additional steps in the reorganization are

more fully described in "The Reorganization -- Structure of the Reorganization"

on page 15.

 

WHAT ARE THE BENEFITS TO THE COMPANY OF COMPLETING THIS REORGANIZATION?

 

     We believe that a significant portion of our business is currently

generated from non-U.S. markets. We believe the reorganization will allow us to

take advantage of financial and other business opportunities that are not

available under our current corporate structure, including:

 

     - Maximization of our potential business growth and cash flow;

 

     - Expansion of our international businesses as a result of greater

       flexibility in financing arrangements, transaction structuring and access

       to global capital;

 

     - Increased competitiveness regarding domestic and international

       acquisition opportunities;

 

     - Potential improvement of our global tax position and global cash

       management;

 

     - Use of the greater cash flow to invest for further earnings growth; and

 

     - Expansion of our investor base as our company's shares may become more

       attractive to non-U.S. investors.

 

     We believe these benefits should enhance stockholder value. However, we

cannot predict what impact, if any, the reorganization will have in the

long-term in light of the fact that the achievement of our objectives depends on

many things, including our ability to react to any changes in the tax laws and

treaties of the various jurisdictions where we operate. See "The

Reorganization -- Background and Reasons for the Reorganization" on page 15.

 

     It is important to note that several senior members of the United States

Congress have introduced legislation that, if enacted, would have the effect of

eliminating the anticipated tax benefits of the transaction. In addition,

several other members of the United States Congress and the Treasury Department

have recently announced the intent to investigate transactions such as the

reorganization. As a result of the increased scrutiny of such transactions,

changes in the tax laws, tax treaties or tax regulations may occur, with

prospective or retroactive effect, which could eliminate or substantially reduce

the anticipated tax benefits of the reorganization or have a material adverse

effect on the tax consequences of the reorganization to the company. If in

response to any such changes the reorganized company or its subsidiaries

undertake a corporate restructuring, such restructuring could result in

additional material adverse tax consequences to the company or its shareholders.

<PAGE>

 

WILL THE REORGANIZATION DILUTE MY OWNERSHIP INTEREST?

 

     No. The reorganization will not dilute your ownership interest. Immediately

after the reorganization is consummated you will own the same percentage of

Nabors Bermuda common shares as you own of Nabors Delaware common stock

immediately prior to the completion of the reorganization. After completion of

the reorganization, the total number of outstanding common shares of Nabors

Bermuda will be equal to the number of shares of common stock of Nabors Delaware

that were outstanding immediately prior to the effective time of the merger. As

of April 17, 2002, Nabors Delaware had 141,099,335 shares of common stock

outstanding.

 

WILL NABORS DELAWARE STOCKHOLDERS BE TAXED AS A RESULT OF THE REORGANIZATION?

 

     Generally, for U.S. federal income tax purposes, stockholders who are U.S.

persons will recognize gain, if any, but not loss, on the receipt of Nabors

Bermuda common shares in exchange for Nabors Delaware common stock pursuant to

the reorganization. Such a holder will generally recognize gain equal to the

excess, if any, of the fair market value of the Nabors Bermuda common shares

received in exchange for Nabors Delaware common stock in the reorganization over

the holder's adjusted tax basis in the shares of Nabors Delaware common stock

exchanged therefor. Generally, any such gain will be capital gain. Further, the

holding period for any Nabors Bermuda common shares received by a U.S. holder

recognizing gain with respect to the reorganization should begin the day after

the effective date of the reorganization. Stockholders will not be permitted to

recognize any loss realized on the exchange of their shares of Nabors Delaware

common stock in the reorganization. In such case, the aggregate adjusted tax

basis in the Nabors Bermuda common shares received would equal the aggregate

adjusted tax basis of their shares of Nabors Delaware common stock. Thus,

subject to any subsequent changes in the fair market value of the Nabors Bermuda

common shares, any loss would be preserved.

 

     WE STRONGLY URGE YOU TO CONSULT YOUR TAX ADVISORS REGARDING YOUR PARTICULAR

TAX CONSEQUENCES OF THE REORGANIZATION.

 

WILL NABORS DELAWARE BE TAXED AS A RESULT OF THE REORGANIZATION?

 

     We believe that Nabors Delaware should not incur a material amount of U.S.

federal income or withholding tax as a result of the reorganization. It should

be noted, however, that the IRS may not agree with this conclusion. If the IRS

were to successfully challenge the tax treatment of the reorganization, this

could have a material adverse effect on the company.

 

     It is important to note that several senior members of the United States

Congress have introduced legislation that, if enacted, would have the effect of

eliminating the anticipated tax benefits of the transaction. In addition,

several other members of the United States Congress and the Treasury Department

have recently announced the intent to investigate transactions such as the

reorganization. As a result of the increased scrutiny of such transactions,

changes in the tax laws, tax treaties or tax regulations may occur, with

prospective or retroactive effect, which could eliminate or substantially reduce

the anticipated tax benefits of the reorganization or have a material adverse

effect on the tax consequences of the reorganization to the company. If in

response to any such changes the reorganized company or its subsidiaries

undertake a corporate restructuring, such restructuring could result in

additional material adverse tax consequences to the company or its shareholders.

 

WHEN DO YOU EXPECT TO COMPLETE THE REORGANIZATION?

 

     We hope to complete the reorganization shortly after the special meeting of

Nabors Delaware stockholders, assuming that the merger agreement is adopted by

stockholders at that meeting.

 

WHY WAS BERMUDA SELECTED AS THE DOMICILE OF THE NEW PARENT COMPANY?

 

     We chose Bermuda for its political stability, legal framework and business

friendly environment. The first international (i.e., not locally owned) company

was incorporated in Bermuda in the 1930s, and there are

 

                                        2

<PAGE>

 

currently many companies domiciled there which are publicly traded on U.S. and

European markets. We also chose Bermuda because of our familiarity with Bermuda

and its corporate legal system through our experience with certain subsidiaries

of Nabors Delaware which have been incorporated in Bermuda since 1992. Under

current Bermuda law, a Bermuda company is not required to pay taxes in Bermuda

on either income or capital gains. In addition, despite certain differences, the

corporate legal system, based on English law, is such that your rights as a

Nabors Bermuda shareholder will be substantially unchanged from your rights as a

stockholder in Nabors Delaware. We encourage you to read the section "Comparison

of Rights of Stockholders" beginning on page 28 for a more detailed description

of the differences between your rights under Delaware law and under Bermuda law.

 

     Although Nabors Bermuda will be incorporated under Bermuda law, Nabors

Bermuda will be legally managed and controlled through an executive office

located in Barbados. Therefore, in order to conduct business in Barbados, Nabors

Bermuda will be registered as an external company in Barbados under the Barbados

Companies Act, Cap. 308 of the laws of Barbados and licensed to operate as an

"International Business Corporation" or "IBC". As a resident of Barbados, Nabors

Bermuda should be entitled to the benefits under the income tax treaty entered

into between the United States and Barbados. Under current Barbados law, an IBC

will be required to pay a maximum rate of 2.5% income tax, which is gradually

reduced to a minimum of 1% as income increases, on its non-Barbados source

income.

 

WILL THE PROPOSAL AFFECT CURRENT OPERATIONS? WHAT ABOUT THE FUTURE?

 

     The reorganization, which will move the company's domicile from Delaware to

Bermuda, will have no immediate major impact on how we conduct day-to-day

operations. The location of future operations will depend on the needs of our

business, independent of our place of incorporation.

 

WHAT VOTE IS REQUIRED TO APPROVE THE TRANSACTION?

 

     In order for us to effect the reorganization, we need affirmative votes

from holders of a majority of the shares of Nabors Delaware common stock

outstanding on April 17, 2002. SHARES FOR WHICH NO VOTES ARE CAST EFFECTIVELY

WILL BE TREATED AS THOUGH THEY WERE VOTED AGAINST THE AGREEMENT AND PLAN OF

MERGER, SO IT IS VERY IMPORTANT FOR ALL STOCKHOLDERS TO VOTE. See "The Special

Meeting -- Vote Required for Approval" on page 23.

 

WILL I BE ABLE TO TRADE MY SHARES DURING THE TIME IT TAKES TO COMPLETE THE

REORGANIZATION?

 

     Yes.

 

HOW DO I VOTE IF MY SHARES ARE REGISTERED IN MY NAME?

 

     You may vote by marking, signing and mailing your proxy card in the

enclosed postage-prepaid envelope.

 

     Please vote as soon as possible even if you currently plan to attend the

meeting in person, so that your shares may be represented and voted at the

special meeting.

 

HOW DO I VOTE IF MY BROKER HOLDS MY SHARES IN "STREET NAME"?

 

     You should follow the voting instructions provided by your broker.

 

IF MY BROKER HOLDS MY SHARES IN "STREET NAME," WILL MY BROKER VOTE MY SHARES FOR

ME?

 

     No. If you do not provide your broker with instructions on how to vote your

"street name" shares, your broker will not be permitted to vote them. You should

complete and return the enclosed form of proxy or be sure to provide your broker

with instructions on how to vote your shares.

 

                                        3

<PAGE>

 

WHAT DO I DO IF I WANT TO CHANGE MY VOTE?

 

     There are three ways in which you may revoke your proxy and change your

vote:

 

     - First, you may send a written notice to our proxy solicitor, Georgeson

       Shareholder Communications Inc., stating that you would like to revoke

       your proxy. This notice must be received prior to the special meeting.

 

     - Second, you may complete and submit a new, later-dated proxy as described

       above. The latest dated proxy actually received by the company prior to

       the special meeting will be the one that is counted, and all earlier

       proxies will be revoked.

 

     - Third, you may attend the special meeting and vote in person. Simply

       attending the meeting, however, will not revoke your proxy. At the

       special meeting, the chairman of the meeting will announce instructions

       for you to follow if you wish to revoke your proxy and vote in person at

       the meeting.

 

     If you have instructed a broker to vote your shares, you must follow

directions received from your broker to change or revoke your proxy.

 

DO I HAVE TO CHANGE MY STOCK CERTIFICATES?

 

     Yes. At the effective time of the merger, two subsidiaries of Nabors

Bermuda who are parties to the Agreement and Plan of Merger, Nabors US Holdings

Inc. and Nabors Acquisition Corp. VIII, will cause a sufficient number of Nabors

Bermuda common shares to be deposited with an exchange agent for the purpose of

enabling stockholders to exchange their Nabors Delaware common stock

certificates for certificates representing an equal number of Nabors Bermuda

common shares. PLEASE DO NOT SEND ANY STOCK CERTIFICATES AT THIS TIME. After the

merger occurs, the exchange agent previously appointed by Nabors US Holdings

Inc. and Nabors Acquisition Corp. VIII in connection with the merger will send a

letter of transmittal to shareholders that will provide instructions on these

exchange procedures.

 

     For further information, please see "The Reorganization -- Share

Conversion; Exchange of Shares" on page 19.

 

WHO DO I CONTACT WITH FURTHER QUESTIONS?

 

     You should contact:

 

     Nabors Delaware:       Nabors Industries, Inc.

                            515 West Greens Road, Suite 1200

                            Houston, Texas 77067

                            Attention: Secretary

                            (281) 874-0035

 

     the Proxy Solicitor:   Georgeson Shareholder Communications Inc.

                            17 State Street

                            New York, New York 10004

                            (800) 223-2064

 

                                        4

<PAGE>

 

                                    SUMMARY

 

     This summary highlights selected information from this document and may not

contain all of the information that is important to you. To understand the

reorganization, the merger and other transactions more fully and for a more

complete description of the legal terms of the merger, you should read carefully

this entire document, including the annexes, and the other documents we have

referred you to. See "Where You Can Find More Information" on page 45. The

Agreement and Plan of Merger is attached as annex I to this document. The

Memorandum of Association and Bye-laws that will govern our company once we are

domiciled in Bermuda are attached as annexes II and III.

 

PARTIES TO THE MERGER

 

  NABORS INDUSTRIES, INC.

 

     Nabors Delaware is the largest land drilling contractor in the world, with

over 580 land drilling rigs as of April 29, 2002. Nabors Delaware conducts oil,

gas and geothermal land drilling operations in the US lower 48 states, Alaska

and Canada, and internationally, primarily in South and Central America, the

Middle East and Africa. As of April 29, 2002, 142 of Nabors Delaware's

approximately 596 land drilling rigs were located in certain international

markets. Nabors Delaware also is one of the largest land well-servicing and

workover contractors in the United States. Nabors Delaware owns approximately

745 land workover and well-servicing rigs in the southwestern and western United

States, and approximately 233 well-servicing and workover rigs in certain

international markets, including approximately 193 rigs in Canada. Nabors

Delaware also is a leading provider of offshore platform workover and drilling

rigs. Nabors Delaware markets 42 platform, 16 jackup and three barge rigs in the

Gulf of Mexico and international markets. These rigs provide well-servicing,

workover and drilling services. Nabors Delaware also owns and operates a net of

nine rigs through an international joint venture in Saudi Arabia (giving effect

to Nabors Delaware's 50% interest in the venture's 18 rigs).

 

     To further supplement our primary business, we offer a number of ancillary

well-site services, including oilfield management, engineering, transportation,

construction, maintenance, well logging and other support services, in selected

domestic and international markets. Our land transportation and hauling fleet

includes approximately 240 rig and oilfield equipment hauling tractor-trailers

and a number of cranes, loaders and light-duty vehicles. We also maintain over

290 fluid hauling trucks, approximately 700 fluid storage tanks, eight salt

water disposal wells and other auxiliary equipment used in domestic drilling and

well-servicing operations. In addition, we market a fleet of 30 marine

transportation and support vessels, primarily in the Gulf of Mexico, that

provides transportation of drilling materials, supplies and crews for offshore

rig operations and support for other offshore operations. And we manufacture and

lease or sell top drives for a broad range of drilling rig applications, rig

instrumentation and data collection equipment, and rig reporting software.

 

  NABORS INDUSTRIES LTD.

 

     Nabors Bermuda is a newly formed Bermuda exempted company and is a

wholly-owned subsidiary of Nabors Delaware. Nabors Bermuda has no significant

assets or capitalization and has not engaged in any business or other activities

other than in connection with its formation and the reorganization and related

transactions. As a result of the reorganization, it will become the indirect

parent holding company of Nabors Delaware.

 

  NABORS US HOLDINGS INC.

 

     Nabors US Holdings Inc. is a newly formed Delaware corporation and a

wholly-owned, direct subsidiary of Nabors Bermuda. Nabors US Holdings was formed

to accomplish the proposed merger and to hold all of the stock of Nabors

Delaware subsequent to the merger. It has no significant assets or

capitalization unrelated to the merger and has not engaged in any business or

other activities except in connection with its formation and the reorganization

and related transactions.

 

                                        5

<PAGE>

 

  NABORS ACQUISITION CORP. VIII

 

     Nabors Acquisition Corp. VIII is a newly formed Delaware corporation and a

wholly-owned, indirect subsidiary of Nabors Bermuda. Nabors Acquisition was

formed to accomplish the proposed merger. Nabors Acquisition will merge with

Nabors Delaware to facilitate the reorganization. See "The Reorganization --

Structure of the Reorganization" on page 15. It has no significant assets or

capitalization unrelated to the merger and has not engaged in any business or

other activities except in connection with its formation and the reorganization

and related transactions.

 

     The principal executive offices of Nabors Delaware, Nabors US Holdings and

Nabors Acquisition are located at 515 West Greens Road, Suite 1200, Houston,

Texas 77067. The telephone number of each such party at that address is (281)

874-0035. The registered office of Nabors Bermuda is located at Cedar House, 41

Cedar Avenue, Hamilton HM 12, Bermuda. The principal executive offices of Nabors

Bermuda are currently located at c/o The Corporate Secretary Limited, Whitepark

House, White Park Road, Bridgetown, Barbados and its telephone number at that

address is (246) 427-8617.

 

RECENT DEVELOPMENTS (SEE PAGE 21)

 

     On April 26, 2002, Nabors Delaware announced that it had completed the

previously announced acquisition of Enserco Energy Service Company Inc., a

Canadian corporation. Under the terms of the acquisition, Nabors Exchangeco

(Canada) Inc., a Canadian subsidiary of Nabors Delaware, acquired all of the

outstanding common shares of Enserco pursuant to a plan of arrangement under the

Canada Business Corporation Act in exchange for approximately Cdn. $184 million

in cash and approximately 3.55 million exchangeable shares of Nabors Exchangeco

(Canada) Inc. which are exchangeable into Nabors Delaware common stock on a 1:1

basis. Approximately 2.64 million of the issued exchangeable shares were

immediately exchanged for shares of Nabors Delaware common stock in accordance

with the instructions of the holders of such exchangeable shares. The

exchangeable shares of Nabors Exchangeco (Canada) Inc. have provisions which

effectively confer on the holders of the exchangeable shares the same voting and

economic rights in Nabors Delaware as the holders of Nabors Delaware common

stock. The exchangeable shares will be listed on The Toronto Stock Exchange

under the symbol "NBX". If the reorganization is completed, the exchangeable

shares will, after the effective time of the reorganization, become exchangeable

for Nabors Bermuda common shares.

 

     On March 18, 2002, Nabors Delaware also separately acquired from two

Enserco shareholders Enserco common shares representing approximately 20.5% of

the issued and outstanding Enserco shares for Cdn. $15.50 per share.

 

     Enserco is an integrated energy services company providing production and

drilling services to the North American oil and gas industry. Through its

subsidiaries, Bonus Well Servicing and H&R Drilling, Enserco operates over 200

Canadian well-servicing rigs and 30 drilling rigs. See "Recent Developments" on

page 21.

 

THE REORGANIZATION (SEE PAGE 15)

 

     Our Board of Directors has unanimously approved and recommends that you

adopt the Agreement and Plan of Merger which effectively changes your company's

place of incorporation from Delaware to Bermuda. The reorganization will be

accomplished through the merger of Nabors Acquisition into Nabors Delaware.

Nabors Delaware will be the surviving company in the merger and will become a

wholly-owned, indirect subsidiary of Nabors Bermuda. The terms of the merger are

set forth in the Agreement and Plan of Merger attached as annex I to this proxy

statement/prospectus. As a result of the merger, your shares of Nabors Delaware

common stock will automatically convert into the right to receive Nabors Bermuda

common shares so that you will own shares in a Bermuda corporation rather than a

Delaware corporation. For a more detailed description of the differences between

your rights under Delaware law and under Bermuda law, please see "Comparison of

Rights of Stockholders" on page 28. After completion of the reorganization,

Nabors Bermuda and its subsidiaries will continue to conduct the business that

Nabors Delaware and its subsidiaries now conduct.

 

                                        6

<PAGE>

 

     The reorganization involves the following steps:

 

          1. Nabors Acquisition will merge into Nabors Delaware. Nabors Delaware

     will be the surviving entity and become a wholly-owned, indirect subsidiary

     of Nabors Bermuda.

 

          2. In the merger, each outstanding share of common stock of Nabors

     Delaware will automatically convert by operation of law into the right to

     receive one common share of Nabors Bermuda, and the current stockholders of

     Nabors Delaware will own exactly the same number of Nabors Bermuda common

     shares as they currently own in Nabors Delaware. For a description of the

     terms of the Nabors Bermuda common shares, please see the discussion under

     "Description of Authorized Shares of Nabors Industries Ltd." on page 24.

 

     Stockholders will be required to exchange their stock certificate(s) as a

result of the merger. Each outstanding certificate representing shares of Nabors

Delaware shall automatically represent the right to receive the same number of

Nabors Bermuda common shares. Following the merger, certificates bearing the

name of Nabors Bermuda will be issued upon surrender of certificates bearing the

name of Nabors Delaware for exchange or transfer to an exchange agent appointed

by Nabors US Holdings and Nabors Acquisition.

 

REASONS FOR THE REORGANIZATION (SEE PAGE 15)

 

     International activities are an important part of our current business and

we believe that international operations will account for a greater percentage

of our total revenues in the future. Expansion of our international business is

an important part of our current business strategy and significant growth

opportunities exist in the international marketplace. We believe that

reorganizing as a Bermuda corporation will allow us to implement our business

strategy more effectively.

 

     We believe that the reorganization should increase our access to

international capital markets and acquisition opportunities, increase our

attractiveness to non-U.S. investors, improve global cash management, improve

global tax position and result in a more favorable corporate structure for

expansion of our current business. We anticipate that the reorganization may

result in significant tax savings net of tax costs. However, we cannot give any

assurance as to what our tax savings net of tax costs will be after the

reorganization. In addition, a number of our competitors have reincorporated

outside of the United States to achieve these competitive advantages. We believe

the reorganization will allow us to compete more effectively on a global scale.

 

     For a discussion of the risk factors associated with the reorganization,

please see the discussion under "Risk Factors" on page 13.

 

CONDITIONS TO CONSUMMATION OF THE MERGER (SEE PAGE 17)

 

     The consummation of the reorganization is conditioned on several factors,

including the affirmative vote of the holders of a majority of the outstanding

shares of common stock of Nabors Delaware entitled to vote at the special

meeting and that none of the parties to the Agreement and Plan of Merger is

subject to any governmental authority which prohibits the consummation of the

reorganization.

 

     For additional factors, please see "The Reorganization -- Conditions to

Consummation of the Merger" on page 17.

 

REGULATORY APPROVALS (SEE PAGE 18)

 

     Through various subsidiaries, Nabors Delaware owns a fleet of approximately

30 vessels which provide transportation of drilling materials, supplies and

crews for offshore rig operations and support for other offshore operations to

third parties, principally through time charter contracts. Under United States

laws and regulations of the United States Coast Guard, these vessels are

considered to be operating in the "coastwise trades" and accordingly must be

owned by an entity which is a United States citizen for these purposes as

determined by the Coast Guard. After the reorganization is completed, Nabors

Bermuda will be deemed to be the ultimate owner of the vessels and will not

qualify as a United States citizen for the purposes of these

 

                                        7

<PAGE>

 

regulations. If the merger agreement is adopted by stockholders, Nabors Delaware

anticipates it will undertake transactions with respect to the vessels to

satisfy United States law and the Coast Guard regulations while retaining legal

title and an economic participation in the utilization of the vessels. By letter

dated March 20, 2002, the Coast Guard granted preliminary approval for the

structure Nabors Delaware will utilize for these transactions. Formal

application will be made to the Coast Guard for final approval to document the

vessels in the name of a Nabors Delaware subsidiary and approve such

transactions. While Nabors Delaware expects that such applications will be

approved, there can be no assurance that the Coast Guard will approve such

applications. If the Coast Guard does not approve such applications, Nabors

Delaware will consider alternative methods to satisfy the citizenship

requirements. For further discussion of the vessel transactions and the Coast

Guard approval see "The Reorganization -- Regulatory Approvals" on page 18.

 

CREDIT FACILITIES (SEE PAGE 21)

 

     As a result of the merger, we may fail to comply with certain covenants

contained in a credit agreement, dated as of September 5, 1997, as amended,

among Nabors Delaware, its subsidiaries, Bank of America National Trust and

Savings Association, Wells Fargo Bank (Texas), National Association and some

other financial institutions. Currently, there is no indebtedness outstanding

under this $200 million credit agreement. Due to its current cash position,

Nabors Delaware does not anticipate having to borrow under this facility for the

foreseeable future. Nabors Delaware presently intends to seek a waiver in

connection with this potential default, although there can be no assurance that

Nabors Delaware will obtain such a waiver. If no waiver is obtained, we cannot

borrow under the credit agreement. In addition, this default would cause a

cross-default under a $30 million letter of credit facility with Bank of

America, N.A., dated January 7, 2002. As of March 20, 2002, there is

approximately $25 million outstanding under such letter of credit facility.

Nabors Delaware presently intends to seek a waiver in connection with this

potential cross-default, although there can be no assurance that Nabors Delaware

will obtain such a waiver. If no waiver is obtained, we will have to replace

this letter of credit facility or cash collateralize such letters of credit.

Nabors Delaware does not believe such potential defaults will adversely affect

it, its operations or its stockholders or Nabors Bermuda or its shareholders if

the merger is completed. The credit agreement and letter of credit facility are

currently scheduled to expire in September 2002. It is currently anticipated

that Nabors Delaware (or Nabors Bermuda if the merger is completed) would seek

to obtain a replacement credit facility and letter of credit facility beginning

in the second quarter of 2002.

 

U.S. FEDERAL INCOME TAX CONSEQUENCES TO STOCKHOLDERS (SEE PAGE 40)

 

     Generally, for U.S. federal income tax purposes, stockholders who are U.S.

persons will recognize gain, if any, but not loss, on the receipt of Nabors

Bermuda common shares in exchange for Nabors Delaware common stock pursuant to

the reorganization. Such a holder will generally recognize gain equal to the

excess, if any, of the fair market value of the Nabors Bermuda common shares

received in exchange for Nabors Delaware common stock in the reorganization over

the holder's adjusted tax basis in the shares of Nabors Delaware common stock

exchanged therefor. Generally, any such gain will be capital gain. Further, the

holding period for any Nabors Bermuda common shares received by a U.S. holder

recognizing gain with respect to the reorganization should begin the day after

the effective date of the reorganization. Stockholders will not be permitted to

recognize any loss realized on the exchange of their shares of Nabors Delaware

common stock in the reorganization. In such case, the aggregate adjusted tax

basis in the Nabors Bermuda common shares received would equal the aggregate

adjusted tax basis of their shares of Nabors Delaware common stock. Thus,

subject to any subsequent changes in the fair market value of Nabors Bermuda

common shares, any loss would be preserved. The holding period for any Nabors

Bermuda common shares received by U.S. holders with a loss on their Nabors

Delaware common stock will include the holding period of the Nabors Delaware

common stock exchanged therefor.

 

     WE STRONGLY URGE YOU TO CONSULT YOUR TAX ADVISORS REGARDING YOUR PARTICULAR

TAX CONSEQUENCES OF THE REORGANIZATION.

 

                                        8

<PAGE>

 

     A more detailed discussion of the material U.S. federal income tax

consequences of the reorganization to the stockholders of Nabors Delaware is set

forth under the heading "Income Tax Consequences of the Reorganization -- U.S.

Federal Income Tax Consequences to Stockholders" on page 40.

 

RIGHTS OF STOCKHOLDERS (SEE PAGE 28)

 

     The principal attributes of the Nabors Delaware common stock and the Nabors

Bermuda common shares will be substantially similar. There are differences,

however, between the rights of stockholders under Delaware law and shareholders

under Bermuda law. In addition, there are differences between our current

certificate of incorporation and by-laws and Nabors Bermuda's memorandum of

association and bye-laws. We encourage you to read the section titled

"Comparison of Rights of Stockholders" on page 28 for a more detailed discussion

of these differences.

 

STOCK EXCHANGE LISTING; RECENT STOCK PRICES (SEE PAGE 21)

 

     Immediately following the merger, Nabors Bermuda's common shares will be

listed on the American Stock Exchange under the symbol "NBR", the same symbol

under which Nabors Delaware's common stock is currently listed. Based on prior

transactions similar to the reorganization by member companies of the S&P 500

Index, we believe that the pending change of domicile to Bermuda should not

affect the company's status as a member of the S&P 500 Index.

 

 

     The closing price per share of our shares on the American Stock Exchange

was $46.14 on May 9, 2002. The high and low sales prices of Nabors Delaware's

common stock on the American Stock Exchange were $35.49 and $34.30 on December

31, 2001, the last trading day before the public announcement of the

reorganization.

 

 

NO RIGHTS OF DISSENTING STOCKHOLDERS (SEE PAGE 20)

 

     Under the Delaware General Corporation Law, you will not have "dissenters"

or appraisal rights in connection with the merger and the reorganization.

 

ACCOUNTING TREATMENT OF THE REORGANIZATION (SEE PAGE 21)

 

     The reorganization will be accounted for as a reorganization of entities

under common control which will not result in changes in our historical

consolidated carrying amount of assets, liabilities and stockholders' equity.

 

SPECIAL MEETING (SEE PAGE 22)

 

 

     Time, Date, Place.  The special meeting of stockholders will be held at

11:00 a.m., local time, on Friday, June 14, 2002 at the Sofitel Hotel, 425 N.

Sam Houston Parkway E., Houston, Texas 77060.

 

 

     Record Date.  Only stockholders of record at the close of business on April

17, 2002, as shown in our records, will be entitled to vote, or to grant proxies

to vote, at the special meeting.

 

     Quorum.  The presence, in person or by proxy, of stockholders holding a

majority of the shares of Nabors Delaware entitled to vote will constitute a

quorum.

 

RECOMMENDATION OF THE BOARD OF DIRECTORS

 

     THE BOARD OF DIRECTORS OF NABORS DELAWARE UNANIMOUSLY APPROVED THE

AGREEMENT AND PLAN OF MERGER AND DECLARED ITS ADVISABILITY AND RECOMMENDS THAT

YOU VOTE "FOR" ITS ADOPTION.

 

VOTE REQUIRED (SEE PAGE 23)

 

     ADOPTION OF THE AGREEMENT AND PLAN OF MERGER REQUIRES THE AFFIRMATIVE VOTE

OF HOLDERS OF A MAJORITY OF THE SHARES OF NABORS DELAWARE

                                        9

<PAGE>

 

COMMON STOCK OUTSTANDING ON APRIL 17, 2002. ABSTENTIONS AND BROKER NON-VOTES

WILL THEREFORE EFFECTIVELY BE COUNTED AS VOTES AGAINST ADOPTION OF THE MERGER

AGREEMENT. As of the April 17, 2002 record date, there were 141,099,335 Nabors

Delaware shares outstanding and entitled to vote. As of the record date, our

directors and executive officers and their affiliates directly owned or are

entitled to vote, in the aggregate, approximately 1,846,378 shares of Nabors

Delaware common stock, which represents approximately 1.3% of the outstanding

shares of Nabors Delaware common stock. These persons have informed us that they

intend to vote their shares in favor of the proposal to adopt the Agreement and

Plan of Merger. Like other Nabors Delaware stockholders, for U.S. federal income

tax purposes, certain of such directors and executive officers, including the

Chairman of the board of Nabors Delaware, will recognize gain on the receipt of

Nabors Bermuda common shares in exchange for their Nabors Delaware common stock

pursuant to the reorganization.

 

PROXIES (SEE PAGE 23)

 

  GENERAL

 

     Stockholders of record may vote by marking, signing and mailing your proxy

card in the enclosed postage-prepaid envelope.

 

     If you hold your Nabors Delaware shares in the name of a bank, broker or

other nominee, you should follow the instructions provided by your bank, broker

or nominee when voting your shares. To be effective, a form of proxy must be

received by us prior to the beginning of voting at the special meeting.

 

  REVOCATION

 

     There are three ways in which you may revoke your proxy and change your

vote:

 

     - First, you may send a written notice to our proxy solicitor, Georgeson

       Shareholder Communications Inc., stating that you would like to revoke

       your proxy. This notice must be received prior to the special meeting.

 

     - Second, you may complete and submit a new later-dated proxy as described

       above. The latest dated proxy actually received by the company prior to

       the special meeting will be the one that is counted, and all earlier

       proxies will be revoked.

 

     - Third, you may attend the special meeting and vote in person. Simply

       attending the meeting, however, will not revoke your proxy. At the

       special meeting, the chairman of the meeting will announce instructions

       for you to follow if you wish to revoke your proxy and vote in person at

       the meeting.

 

     If you have instructed a broker to vote your shares, you must follow

directions received from your broker to change or revoke your proxy.

 

                                        10

<PAGE>

 

                SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

 

     The selected historical consolidated financial data of Nabors Delaware in

the table below were derived from Nabors Delaware's audited consolidated

financial statements as of and for the four years ended December 31, 2001, as of

and for the year ended September 30, 1997 and a transition period for the three

months ended December 31, 1997. Nabors Delaware changed its fiscal year end from

September 30 to December 31, effective for the fiscal year beginning January 1,

1998. A three-month transition period from October 1, 1997 through December 31,

1997 preceded the start of Nabors Delaware's new fiscal year. Nabors Delaware

has recast its financial data to conform to the presentation of the twelve

months ended December 31, 1997 by adjusting its audited results for the year

ended September 30, 1997 to exclude the unaudited results for the quarter ended

December 31, 1996 and to include the audited results for the quarter ended

December 31, 1997. This data should be read in conjunction with the audited

consolidated financial statements of Nabors Delaware, including the notes to the

financial statements, incorporated by reference into this proxy

statement/prospectus.

 

     We have not included data for Nabors Bermuda, Nabors Acquisition or Nabors

US Holdings because they did not conduct business during any of the periods

discussed below.

 

<Table>

<Caption>

                                            THREE          TWELVE

                                            MONTHS         MONTHS

                          YEAR ENDED        ENDED          ENDED                    YEAR ENDED DECEMBER 31,

                         SEPTEMBER 30,   DECEMBER 31,   DECEMBER 31,   -------------------------------------------------

                             1997            1997           1997          1998         1999         2000         2001

(IN THOUSANDS, EXCEPT    -------------   ------------   ------------   ----------   ----------   ----------   ----------

PER SHARE AMOUNTS)                                      (UNAUDITED)

<S>                      <C>             <C>            <C>            <C>          <C>          <C>          <C>

Operating revenues.....   $1,028,853       $302,831      $1,114,758    $  968,462   $  638,507   $1,327,124   $2,121,157

                          ----------       --------      ----------    ----------   ----------   ----------   ----------

Income before

  extraordinary gain...      114,808         41,327         136,020       124,988       27,704      135,474      347,792

Extraordinary gain,

  net..................           --             --              --            --           --        1,882        9,658

                          ----------       --------      ----------    ----------   ----------   ----------   ----------

Net income.............   $  114,808       $ 41,327      $  136,020    $  124,988   $   27,704   $  137,356   $  357,450

                          ----------       --------      ----------    ----------   ----------   ----------   ----------

Net income per diluted

  share:

  Net income before

    extraordinary

    gain...............   $     1.08       $    .37      $     1.24    $     1.16   $      .23   $      .89   $     2.18

  Extraordinary gain,

    net................           --             --              --            --           --          .01          .06

                          ----------       --------      ----------    ----------   ----------   ----------   ----------

  Net income...........   $     1.08       $    .37      $     1.24    $     1.16   $      .23   $      .90   $     2.24

                          ----------       --------      ----------    ----------   ----------   ----------   ----------

Dividends per common

  share................           --             --              --            --           --           --           --

Total assets...........   $1,234,232                     $1,281,306    $1,465,907   $2,398,003   $3,136,868   $4,151,915

Long-term

  obligations..........      229,507                        226,299       217,034      482,600      854,777    1,567,616

Stockholders' equity...   $  727,843                     $  767,340    $  867,469   $1,470,074   $1,806,468   $1,857,866

</Table>

 

                                        11

<PAGE>

 

                    SUMMARY PRO FORMA FINANCIAL INFORMATION

 

     A pro forma condensed consolidated balance sheet for Nabors Bermuda is not

presented in this proxy statement/prospectus because there would be no

significant pro forma adjustments required to be made to the historical

consolidated balance sheet of Nabors Delaware as of December 31, 2001. That

balance sheet is included in Nabors Delaware's Annual Report on Form 10-K for

the year ended December 31, 2001.

 

     A pro forma condensed consolidated income statement for Nabors Bermuda is

not presented in this proxy statement/prospectus because there would be no

significant pro forma adjustments required to be made to income from operations

in the historical consolidated income statement of Nabors Delaware for the year

ended December 31, 2001. That income statement is included as an exhibit to

Nabors Delaware's Annual Report on Form 10-K for the fiscal year ended December

31, 2001.

 

     Costs incurred in connection with the reorganization are not expected to be

material and are expensed as incurred.

 

                                        12

<PAGE>

 

                                  RISK FACTORS

 

CERTAIN NABORS DELAWARE STOCKHOLDERS WILL RECOGNIZE A TAXABLE GAIN AS A RESULT

OF THE REORGANIZATION.

 

     Generally, for U.S. federal income tax purposes, stockholders who are U.S.

persons will recognize gain, if any, but not loss, on the receipt of Nabors

Bermuda common shares in exchange for Nabors Delaware common stock pursuant to

the reorganization. Such a holder will generally recognize gain equal to the

excess, if any, of the fair market value of the Nabors Bermuda common shares

received in exchange for Nabors Delaware common stock in the reorganization over

the holder's adjusted tax basis in the shares of Nabors Delaware common stock

exchanged therefor. Generally, any such gain will be capital gain. Further, the

holding period for any Nabors Bermuda common shares received by a U.S. holder

recognizing gain with respect to the reorganization should begin the day after

the effective date of the reorganization. Stockholders will not be permitted to

recognize any loss realized on the exchange of their shares of Nabors Delaware

common stock in the reorganization. In such case, the aggregate adjusted tax

basis in the Nabors Bermuda common shares received would equal the aggregate

adjusted tax basis of their shares of Nabors Delaware common stock. Thus,

subject to any subsequent changes in the fair market value of Nabors Bermuda

common shares, any loss would be preserved.

 

     WE STRONGLY URGE YOU TO CONSULT YOUR TAX ADVISORS REGARDING YOUR PARTICULAR

TAX CONSEQUENCES OF THE REORGANIZATION.

 

NABORS BERMUDA AND ITS SUBSIDIARIES COULD INCUR A MATERIAL AMOUNT OF TAXES IF

THERE ARE UNFAVORABLE CHANGES IN, OR INTERPRETATIONS OF, TAX LAWS.

 

     Several senior members of the United States Congress have introduced

legislation that, if enacted, would have the effect of eliminating the

anticipated tax benefits of the transaction. Each of the proposed bills, for

U.S. federal tax purposes, would treat a foreign corporation, such as Nabors

Bermuda, that undertakes a corporate expatriation transaction such as the

reorganization as a domestic corporation and, thus, such foreign corporation

would be subject to U.S. federal tax. Each of the proposed bills would have

retroactive effect to inversion transactions occurring after specified dates in

2001 or 2002. If any of the proposed legislation were enacted in their present

forms and with their proposed effective dates, the anticipated tax savings from

the reorganization would not be realized.

 

     In addition, several other members of the United States Congress and the

Treasury Department have recently announced the intent to investigate

transactions such as the reorganization. As a result of the increased scrutiny

of such transactions, changes in the tax laws, tax treaties or tax regulations

may occur, with prospective or retroactive effect, which could eliminate or

substantially reduce the anticipated tax benefits of the reorganization or

subject the company to material tax liability as a result of the reorganization.

If in response to any such changes the reorganized company or its subsidiaries

undertake a corporate restructuring, such restructuring could result in

additional material adverse tax consequences to the company or its shareholders.

 

     In addition, the IRS or other taxing authority could disagree with our

assessment of the effects or interpretation of existing laws, regulations and

treaties, which could have a material adverse effect on the tax consequences of

the reorganization, the tax consequences of the future operations of the

reorganized company and its subsidiaries or otherwise have a material adverse

effect on the tax consequences to the company or its shareholders.

 

THE REORGANIZATION COULD RESULT IN A MATERIAL AMOUNT OF TAXES TO NABORS

DELAWARE.

 

     Although we believe that Nabors Delaware should not incur a material amount

of U.S. federal income or withholding tax as a result of the reorganization, the

IRS may not agree with this conclusion. If the IRS were to successfully

challenge the tax treatment of the reorganization, Nabors Delaware could incur a

material amount of U.S. federal income or withholding tax as a result of the

reorganization.

 

                                        13

<PAGE>

 

NABORS BERMUDA MAY BECOME SUBJECT TO U.S. CORPORATE INCOME TAX.

 

     Although Nabors Delaware and its subsidiaries will continue to be subject

to U.S. corporate income tax on their operations after the reorganization,

Nabors Bermuda anticipates that its non-U.S. operations will not be subject to

U.S. corporate income tax, other than withholding taxes imposed on certain U.S.

source income. If, however, Nabors Bermuda becomes subject to U.S. corporate

income tax, Nabors Bermuda's net income could be reduced.

 

     Nabors Bermuda and other non-U.S. Nabors affiliates will conduct their

operations in a manner intended to ensure that Nabors Bermuda and its non-U.S.

affiliates do not engage in the conduct of a U.S. trade or business and, thus,

Nabors Bermuda and its non-U.S. affiliates believe that they should not be

required to pay U.S. corporate income tax, other than withholding tax on certain

U.S. source income. However, if the IRS successfully contends that Nabors

Bermuda or any of its non-U.S. affiliates are engaged in a trade or business in

the U.S., Nabors Bermuda or that non-U.S. affiliate would be required to pay

U.S. corporate income tax on income that is subject to the taxing jurisdiction

of the U.S., and possibly the U.S. branch profits tax.

 

THE ENFORCEMENT OF JUDGMENTS IN STOCKHOLDER SUITS AGAINST NABORS BERMUDA MAY BE

MORE DIFFICULT.

 

     Nabors Bermuda is a Bermuda exempted company. As a result, it may be

difficult for you to effect service of process within the United States or to

enforce judgments obtained against Nabors Bermuda in United States courts. This

difficulty may adversely affect your rights in this regard as a shareholder of

Nabors Bermuda when compared to your rights as a stockholder of Nabors Delaware.

Nabors Bermuda will irrevocably agree that it may be served with process with

respect to actions based on offers and sales of securities made in the United

States and other violations of U.S. securities laws by having Nabors Industries,

Inc. (Nabors Delaware) located at 515 West Greens Road, Suite 1200, Houston,

Texas 77067, be its United States agent appointed for that purpose.

 

     Nabors Bermuda has been advised by its Bermuda counsel, Appleby, Spurling &

Kempe, that a judgment for the payment of money rendered by a court in the

United States based on civil liability would not be automatically enforceable in

Bermuda. Nabors Bermuda has also been advised by Appleby, Spurling & Kempe that

a final and conclusive judgment obtained in a court of competent jurisdiction in

the United States under which a sum of money is payable (not being a sum payable

in respect of taxes or other charges of a like nature, in respect of a fine or

other penalty, or in respect of multiple damages as defined in the Protection of

Trading Interests Act of 1981) may be the subject of an action in the Supreme

Court of Bermuda under the common law doctrine of obligation, by action on the

debt evidenced by the court's judgment. Such an action should be successful upon

proof that the sum of money is due and payable, and without having to prove the

facts supporting the underlying judgment, as long as:

 

     - the court that gave the judgment was competent to hear the action in

       accordance with private international law principles as applied by the

       courts in Bermuda; and

 

     - the judgment is not contrary to public policy in Bermuda, was not

       obtained by fraud or in proceedings contrary to natural justice of

       Bermuda and is not based on an error in Bermuda law.

 

     A Bermuda court may impose civil liability on Nabors Bermuda or its

directors or officers in a suit brought by shareholders or others in the Supreme

Court of Bermuda against Nabors Bermuda or such persons with respect to facts

that constitute a violation of U.S. federal securities laws only if the facts

surrounding such violation would constitute or give rise to a cause of action

under Bermuda law.

 

ANTI-TAKEOVER PROVISIONS IN NABORS BERMUDA'S BYE-LAWS WILL MAINTAIN CERTAIN

EXISTING ANTI-TAKEOVER PROVISIONS OF NABORS DELAWARE WHICH COULD DISCOURAGE OR

MAKE MORE DIFFICULT UNSOLICITED TAKEOVER BIDS FROM THIRD PARTIES OR THE REMOVAL

OF INCUMBENT MANAGEMENT OF NABORS BERMUDA.

 

     Similar to the current authority of Nabors Delaware's board of directors,

the board of directors of Nabors Bermuda may issue preferred shares and

determine their rights and qualifications. The issuance of preferred shares

might discourage or make more difficult unsolicited takeover bids from third

parties.

 

                                        14

<PAGE>

 

     In addition, provisions in Nabors Bermuda's bye-laws, which replicate or

are similar to certain provisions of Nabors Delaware's restated certificate of

incorporation and by-laws, similarly could discourage or make more difficult

unsolicited takeover bids from third parties or the removal of incumbent

management. These provisions include:

 

     - a classified board of directors; and

 

     - the requirement that the written request of the holders of record of not

       less than 10% of the Nabors Bermuda common shares then outstanding is

       necessary for shareholders to validly call a special meeting.

 

YOUR RIGHTS AS A STOCKHOLDER WILL CHANGE AS A RESULT OF THE REORGANIZATION.

 

     Because of differences in Bermuda law and Delaware law and differences in

the governing documents of Nabors Bermuda and Nabors Delaware, your rights as a

stockholder will change if the reorganization is completed. For example, in

general, it may be more difficult for you to bring a shareholder derivative suit

on behalf of the company under Bermuda law than it is to bring such a suit under

Delaware law. In addition, provisions in Nabors Bermuda's bye-laws will place

time limitations on your ability to submit shareholder proposals and nominations

for directors which are not included in Nabors Delaware's by-laws. For a

description of these and other differences, see "Comparison of Corporate

Governance Provisions" beginning on page 30.

 

                               THE REORGANIZATION

 

STRUCTURE OF THE REORGANIZATION

 

     The Board of Directors has unanimously approved and recommends that you

adopt the Agreement and Plan of Merger whereby we will change our domicile from

Delaware to Bermuda. The reorganization will be accomplished through the merger

of Nabors Acquisition into Nabors Delaware. Nabors Delaware will be the

surviving company in the merger and become a wholly-owned, indirect subsidiary

of Nabors Bermuda. The terms of the merger are set forth in the Agreement and

Plan of Merger attached as annex I to this proxy statement/prospectus. As a

result of the merger your shares of Nabors Delaware common stock will

automatically convert into the right to receive the same number of Nabors

Bermuda common shares.

 

     After completion of the reorganization, you will own an interest in a

Bermuda holding company which, through Nabors Delaware and its other

subsidiaries, will be engaged in the same business that Nabors Delaware and its

subsidiaries were engaged in prior to the reorganization.

 

     The reorganization involves the following steps:

 

          1.  Nabors Acquisition will merge into Nabors Delaware. Nabors

     Delaware will be the surviving entity and become a wholly-owned, indirect

     subsidiary of Nabors Bermuda.

 

          2.  In the merger, each outstanding share of common stock of Nabors

     Delaware will automatically convert by operation of law into the right to

     receive one common share of Nabors Bermuda, and the current stockholders of

     Nabors Delaware will own exactly the same number of Nabors Bermuda common

     shares. For a description of the terms of the Nabors Bermuda common shares,

     please see the discussion under "Description of Authorized Shares of Nabors

     Industries Ltd." on page 24.

 

BACKGROUND AND REASONS FOR THE REORGANIZATION

 

  INTERNATIONAL EXPANSION

 

 

     International activities are an important part of our current business.

Internationally, operating revenues and earnings from unconsolidated affiliates

were approximately $279 million in 2000 and $344.5 million in 2001, accounting

for approximately 20% and 16%, respectively, of our total operating revenues and

earnings from unconsolidated affiliates in such years. Approximately 142 rigs of

our approximately 596 land drilling rig

 

 

                                        15

<PAGE>

 

fleet currently are located outside of the United States and approximately 14

rigs of our 60 offshore rig fleet currently are positioned outside of United

States waters. We believe that a substantial portion of future opportunities for

our services will be outside of the United States and accordingly, we believe

international operations will account for a greater percentage of our total

revenues in the future. We believe that reorganizing Nabors Delaware as a

Bermuda corporation will give us competitive advantages not available to a U.S.

company. As a Bermuda company, we believe we will have greater access to

international capital markets and international acquisition opportunities, which

will allow us to implement our international expansion strategy more

effectively. In addition, a number of our competitors have reincorporated

outside of the United States to achieve these competitive advantages. We believe

the reorganization will allow us to compete more effectively on a global scale.

 

  GLOBAL TAX POSITION

 

     The board is recommending the reorganization in part because it believes

that the reorganization will improve our global tax position and should maximize

potential growth and cash flow. We anticipate that the reorganized structure may

enhance our ability to realize significant tax savings net of tax costs.

However, we cannot give any assurance as to what our tax savings net of tax

costs will be after the reorganization. After the reorganization our tax rate

will depend on, among other things, profitability and the relative mix of our

operations worldwide and our ability to react to any changes in tax laws,

treaties and policies and the interpretation of such laws, treaties and policies

in the jurisdictions where we operate. Our actual effective tax rate may vary

materially from our expectation.

 

     As a result of an improvement in cash flow we believe we will be able to:

 

     - maximize existing business growth and cash flow; and

 

     - commit additional capital to international expansion.

 

     Nabors Bermuda will be indirectly subject to U.S. tax on income earned from

its U.S. business much as we are now. However, we believe the reorganization:

 

     - will potentially improve our global tax position;

 

     - may facilitate foreign tax savings through a more flexible corporate

       structure; and

 

     - may provide future U.S. tax savings to the extent that new foreign

       businesses may be held by Nabors Bermuda without any intervening U.S.

       owners.

 

Thus the new corporate structure should give us greater flexibility in seeking

to lower our worldwide tax liability and effective tax rate.

 

     In addition, Nabors Delaware's board believes that the reorganization will

result in a more favorable corporate structure for expansion of our current

business because it will facilitate the cost effective acquisition and operation

of non-U.S. businesses.

 

     It is important to note that several senior members of the United States

Congress have introduced legislation that, if enacted, would have the effect of

eliminating the anticipated tax benefits of the transaction. In addition,

several other members of the United States Congress and the Treasury Department

have recently announced the intent to investigate transactions such as the

reorganization. As a result of the increased scrutiny of such transactions,

changes in the tax laws, tax treaties or tax regulations may occur, with

prospective or retroactive effect, which could eliminate or substantially reduce

the anticipated tax benefits of the reorganization or have a material adverse

effect on the tax consequences of the reorganization to the company. If in

response to any such changes the reorganized company or its subsidiaries

undertake a corporate restructuring, such restructuring could result in

additional material adverse tax consequences to the company or its shareholders.

 

                                        16

<PAGE>

 

  POTENTIAL EXPANSION OF INVESTOR BASE

 

     The board also believes that the reorganization may increase Nabors

Bermuda's attractiveness to non-U.S. investors. Estate taxes are payable in some

cases in respect of the value of shares in a U.S. corporation owned by a

non-U.S. investor. Although Nabors Delaware has not paid any dividends on its

common stock since 1982, distributions with respect to stock in a U.S.

corporation to nonresident aliens could be subject to withholding taxes under

the Internal Revenue Code of 1986, as amended (the "Code"). As we will be a non-

U.S. corporation following the reorganization, these taxes will generally no

longer be applicable to non-U.S. investors. Under existing Bermuda law, there

will be no Bermuda income or withholding tax on dividends, if any, paid by

Nabors Bermuda to its shareholders. Furthermore, no Bermuda tax or other levy is

payable on the sale or other transfer (including by gift or on the death of the

shareholder) of Nabors Bermuda common shares (other than by shareholders

resident in Bermuda). Likewise, under existing Barbados law, there will be no

Barbados income or withholding tax on dividends, if any, paid by Nabors Bermuda

to its shareholders. Furthermore, U.S. shareholders will not be subject to any

Barbados taxation on the sale or other transfer (including by gift or on the

death of the shareholder) of Nabors Bermuda common shares. Nabors Bermuda is not

aware of any other taxes that non-U.S. residents might incur that could

discourage an investment in Nabors Bermuda as compared to an investment in

Nabors Delaware. As a result, non-U.S. investors may be more receptive to an

investment in Nabors Bermuda common shares.

 

     In addition to the potential benefits described above, the reorganization

will expose you to some risks. Please see the discussion under "Risk Factors" on

page 13. There are also differences between the Delaware and the Bermuda

corporate law and the organizational documents of Nabors Delaware and Nabors

Bermuda. For a discussion of these differences, please see "Comparison of Rights

of Stockholders" on page 28. The board of directors has determined that the

potential advantages of the reorganization substantially outweigh these risks

and differences. Accordingly, the board of directors of Nabors Delaware has

unanimously approved the Agreement and Plan of Merger and declared its

advisability and recommends that stockholders vote "FOR" its adoption. However,

no assurances can be given that the anticipated benefits of the reorganization

will be realized.

 

THE MERGER AGREEMENT

 

     Nabors Delaware, Nabors Bermuda, Nabors Acquisition and Nabors US Holdings

have entered into the merger agreement, which is the legal document that governs

the merger. We recommend that you read carefully the complete merger agreement

for the precise legal terms of the merger and other information that may be

important to you. The merger agreement is included in this proxy

statement/prospectus as annex I and is incorporated in this document by

reference.

 

CONDITIONS TO CONSUMMATION OF THE MERGER

 

     The merger will not be completed unless, among other things, the following

conditions are satisfied or, if allowed by law, waived:

 

     - the merger agreement is adopted by the affirmative vote of holders of a

       majority of the shares of Nabors Delaware common stock outstanding on the

       record date;

 

     - none of the parties to the merger agreement is subject to any

       governmental decree, order or injunction that prohibits the consummation

       of any of the steps in the reorganization;

 

     - the registration statement of which this proxy statement/prospectus is a

       part is declared effective by the Securities and Exchange Commission, and

       no stop order is in effect;

 

     - the Nabors Bermuda common shares to be issued pursuant to the merger are

       approved for listing on the American Stock Exchange, subject to official

       notice of issuance;

 

     - all filings required by a governmental or regulatory agency are made; and

 

     - all consents and approvals required by any governmental or regulatory

       agency and all other material third-party consents are received.

                                        17

<PAGE>

 

     We are parties to agreements that require the consent of third parties

prior to the implementation of the merger. We believe that we will obtain all

material consents required prior to the completion of the merger and that the

failure to obtain any other consents will not have a material impact on our

business or our ability to consummate the reorganization.

 

REGULATORY APPROVALS

 

     Through various subsidiaries, Nabors Delaware owns a fleet of approximately

30 vessels which provide transportation of drilling materials, supplies and

crews for offshore rig operations and support for other offshore operations to

third parties, principally through time charter contracts. Under a time charter

contract, an operator, a subsidiary of Nabors Delaware, operates the vessels to

provide the transportation services required by the third parties. Annual

revenues generated by this vessel fleet for each of the years 2000 and 2001 were

less than 3.5% of Nabors Delaware's total consolidated revenues in such years.

Under United States laws and regulations of the United States Coast Guard, these

vessels are considered to be operating in the "coastwise trades" and accordingly

must be owned by an entity which is a United States citizen for these purposes

as determined by the Coast Guard. After the reorganization is completed, Nabors

Bermuda will be deemed to be the ultimate owner of the vessels and will not

qualify as a United States citizen for these purposes.

 

     Accordingly, if stockholders of Nabors Delaware adopt the merger agreement,

Nabors Delaware will undertake actions to satisfy these citizenship

requirements. Specifically, Nabors Delaware anticipates that it will transfer

title of the vessels and assign charter contracts to Nabors US Finance LLC, an

indirect, Delaware subsidiary of Nabors Delaware. Nabors US Finance will enter

into a contract called a "bareboat charter" with an independent third party

which will "time charter" the vessels back to a subsidiary of Nabors Bermuda.

Under the terms of the bareboat charter, the independent third party will have

full possession, control and command of the vessels, will man, equip, maintain

and repair the vessels and will operate them as directed by the Nabors Bermuda

subsidiary under the time charter. The time charter contract will be between the

Nabors Bermuda subsidiary and the independent third party pursuant to which the

independent third party will operate the vessels to provide transportation

services to the Nabors Bermuda subsidiary at such subsidiary's direction. The

independent third party will qualify as a United States citizen under sections

2(a) and (c) of the Shipping Act, 1916, as amended, and for purposes of the

Coast Guard regulations. This transaction structure will allow the Nabors group

to retain legal title and an economic participation in the utilization of the

vessels through their employment under the time charter while satisfying the

Coast Guard's citizenship requirements. By letter dated March 20, 2002, the

Coast Guard granted preliminary approval for the structure Nabors Delaware will

utilize for these transactions. If shareholders adopt the merger agreement,

Nabors US Finance will submit formal applications to the Coast Guard to document

the vessels in its name and approve the transactions described above. While

Nabors Delaware expects that such applications will be approved, there can be no

assurance that the Coast Guard will approve such applications. If the Coast

Guard does not approve such applications, Nabors Delaware will consider

alternative methods to satisfy the citizenship requirements.

 

EFFECTIVE TIME

 

     If the merger agreement is adopted by the requisite vote of our

stockholders, the merger will become effective upon the filing of a certificate

of merger with the Secretary of State of the State of Delaware in accordance

with Delaware law. If the merger agreement is adopted, Nabors Delaware expects

to file the certificate of merger and have the merger become effective promptly

following the special meeting.

 

     In the event the conditions to the merger are not satisfied, the merger may

be abandoned or delayed even after the merger agreement has been adopted by our

stockholders. In addition, the merger may be abandoned or delayed for any reason

by the board of directors of Nabors Delaware at any time prior to its becoming

effective, even though the merger agreement has been adopted by our stockholders

and all conditions to the merger have been satisfied.

 

                                        18

<PAGE>

 

AMENDMENT OR TERMINATION

 

     The merger agreement may be amended, modified or supplemented at any time

before or after its adoption by our stockholders. However, after adoption, no

amendment, modification or supplement may be made or effected that does any of

the following:

 

     - alters or changes the amount or kind of shares to be received by

       stockholders in the merger;

 

     - alters or changes any term of the certificate of incorporation of the

       surviving corporation; or

 

     - alters or changes any other terms and conditions of the merger agreement

       if any of the alterations or changes would adversely affect the holders

       of Nabors Delaware common stock.

 

     Our board of directors may terminate the merger agreement and abandon the

merger at any time prior to its effectiveness.

 

SHARE CONVERSION; EXCHANGE OF SHARES

 

     Each share of Nabors Delaware common stock will automatically convert by

operation of law into the right to receive one common share of Nabors Bermuda

upon the consummation of the merger.

 

     If you desire to sell some or all of your Nabors Bermuda common shares

after the effective date of the merger, delivery of the stock certificate(s)

which previously represented shares of Nabors Delaware common stock will be

sufficient. The holding period for any Nabors Bermuda common shares received by

a U.S. holder recognizing gain with respect to the reorganization should begin

the day after the effective date of the reorganization. The holding period for

any Nabors Bermuda common shares received by U.S. holders with a loss on their

Nabors Delaware common stock will include the holding period of the Nabors

Delaware common stock exchanged therefor. Your right to sell shares of Nabors

Delaware before the effective date of the merger will not be affected.

 

     Prior to the merger, an exchange agent will be appointed by Nabors US

Holdings and Nabors Acquisition to handle the exchange of Nabors Delaware stock

certificates for Nabors Bermuda common share certificates. Prior to the merger,

Nabors US Holdings and Nabors Acquisition will cause a sufficient number of

Nabors Bermuda common shares to be deposited with the exchange agent for the

purpose of enabling stockholders to exchange their Nabors Delaware common stock

certificates for certificates representing an equal number of Nabors Bermuda

common shares. Soon after the closing of the merger, the exchange agent will

send a letter of transmittal, which is to be used to exchange Nabors Delaware

stock certificates for Nabors Bermuda share certificates, to each former Nabors

Delaware stockholder. The letter of transmittal will contain instructions

explaining the procedure for surrendering Nabors Delaware stock certificates.

YOU SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.

 

     Nabors Delaware stockholders who surrender their stock certificates,

together with a properly completed letter of transmittal, will receive share

certificates representing the common shares of Nabors Bermuda into which their

shares of Nabors Delaware have been converted in the merger. After the merger,

each certificate that previously represented shares of Nabors Delaware common

stock will represent only the right to receive the common shares of Nabors

Bermuda into which those shares of Nabors Delaware common stock have been

converted.

 

     Although Nabors Bermuda anticipates that it will not pay any dividends on

its common shares for the foreseeable future, if it does pay any dividends it

will not pay dividends to holders of Nabors Delaware stock certificates in

respect of the common shares of Nabors Bermuda into which the Nabors Delaware

shares represented by those certificates have been converted until the Nabors

Delaware stock certificates are surrendered to the exchange agent.

 

     After the merger becomes effective, Nabors Delaware will not register any

further transfers of shares of Nabors Delaware common stock. Any certificates

for Nabors Delaware shares that you present for registration after the effective

time of the merger will be exchanged for Nabors Bermuda common shares.

 

                                        19

<PAGE>

 

     If you surrender a Nabors Delaware stock certificate and request the new

Nabors Bermuda certificate to be issued in a name other than the one appearing

on the surrendered certificate, you must endorse the stock certificate or

otherwise prepare it to be in proper form for transfer.

 

MANAGEMENT OF NABORS BERMUDA

 

     When the reorganization is completed, all of the directors and all of the

executive officers of Nabors Delaware will become the directors and executive

officers of Nabors Bermuda. Assuming the merger agreement is adopted, the

current directors of Nabors Delaware will carry over their remaining terms of

office to Nabors Bermuda.

 

REQUIRED VOTE FOR THE REORGANIZATION

 

     In order to complete the reorganization, the merger agreement must be

adopted by the affirmative vote of holders of a majority of the shares of Nabors

Delaware common stock outstanding on April 17, 2002. Because of this vote

requirement, ABSTENTIONS WILL HAVE THE SAME EFFECT AS VOTES AGAINST THE PROPOSAL

TO ADOPT THE MERGER AGREEMENT. THE FAILURE OF A STOCKHOLDER TO SUBMIT A FORM OF

PROXY OR TO VOTE IN PERSON AT THE MEETING WILL ALSO HAVE THE EFFECT OF A VOTE

AGAINST THE ADOPTION OF THE MERGER AGREEMENT. Under the rules of the American

Stock Exchange, brokers who hold shares in street name for customers have the

authority to vote on many "routine" proposals when they have not received

instructions from beneficial owners. Under these rules, brokers are precluded

from exercising their voting discretion with respect to proposals for

non-routine matters like the merger. THUS, ABSENT SPECIFIC INSTRUCTIONS FROM

YOU, YOUR BROKER IS NOT EMPOWERED TO VOTE YOUR SHARES WITH RESPECT TO THE

ADOPTION OF THE MERGER AGREEMENT (I.E., "BROKER NON-VOTES"). Since the

affirmative vote of holders of a majority of the shares of Nabors Delaware

common stock is required for adoption of the merger agreement, A BROKER NON-VOTE

WILL HAVE THE SAME EFFECT AS A VOTE AGAINST ADOPTION OF THE MERGER AGREEMENT.

 

     As of the record date for the special meeting, there were 141,099,335

shares of Nabors Delaware common stock outstanding and entitled to vote. As of

the record date, our directors and executive officers owned or are entitled to

vote, in the aggregate, approximately 1,846,378 shares of our common stock,

which represents approximately 1.3% of the outstanding Nabors Delaware common

stock. These persons have informed us that they intend to vote their shares in

favor of the proposal to adopt the merger agreement.

 

NO RIGHTS OF DISSENTING STOCKHOLDERS

 

     Under Delaware law, you will not have "dissenters" or appraisal rights in

connection with the merger or the reorganization because, among other reasons,

Nabors Delaware common stock is listed on the American Stock Exchange and Nabors

Bermuda common shares will be listed on the American Stock Exchange following

the effective time of the merger.

 

DIVIDENDS

 

     Nabors Delaware has not declared or paid any cash dividends on its common

stock since 1982. We do not intend to pay any cash dividends on our common stock

for the foreseeable future. If the merger agreement is adopted and the

reorganization is completed, Nabors Bermuda anticipates that it will not pay any

dividends on its common shares for the foreseeable future.

 

STOCK COMPENSATION PLANS AND EMPLOYMENT AGREEMENTS

 

     If the reorganization is completed, we will amend and revise our employee

and director stock option and other stock-based plans and arrangements to (1)

provide that Nabors Delaware will continue to sponsor the employee plans and

Nabors Bermuda will assume sponsorship of certain director plans, (2) provide

that common shares of Nabors Bermuda will be issued upon the exercise of any

options or the payment of any other stock-based awards under the plans and

arrangements, and (3) otherwise appropriately reflect the substitution of common

shares of Nabors Bermuda for common stock of Nabors Delaware under the plans and

arrangements and related agreements. Your approval of the merger will also

constitute approval of those

                                        20

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amendments and revisions to our stock option and other stock-based plans and

arrangements providing for future use of Nabors Bermuda common shares in lieu of

common stock of Nabors Delaware after the merger. In addition, Nabors Delaware

will amend or obtain waivers with respect to employment agreements with certain

executive officers to provide that the reorganization does not constitute a

"change in control" under such agreements, and Nabors Bermuda will agree to

assume the rights and obligations of Nabors Delaware under such agreements. Such

executive officers have agreed to such amendments and waivers in principle,

subject to mutual agreement on documentation.

 

STOCK EXCHANGE LISTING

 

     Our common stock is currently listed on the American Stock Exchange. There

is currently no established public trading market for the common shares of

Nabors Bermuda. We have made an application so that, immediately following the

reorganization, the common shares of Nabors Bermuda will be listed on the

American Stock Exchange under the symbol "NBR", the same symbol under which

Nabors Delaware common stock is currently listed. Based on prior transactions

similar to the reorganization by member companies of the S&P 500 Index, we

believe that the pending change of domicile to Bermuda should not affect the

company's status as a member of the S&P 500 Index.

 

ACCOUNTING TREATMENT OF THE REORGANIZATION

 

     The reorganization will be accounted for as a reorganization of entities

under common control which will not result in changes in our historical

consolidated carrying amounts of assets, liabilities and stockholders' equity.

 

CREDIT FACILITIES

 

     As a result of the merger, we may fail to comply with certain covenants

contained in a credit agreement, dated as of September 5, 1997, as amended,

among Nabors Delaware, its subsidiaries, Bank of America National Trust and

Savings Association, Wells Fargo Bank (Texas), National Association and some

other financial institutions. Currently, there is no indebtedness outstanding

under this $200 million credit agreement. Due to its current cash position,

Nabors Delaware does not anticipate having to borrow under this facility for the

foreseeable future. Nabors Delaware presently intends to seek a waiver in

connection with this potential default, although there can be no assurance that

Nabors Delaware will obtain such a waiver. If no waiver is obtained, we cannot

borrow under the credit agreement. In addition, this default would cause a

cross-default under a $30 million letter of credit facility with Bank of

America, N.A., dated January 7, 2002. As of March 20, 2002, there is

approximately $25 million outstanding under such letter of credit facility.

Nabors Delaware presently intends to seek a waiver in connection with this

potential cross-default, although there can be no assurance that Nabors Delaware

will obtain such a waiver. If no waiver is obtained, we will have to replace

this letter of credit facility or cash collateralize such letters of credit.

Nabors Delaware does not believe such potential defaults will adversely affect

it, its operations or its stockholders or Nabors Bermuda or its shareholders if

the merger is completed. The credit agreement and letter of credit facility are

currently scheduled to expire in September 2002. It is currently anticipated

that Nabors Delaware (or Nabors Bermuda if the merger is completed) would seek

to obtain a replacement credit facility and letter of credit facility beginning

in the second quarter of 2002.

 

                              RECENT DEVELOPMENTS

 

     On April 26, 2002, Nabors Delaware announced that it had completed the

previously announced acquisition of Enserco Energy Service Company Inc., a

Canadian corporation. Under the terms of the acquisition, Nabors Exchangeco

(Canada) Inc., a Canadian subsidiary of Nabors Delaware, acquired all of the

outstanding common shares of Enserco pursuant to a plan of arrangement under the

Canada Business Corporations Act in exchange for approximately Cdn. $1.84

million in cash and approximately 3.55 million exchangeable shares of Nabors

Exchangeco (Canada) Inc. which are exchangeable into Nabors Delaware common

stock on a 1:1 basis. Approximately 2.64 million of the issued exchangeable

shares were immediately

 

                                        21

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exchanged for shares of Nabors Delaware common stock in accordance with the

instructions of the holders of such exchangeable shares. The exchangeable shares

will be listed on The Toronto Stock Exchange under the symbol "NBX". The

exchangeable shares of Nabors Exchangeco (Canada) Inc. have provisions which

effectively confer on the holders of the exchangeable shares the same voting and

economic rights in Nabors Delaware as the holders of Nabors Delaware common

stock. Specifically, the exchangeable shares:

 

     - will effectively have the same voting rights, dividend entitlements and

       other attributes of Nabors Delaware common stock (or Nabors Bermuda

       common shares if the reorganization is completed);

 

     - will be exchangeable, at the holder's option, on a one-for-one basis into

       Nabors Delaware common stock (or Nabors Bermuda common shares if the

       reorganization is completed);

 

     - subject to compliance with listing requirements, will be listed on the

       Toronto Stock Exchange; and

 

     - will automatically be exchanged five years after completion of the

       Enserco acquisition or upon the occurrence of other specified events.

 

     If the reorganization is completed, the exchangeable shares will, after the

effective time of the reorganization, become exchangeable for Nabors Bermuda

common shares.

 

     On March 18, 2002, Nabors Delaware also separately acquired from two

Enserco shareholders Enserco common shares representing approximately 20.5% of

the issued and outstanding Enserco shares for Cdn. $15.50 per share.

 

     Enserco is an integrated energy services company providing production and

drilling services to the North American oil and gas industry. Through its

subsidiaries, Bonus Well Servicing and H&R Drilling, Enserco operates over 200

Canadian well-servicing rigs and 30 drilling rigs.

 

                              THE SPECIAL MEETING

 

 

     This proxy statement/prospectus is being furnished in connection with the

solicitation of proxies from the holders of Nabors Delaware common stock by the

Nabors Delaware board of directors relating to the merger and other matters to

be voted upon at the special meeting and at any adjournment or postponement of

the meeting. This proxy statement/prospectus is also a prospectus for Nabors

Bermuda common shares to be issued in the merger. Nabors Delaware mailed this

proxy statement/prospectus to stockholders beginning on or about May 16, 2002.

You should read this proxy statement/prospectus carefully before voting your

shares.

 

 

WHEN AND WHERE THE SPECIAL MEETING WILL BE HELD

 

 

     The special meeting of stockholders will be held at 11:00 a.m., local time,

on Friday, June 14, 2002, at the Sofitel Hotel, 425 N. Sam Houston Parkway E.,

Houston, Texas 77060.

 

 

WHAT WILL BE VOTED UPON

 

     At the special meeting, you will be asked to consider and vote upon the

following items:

 

     - To adopt the Agreement and Plan of Merger, substantially in the form

       attached to this proxy statement/prospectus as annex I, among Nabors

       Delaware, Nabors Acquisition, Nabors Bermuda and Nabors US Holdings

       whereby the company will effectively change its place of incorporation

       from Delaware to Bermuda by merging Nabors Acquisition with Nabors

       Delaware, which will be the surviving entity and become a wholly-owned,

       indirect subsidiary of Nabors Bermuda, and pursuant to which each share

       of Nabors Delaware will automatically be converted into the right to

       receive a share of Nabors Bermuda and all current stockholders of Nabors

       Delaware will become shareholders of Nabors Bermuda; and

 

     - To transact such other business as may properly come before the special

       meeting.

 

                                        22

<PAGE>

 

ONLY NABORS DELAWARE STOCKHOLDERS OF RECORD ON APRIL 17, 2002 ARE ENTITLED TO

VOTE

 

     Only stockholders of record at the close of business on April 17, 2002, as

shown in our records, will be entitled to vote, or to grant proxies to vote, at

the special meeting. On the record date, there were 141,099,335 million shares

of Nabors Delaware common stock outstanding and entitled to vote at the special

meeting.

 

MAJORITY OF OUTSTANDING SHARES MUST BE REPRESENTED FOR A VOTE TO BE TAKEN

 

     In order to have a quorum, the holders of a majority of the shares of

Nabors Delaware common stock outstanding on the record date must be represented

in person or by proxy at the special meeting.

 

VOTE REQUIRED FOR APPROVAL

 

     The Agreement and Plan of Merger must be adopted by the affirmative vote of

holders of a majority of the shares of Nabors Delaware common stock outstanding

on April 17, 2002. Each share of Nabors Delaware common stock is entitled to

cast one vote. As of the record date, directors and executive officers of Nabors

Delaware owned and were entitled to vote 1,846,378 shares (or approximately

1.3%) of Nabors Delaware common stock. These persons have advised us that they

intend to vote their shares in favor of the proposal. Like other Nabors Delaware

stockholders, for U.S. federal income tax purposes, certain of such directors

and executive officers, including the Chairman of the board of Nabors Delaware,

will recognize gain on the receipt of Nabors Bermuda common shares in exchange

for their Nabors Delaware common stock pursuant to the reorganization.

 

VOTING YOUR SHARES AND CHANGING YOUR VOTE

 

  VOTING YOUR SHARES

 

     The Nabors Delaware board of directors is soliciting proxies from the

Nabors Delaware stockholders. This will give you the opportunity to vote at the

special meeting. When you deliver a valid proxy, the shares represented by that

proxy will be voted in accordance with your instructions. If you do not vote by

marking, signing and mailing your proxy card or by attending the special meeting

and voting in person, it will have the same effect as voting against the

adoption of the merger agreement.

 

     Stockholders of record may vote by marking, signing and mailing your proxy

card in the enclosed postage-prepaid envelope.

 

     If you hold your Nabors Delaware shares in the name of a bank, broker or

other nominee, you should follow the instructions provided by your bank, broker

or nominee when voting your shares. To be effective, a form of proxy must be

received by us prior to the beginning of voting at the special meeting.

 

  CHANGING YOUR VOTE BY REVOKING YOUR PROXY

 

     There are three ways in which you may revoke your proxy and change your

vote:

 

     - First, you may send a written notice to our proxy solicitor, Georgeson

       Shareholder Communications Inc., stating that you would like to revoke

       your proxy. This notice must be received prior to the special meeting.

 

     - Second, you may complete and submit a new later-dated proxy by marking,

       signing and mailing a new proxy card. The latest dated proxy actually

       received by the company prior to the special meeting will be the one that

       is counted, and all earlier proxies will be revoked.

 

     - Third, you may attend the special meeting and vote in person. Simply

       attending the meeting, however, will not revoke your proxy. At the

       special meeting, the chairman of the meeting will announce instructions

       for you to follow if you wish to revoke your proxy and vote in person at

       the meeting.

 

     If you have instructed a broker to vote your shares, you must follow the

directions you receive from your broker to change or revoke your proxy.

 

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<PAGE>

 

HOW PROXIES ARE COUNTED

 

     If you return a signed and dated proxy card but do not indicate how the

shares are to be voted, those shares represented by your proxy card will be

voted as recommended by the Nabors Delaware board of directors. A valid proxy

also gives the individuals named as proxies authority to vote in their

discretion when voting the shares on any other matters that are properly

presented for action at the special meeting. A properly executed proxy marked

"ABSTAIN" will not be voted. However, it may be counted to determine whether

there is a quorum present at the special meeting. Accordingly, since the

affirmative vote of holders of a majority of the shares of Nabors Delaware

common stock entitled to vote at the special meeting is required to adopt the

merger agreement, a proxy marked "ABSTAIN" will have the effect of a vote

against this proposal. Broker non-votes (i.e., shares held by brokers or

nominees which are represented at a meeting but with respect to which the broker

or nominee is not empowered to vote on a particular proposal) will be counted

for purposes of determining whether there is a quorum at the special meeting.

The American Stock Exchange rules do not permit brokers and nominees to vote the

shares that they hold beneficially either for or against the adoption of the

merger agreement without specific instructions from the person who beneficially

owns those shares. Therefore, if your shares are held by a broker or other

nominee and you do not give them instructions on how to vote your shares, this

will have the same effect as voting against the merger.

 

COST OF SOLICITATION

 

     Nabors Delaware will pay the cost of soliciting proxies. In addition to

solicitation by mail, telephone or other means, Nabors Delaware will make

arrangements with brokerage houses and other custodians, nominees and

fiduciaries to send proxy material to beneficial owners. Nabors Delaware will,

upon request, reimburse these institutions for their reasonable expenses. Nabors

Delaware has retained Georgeson Shareholder Communications Inc. to aid in the

solicitation of proxies. Nabors Delaware will pay Georgeson a fee of $15,000 and

reimburse Georgeson for its expenses in connection with such services.

 

     NABORS DELAWARE STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES

WITH THEIR PROXY CARDS.

 

                        DESCRIPTION OF AUTHORIZED SHARES

                           OF NABORS INDUSTRIES LTD.

 

     The memorandum of association and bye-laws of Nabors Bermuda and The

Companies Act 1981 (Bermuda), as amended (the "Companies Act"), govern the terms

of the share capital of Nabors Bermuda. The memorandum of association of Nabors

Bermuda is attached to this proxy statement/prospectus as annex II. The amended

and restated bye-laws of Nabors Bermuda which will be in effect upon

consummation of the merger are attached to this proxy statement/prospectus as

annex III. The following discussion is a summary of the terms of the share

capital of Nabors Bermuda that will be in effect immediately following the

merger. This summary is not complete and is subject to the complete text of

Nabors Bermuda's memorandum of association and its amended and restated bye-laws

which are attached as annex II and III, respectively, and incorporated by

reference. We encourage you to read those documents carefully.

 

AUTHORIZED SHARE CAPITAL

 

     Immediately following the merger, Nabors Bermuda's authorized share capital

will be US$425,000, divided into 400,000,000 common shares, par value US$.001

per share and 25,000,000 preferred shares, par value US$.001 per share, which

preferred shares may be designated and created as shares of any other classes or

series of shares with the respective rights and restrictions determined by

action of the board of directors.

 

VOTING

 

     The holders of Nabors Bermuda common shares will be entitled to one vote on

any question to be decided on a show of hands and one vote per share on a poll

on all matters submitted to a vote of the shareholders of Nabors Bermuda. Nabors

Bermuda's bye-laws do not provide for cumulative voting. Except as specifically

provided in Nabors Bermuda's bye-laws or in the Companies Act, any action to be

taken by the shareholders

 

                                        24

<PAGE>

 

at any meeting at which a quorum is in attendance shall be decided by a majority

of the issued shares present in person or represented by proxy and entitled to

vote thereat.

 

     There are no limitations imposed by Bermuda law or Nabors Bermuda's

bye-laws on the right of shareholders who are not Bermuda residents to hold or

vote their Nabors Bermuda common shares.

 

DIVIDEND RIGHTS

 

     Subject to any rights and restrictions of any other class or series of

shares, the board of directors may, from time to time, declare dividends and

other distributions on the issued Nabors Bermuda common shares and authorize

payment of such dividends and other distributions. Such dividends or other

distributions may be in cash, shares or property of Nabors Bermuda out of assets

or funds legally available therefor.

 

     Nabors Bermuda does not anticipate that it will pay any dividends on its

common shares for the foreseeable future.

 

REDEMPTION AND CONVERSION

 

     Nabors Bermuda common shares will not be convertible into shares of any

other class or series or be subject to redemption either by Nabors Bermuda or

the holder of the common shares.

 

STOCK EXCHANGE LISTING

 

     Immediately following the merger, Nabors Bermuda's common shares will be

listed on the American Stock Exchange under the symbol "NBR", the same symbol

under which Nabors Delaware's common stock is currently listed.

 

CHANGES TO RIGHTS OF A CLASS OR SERIES

 

     Subject to the Companies Act, the rights attached to any class or series of

shares of Nabors Bermuda, unless otherwise provided by the terms of that class

or series, may be altered or abrogated by a resolution passed at a separate

general meeting of the holders of shares of that class, voting in person or by

proxy and representing at least a majority of the issued shares of that class

entitled to vote. Every holder of shares of the relevant class shall be entitled

on a poll to one vote for each share held by such holder and any holder of

shares of the relevant class present in person or by proxy may demand a poll.

Outstanding shares will not be deemed to be varied by the creation or issue of

shares that rank in any respect prior to or equivalent with those shares.

 

QUORUM FOR GENERAL MEETINGS

 

     The holders of shares present in person or by proxy entitling them to

exercise a majority of the voting power of Nabors Bermuda on the relevant record

date shall constitute a quorum to hold a general meeting of the shareholders.

 

RIGHTS UPON LIQUIDATION

 

     Upon the liquidation of Nabors Bermuda, after the full amounts that holders

of any issued shares ranking senior to the common shares as to distribution on

liquidation or winding up are entitled to receive have been paid or set aside

for payment, the holders of Nabors Bermuda's common shares are entitled to

receive, pro rata, any remaining assets of Nabors Bermuda available for

distribution to the holders of common shares. The liquidator may deduct from the

amount payable in respect of those common shares any liabilities the holder has

to or with Nabors Bermuda. The assets received by the holders of Nabors Bermuda

common shares in a liquidation may consist in whole or in part of property. That

property is not required to be of the same kind for all shareholders.

 

                                        25

<PAGE>

 

SINKING FUND

 

     Nabors Bermuda's common shares have no sinking fund provisions.

 

LIABILITY FOR FURTHER CALLS OR ASSESSMENTS

 

     Nabors Bermuda's common shares to be issued in the merger will be duly and

validly issued, fully paid and nonassessable.

 

PREEMPTIVE RIGHTS

 

     Holders of Nabors Bermuda's common shares will have no preemptive or

preferential right to purchase any securities of Nabors Bermuda.

 

REPURCHASE RIGHTS

 

     The board of directors may, at its discretion, authorize the purchase by

Nabors Bermuda of its own shares of any class, at any price (whether at par or

above or below par), as long as such purchase is made in accordance with the

provisions of the Companies Act.

 

COMPULSORY ACQUISITION OF SHARES HELD BY MINORITY HOLDERS

 

     An acquiring party is generally able to acquire compulsorily the common

shares of minority holders in one of the following ways:

 

     - By a procedure under the Companies Act known as a "scheme of

       arrangement." A scheme of arrangement is made by obtaining the consent of

       Nabors Bermuda, the consent of the court and approval of the arrangement

       by holders of the common shares, (1) representing in the aggregate a

       majority in number of the shareholders present at the meeting held to

       consider the arrangement and (2) holding at least 75% of all the issued

       common shares taken together as a class. If a scheme of arrangement

       receives all necessary consents, all holders of common shares could be

       compelled to sell their shares under the terms of the scheme of

       arrangement.

 

     - If the acquiring party is a company, by acquiring pursuant to a tender

       offer 90% of the shares or class of shares not already owned by the

       acquiring party (the "offeror"). If an offeror has, within four months

       after the making of an offer for all the shares or class of shares not

       owned by the offeror, obtained the approval of or acquired 90% or more of

       all the shares to which the offer relates, the offeror may, at any time

       within two months beginning with the date on which such approval was

       obtained or such percentage of shares were acquired, require by a "Notice

       of Acquisition" any nontendering shareholder to transfer its shares on

       the same terms as the original offer. In those circumstances,

       nontendering shareholders will be compelled to sell their shares.

       Nontendering shareholders have a one-month period from the date of the

       Notice of Acquisition in which to apply to a court to enjoin the company

       acquisition.

 

     - By acquiring, pursuant to a notice given to the remaining shareholders or

       class of shareholders, where the acquiring party holds not less than 95%

       of the shares or the class of shares of the company, the shares of such

       remaining shareholders or class of shareholders. When such a notice is

       given, the acquiring party is entitled and bound to acquire the shares of

       the remaining shareholders on the terms set out in such notice, unless a

       remaining shareholder, within one month of receiving such notice, applies

       to the court for an appraisal of the value of their shares. This

       provision only applies where the acquiring party offers the same terms to

       all holders of shares whose shares are being acquired.

 

                                        26

<PAGE>

 

TRANSFER AGENT

 

     The transfer agent and registrar for the Nabors Bermuda common shares will

be EquiServe.

 

PREFERRED SHARES

 

     The board of directors of Nabors Bermuda may issue preferred shares in one

or more classes or series, and fix for each such class or series such voting

power, full or limited, or no voting power, and such designations, preferences

and relative, participating, optional or other special rights and such

qualifications, limitations or restrictions thereof, as are provided in the

resolutions adopted by the board of directors providing for the issuance of such

class or series. The Nabors Bermuda board of directors in authorizing such class

or series may provide that any such class or series may be:

 

     - subject to redemption at the option of the company or the holders, or

       both, at such time or times and at such price or prices;

 

     - entitled to receive dividends (which may be cumulative or non-cumulative)

       at such rates, on such conditions, and at such times, and payable in

       preference to, or in relation to, the dividends payable on any other

       class or classes or any other series;

 

     - entitled to such rights upon the dissolution of, or upon any distribution

       of the assets of, Nabors Bermuda; or

 

     - convertible into, or exchangeable for, shares of any other class or

       classes of shares, or of any other series of the same or any other class

       or classes of shares, of Nabors Bermuda at such price or prices or at

       such rates of exchange and with such adjustments;

 

in each case, as set forth in the resolutions authorizing the class or series of

preferred shares.

 

ANTI-TAKEOVER PROVISIONS

 

     Nabors Bermuda's bye-laws have provisions that could have an anti-takeover

effect. Generally, these provisions are intended to substantively replicate

provisions currently in Nabors Delaware's certificate of incorporation and

by-laws. In addition, Nabors Bermuda's bye-laws include an "advance notice"

provision which places time limitations on shareholders' nominations of

directors and submission of proposals for consideration at an annual general

meeting. These provisions are intended to enhance the likelihood of continuity

and stability in the composition of the board of directors and in the policies

formulated by the board of directors and to encourage negotiations with the

board of directors in transactions that may involve an actual or potential

change of control of Nabors Bermuda.

 

     The bye-laws provide that Nabors Bermuda's board of directors will be

divided into three classes serving staggered three-year terms. Directors can be

removed from office prior to the expiration of their term only for cause by the

affirmative vote of the holders of a majority of the voting power of Nabors

Bermuda on the relevant record date. The board of directors does not have the

power to remove directors. As long as a quorum of directors remains and is

present, vacancies on the board of directors may be filled by a majority vote of

the remaining directors. Any general meeting can authorize the board of

directors to fill any vacancy left unfilled at a general meeting. Each of these

provisions can delay a shareholder from obtaining majority representation on the

board of directors.

 

     The bye-laws also provide that the board of directors will consist of not

less than five nor more than eighteen persons, the exact number to be set from

time to time by the affirmative vote of a majority of the directors then in

office. Accordingly, the board of directors, and not the shareholders, has the

authority to determine the number of directors and could delay any shareholder

from obtaining majority representation on the board of directors by enlarging

the board of directors and filling the new vacancies with its own nominees.

 

     The bye-laws of Nabors Bermuda provide that at any annual general meeting,

only such business shall be conducted as shall have been brought before the

meeting by or at the direction of the board of directors, by

 

                                        27

<PAGE>

 

any shareholder who complies with certain procedures set forth in the bye-laws

or by any shareholder pursuant to the valid exercise of the power granted under

the Companies Act.

 

     For business to be properly brought before an annual general meeting by a

shareholder in accordance with the terms of the bye-laws the shareholder must

have given timely notice thereof in proper written form to the Secretary of

Nabors Bermuda and satisfied all requirements under applicable rules promulgated

by the Securities and Exchange Commission. To be timely for consideration at the

annual general meeting, a shareholder's notice must be received by the Secretary

at Nabors Bermuda's principal executive offices and its registered office in

Bermuda not less than 60 days nor more than 90 days prior to the anniversary

date of the immediately preceding annual general meeting, provided that in the

event that the annual general meeting is called for a date that is not within 30

days before or after such anniversary date, not later than the 10th day

following the day on which such notice of the date of the annual general meeting

was mailed or public disclosure of the date of the annual general meeting was

made, whichever occurs first. In order for a shareholder to nominate directors

in connection with an annual general meeting of shareholders, a shareholder's

notice of his intention to make such nominations must be received in proper

written form as specified in the bye-laws of Nabors Bermuda by the Secretary of

Nabors Bermuda within the time limits described above.

 

     In addition, the Companies Act provides for a mechanism by which 100

shareholders acting together or shareholders holding at least 5% of the voting

power of a Bermuda company may properly propose a resolution for consideration

at a general meeting of the company. See "Comparison of Corporate Governance

Provisions -- Advance Notice Requirements for Matters to be Considered at a

General Meeting" on page 34.

 

     Subject to the terms of any other class of shares in issue, any action

required or permitted to be taken by the holders of Nabors Bermuda's common

shares must be taken at a duly called annual or special general meeting of

shareholders unless taken by written consent of all holders of common shares.

Under the bye-laws, special general meetings may be called at any time by the

board of directors or when requisitioned by shareholders pursuant to the

provisions of the Companies Act. The Companies Act currently permits

shareholders holding 10% of the shares of a company entitled to vote at general

meeting to requisition a special general meeting.

 

     The board of directors is authorized, without obtaining any vote or consent

of the holders of any class or series of shares unless expressly provided by the

terms of issue of a class or series, to from time to time issue any authorized

and unissued shares on such terms and conditions as it may determine. For

example, the board of directors could authorize the issuance of preferred shares

with terms and conditions that could discourage a takeover or other transaction

that holders of some or a majority of the Nabors Bermuda common shares might

believe to be in their best interests or in which holders might receive a

premium for their shares over the then market price of the shares.

 

                      COMPARISON OF RIGHTS OF STOCKHOLDERS

 

     Your rights as a stockholder of Nabors Delaware are governed by Delaware

law and Nabors Delaware's restated certificate of incorporation and by-laws.

After the merger, you will become a holder of Nabors Bermuda common shares and

your rights will be governed by the Companies Act and Nabors Bermuda's

memorandum of association and amended and restated bye-laws.

 

     The principal attributes of the Nabors Delaware common stock and the Nabors

Bermuda common shares will be substantially similar; however, there are certain

differences between your rights as a stockholder under Delaware law and as a

shareholder under Bermuda law, which is modeled after the law of England. In

addition, there are certain differences between Nabors Delaware's restated

certificate of incorporation and by-laws and Nabors Bermuda's memorandum of

association and bye-laws. Other than the addition of the advance notice

provision in the bye-laws and an increase in the maximum number of directors the

company may have, it is our intention that your rights as a stockholder be

substantially the same before and after the merger and, accordingly, any

differences which may arise would be as a consequence of the difference between

Bermuda and Delaware law. In addition, there are similarities between those

actions that constitute violations of the

 

                                        28

<PAGE>

 

U.S. federal securities laws that would also constitute or give rise to a cause

of action under Bermuda law and would therefore result in civil liability on

Nabors Bermuda or its directors or officers in a suit brought in the Supreme

Court of Bermuda. For example, a fraudulent misstatement made by a Bermuda

company in a document filed as a prospectus for a public offering of securities

would give rise to a criminal offense under Bermuda law and would give rise to

civil liability on the Bermuda company and its directors or officers to

shareholders who purchased the shares in the offering. In addition, any use of

any deceptive or manipulative devices by the company or by its officers or

directors on behalf of the company in connection with the purchase or sale of

the company's securities would give rise to civil liability on the Bermuda

company and its directors or officers under Bermuda and U.S. securities laws.

 

     The memorandum of association and the bye-laws of Nabors Bermuda, as they

will be in effect immediately following the merger, are included in this proxy

statement/prospectus as annexes II and III, respectively, and are incorporated

by reference herein. The restated certificate of incorporation of Nabors

Delaware is included as Exhibit 3.1 to Nabors Delaware's Quarterly Report on

Form 10-Q, for the quarter ended March 30, 1997, filed May 16, 1997, and an

amendment to the restated certificate of incorporation of Nabors Delaware is

included as Exhibit 3.1 to Nabors Delaware's Current Report on Form 8-K dated

June 22, 2000. The restated by-laws of Nabors Delaware are included as Exhibit

3.2 to Nabors Delaware's Annual Report on Form 10-K for the fiscal year ended

September 30, 1997, filed December 29, 1997. The restated certificate of

incorporation and the restated by-laws of Nabors Delaware are incorporated by

reference in this proxy statement/prospectus. See "Where You Can Find More

Information" on page 45.

 

                                        29

<PAGE>

 

     The following is a comparison of the material rights of holders of Nabors

Delaware common stock and Nabors Bermuda common shares.

 

                 COMPARISON OF CORPORATE GOVERNANCE PROVISIONS

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

BOARD OF DIRECTORS

 

Size of Board                      Board must contain not less than    The provisions of Nabors

                                   five nor more than eighteen         Delaware's organizational

                                   directors, as determined by the     documents are substantially

                                   board pursuant to a resolution      similar, except that the maximum

                                   adopted by the affirmative vote     number of directors is eleven.

                                   of a majority of the directors

                                   in office.

 

Classified Board                   Directors are divided into three    The provisions of Nabors

                                   classes, each class to consist,     Delaware's organizational

                                   as nearly as possible, of           documents are substantially

                                   one-third of the total number of    similar.

                                   directors constituting the

                                   entire board of directors. If

                                   the number of directors is

                                   changed, any increase or

                                   decrease will be apportioned

                                   among the classes so as to

                                   maintain each class as nearly

                                   equal as possible. No decrease

                                   in the number of directors shall

                                   have the effect of shortening

                                   the term of any incumbent

                                   director.

 

Term of Office                     Except for two classes of           The provisions of Nabors

                                   directors which shall initially     Delaware's organizational

                                   hold one and two year terms         documents are substantially

                                   expiring at the annual general      similar.

                                   meetings in 2003 and 2004,

                                   respectively, the term of office

                                   of each director shall be until

                                   the third annual general meeting

                                   following his or her election

                                   and until the election and

                                   qualification of his or her

                                   successor.

 

Vacancies                          Any vacancy among directors of      The provisions of Nabors

                                   any class, including a vacancy      Delaware's organizational

                                   that results from an increase in    documents are substantially

                                   the number of directors, may be     similar, except vacancies on the

                                   filled for the unexpired term by    board may be filled by a vote of

                                   a vote of the majority of           the majority of remaining

                                   remaining directors, regard-        directors regardless of whether

                                   less of class, provided, that a     a quorum is present.

                                   quorum is present. During any

                                   vacancy the remaining directors

                                   shall have full power to act as

                                   the board of directors of Nabors

                                   Bermuda. At a special general

                                   meeting of shareholders

</Table>

 

                                        30

<PAGE>

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

Vacancies - (continued)

                                   called to remove a director for

                                   cause, a vacancy on the board

                                   created by removal of a director

                                   may be filled by the holders of

                                   a majority of the outstanding

                                   shares entitled to vote at the

                                   same meeting.

 

Removal of Directors               Directors can be removed from       The provisions of Nabors

                                   office prior to the expiration      Delaware's organizational

                                   of their term only for cause by     documents and Delaware law are

                                   the affirmative vote of the         substantially similar.

                                   holders of a majority of the

                                   voting power of Nabors Bermuda

                                   on the relevant record date.

 

Indemnification of Directors       Nabors Bermuda shall indemnify      Nabors Delaware's restated

  and Officers                     and hold harmless to the fullest    certificate of incorporation

                                   extent permitted by law any         makes indemnification of

                                   current or former director,         directors and officers and

                                   officer, committee member or        advancement of expenses to

                                   resident representative, against    defend claims against directors

                                   expenses actually and reason-       and officers mandatory on the

                                   ably incurred in connection with    part of Nabors Delaware to the

                                   any threatened, pending or          fullest extent permitted by the

                                   completed action, suit or           Delaware General Corporation

                                   proceeding.                         Law.

 

                                   Under the Companies Act, no in-     Delaware law generally permits a

                                   demnification is permitted if       corporation to indemnify its

                                   the individual is adjudged to be    directors and officers against

                                   liable for fraud or dishonesty      expenses, judgments, fines and

                                   in the performance of his or her    amounts paid in settlement

                                   duties to Nabors Bermuda (unless    actually and reasonably incurred

                                   a court determines otherwise).      in connection with a third-

                                                                       party action, other than a

                                   The indemnification provided for    derivative action, and against

                                   in the bye-laws is not exclusive    expenses actually and reasonably

                                   of other rights to which a          incurred in the defense or

                                   director or officer may be          settlement of a derivative

                                   entitled, including rights pro-     action, provided that there is a

                                   vided pursuant to the memorandum    determination that the

                                   of association, bye-laws, any       individual acted in good faith

                                   agreement, any insurance            and in a manner reasonably

                                   purchased by Nabors Bermuda,        believed to be in or not opposed

                                   vote of stockholders or             to the best interests of the

                                   disinterested directors, or         corporation. That determination

                                   otherwise.                          must be made, in the case of an

                                                                       individual who is a director or

                                   If the reorganization is            officer at the time of the

                                   completed, Nabors Bermuda           determination:

                                   anticipates that it will enter

                                   into indemnification agree-         - by a majority of the

                                   ments with its directors and          disinterested directors, even

                                   officers with terms and               though less than a quorum;

                                   conditions substantially similar

                                   to the agreements Nabors            - by a committee of

                                   Delaware has entered into with        disinterested directors,

                                   its directors and officers            designated by a majority vote

                                   (subject always to Bermuda law        of disinterested directors,

                                   and any limitations on such           even though less than a

                                   agreements contained                  quorum;

</Table>

 

                                        31

<PAGE>

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

Indemnification of Directors

  and Officers - (continued)

                                   in the Companies Act).              - by independent legal counsel,

                                                                         regardless of whether a quorum

                                                                         of disinterested directors

                                                                         exists; or

                                                                       - by a majority vote of the

                                                                         stockholders, at a meeting at

                                                                         which a quorum is present.

 

                                                                       Without court approval, however,

                                                                       no indemnification may be made

                                                                       in respect of any derivative

                                                                       action in which an individual is

                                                                       adjudged liable to the

                                                                       corporation.

 

                                                                       Delaware law requires

                                                                       indemnification of directors and

                                                                       officers for expenses relating

                                                                       to a successful defense on the

                                                                       merits or otherwise of a

                                                                       derivative or third-party

                                                                       action. Delaware law permits a

                                                                       corporation to advance expenses

                                                                       relating to the defense of any

                                                                       proceeding to directors and

                                                                       officers contingent upon those

                                                                       individuals' commitment to repay

                                                                       any advances, unless it is

                                                                       determined ultimately that those

                                                                       individuals are entitled to be

                                                                       indemnified.

 

                                                                       Nabors Delaware has entered into

                                                                       agreements with each of its

                                                                       directors and officers

                                                                       indemnifying each of them

                                                                       against expenses, settlements,

                                                                       judgments and fines in

                                                                       connection with any threatened,

                                                                       pending or completed action,

                                                                       suit, arbitration or pro-

                                                                       ceeding where the individual's

                                                                       involvement is by reason of the

                                                                       fact that he is or was a

                                                                       director or officer or served at

                                                                       Nabors Delaware's request as a

                                                                       director or officer of another

                                                                       organization, except that

                                                                       indemnification is not provided

                                                                       against judgments or fines in a

                                                                       derivative suit unless permitted

                                                                       by Delaware law.

 

Limitations on Liability           Subject to the Bye-laws, no         Delaware law provides that the

                                   current or former director,         certificate of incorporation of

                                   officer, resident representative    a Delaware corporation may

                                   or committee member shall be        include a provision which limits

                                   liable for the acts, receipts,      or eliminates the liability of

                                   neglects or defaults of any         directors of the corporation or

                                   other such person nor shall any     its stockholders for monetary

                                   such person be liable in respect    damages for breach of a

                                   of any negligence,                  fiduciary duty,

</Table>

 

                                        32

<PAGE>

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

Limitations on Liability -

  (continued)

                                   default or breach of duty on his    provided such liability does not

                                   or her own part with respect to     arise from prescribed conduct,

                                   Nabors Bermuda, or for any          including a breach of the duty

                                   damages arising out of the          of loyalty to the corporation or

                                   actual or purported execution or    its stockholders, acts or

                                   discharge of his or her duties      omissions not in good faith or

                                   or the exercise or purported        which involve intentional

                                   exercise of his or her powers or    misconduct or which involve a

                                   otherwise in relation to or in      knowing violation of the law,

                                   connection with his or her          the unlawful payment of

                                   duties, powers or office.           dividends, or any transaction

                                                                       from which the director derived

                                   Nabors Bermuda's bye-laws           an improper personal benefit.

                                   provide that, subject to            Nabors Delaware's certificate of

                                   applicable law, each shareholder    incorporation contains such a

                                   of Nabors Bermuda and Nabors        provision.

                                   Bermuda agree to waive any claim

                                   or right of action, whether

                                   individually or derivatively,

                                   against any current or former

                                   officer, director, resident

                                   representative or committee

                                   member on account of any action,

                                   or failure to take any action,

                                   of such person in his

                                   performance of his duties with

                                   or for Nabors Bermuda, provided

                                   that such waiver shall not apply

                                   to any claims or rights of

                                   action arising out of the fraud

                                   or dishonesty of such person or

                                   to recover any gain, personal

                                   profit or advantage to which

                                   such person is not legally

                                   entitled.

 

                                   In addition to the terms of

                                   Nabors Bermuda's bye-laws, in

                                   order to maintain a derivative

                                   action on behalf of the company,

                                   a shareholder must satisfy the

                                   requirements described under

                                   "Shareholder Derivative Suits"

                                   on page 38.

SHAREHOLDER MEETINGS

 

Calling a Special Meeting          A special meeting of the            May be called by the board or

                                   shareholders may be called by       the Chairman or Vice-Chairman of

                                   the board of directors or the       the board, the President, a Vice

                                   shareholders when requisi-          President or the Secretary at

                                   tioned by the holders of 10% of     the written request of the

                                   the Nabors Bermuda common shares    holders of record of not less

                                   as provided by the Companies        than 50% of the total number of

                                   Act.                                shares of stock then issued and

                                                                       outstanding and entitled to

                                                                       vote.

 

Quorum Requirements;               Holders of shares present in        A majority of the shares

  Adjournment                      person or by proxy entitling        entitled to vote, represented in

                                   them to exercise a majority of      person or by proxy, constitutes

                                   the voting power of Nabors          a quorum at a meeting of

                                   Bermuda on the relevant date        stockholders. At any meeting

                                   constitutes a quorum. At any        duly called, whether or not a

                                   meeting

</Table>

 

                                        33

<PAGE>

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

Quorum Requirements;

  Adjournment -

  (continued)

                                   duly called, holders of a           quorum is present, holders of a

                                   majority of the voting shares       plurality of the shares

                                   represented at the meeting may      represented at the meeting may

                                   adjourn the meeting.                adjourn the meeting.

 

Voting Rights                      Each holder of Nabors Bermuda       The provisions of Nabors

                                   common shares will be entitled      Delaware's organizational

                                   to one vote on any question to      documents are substantially

                                   be decided on a show of hands       similar.

                                   and one vote per share on a poll

                                   on all matters submitted to a

                                   vote of shareholders.

 

Action by Written Consent          The Companies Act provides that     The provisions of Nabors

                                   shareholders may take action by     Delaware's organizational

                                   unanimous written consent.          documents are substantially

                                                                       similar.

 

Advanced Notice Requirements       The Companies Act provides that     There are no similar provisions

  for Matters to be Considered     shareholders may, as set forth      in Nabors Delaware's

  at a General Meeting             below and at their own expense      organizational documents.

                                   (unless a company otherwise

                                   resolves), require a company to     Nabors Delaware is subject to

                                   give notice of any resolution       the Securities Exchange Act of

                                   that the shareholders can prop-     1934, as amended, which provides

                                   erly propose at the next annual     that a shareholder who

                                   general meeting or to circulate     continuously holds at least

                                   a statement prepared by the         US$2,000 in market value or 1%

                                   shareholders in respect of any      of a company's voting securities

                                   matter referred to in a proposed    for at least one year prior to

                                   resolution or any business to be    the submission of a proposal and

                                   conducted at a general meeting.     through the meeting date may,

                                   The number of shareholders          subject to certain conditions,

                                   necessary for such a requisition    include the proposal in the

                                   of a resolution is either that      company's proxy materials sent

                                   number of shareholders              to shareholders.

                                   representing at least 5% of the

                                   total voting rights of all

                                   shareholders having a right to

                                   vote at the meeting to which the

                                   requisition relates or not less

                                   than 100 shareholders.

 

                                   Nabors Bermuda's bye-laws

                                   provide that all nominees for

                                   election to the board of

                                   directors must be made fol-

                                   lowing written notice to the

                                   secretary of Nabors Bermuda

                                   accompanied by certain

                                   background and other infor-

                                   mation specified in the

                                   bye-laws. In connection with any

                                   annual general meeting, written

                                   notice of a shareholder's

                                   intention to make such

                                   nominations must be given to the

                                   secretary of Nabors Bermuda not

                                   less than 60 days nor more than

                                   90 days

</Table>

 

                                        34

<PAGE>

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

Advanced Notice Require-

  ments for Matters to be

  Considered at a General

  Meeting - (continued)

                                   prior to the anniversary date of

                                   the immediately preceding annual

                                   general meeting, provided that

                                   in the event the annual general

                                   meeting is called for a date

                                   that is not within 30 days

                                   before or after such anniver-

                                   sary date, not later than the

                                   10th day following the day on

                                   which such notice of the date of

                                   the annual general meeting was

                                   mailed or public disclosure of

                                   the date of the annual general

                                   meeting was made, whichever

                                   occurs first. In order for a

                                   shareholder to bring other

                                   business before a shareholder

                                   meeting, timely notice must be

                                   received by the secretary of

                                   Nabors Bermuda within the time

                                   limits described above. The

                                   notice must include a

                                   description of the proposed

                                   item, the reasons the share-

                                   holder believes support its

                                   position concerning the item,

                                   and other specified matters.

 

                                   Nabors Bermuda will be subject

                                   to the Securities Exchange Act

                                   of 1934, as amended, which

                                   provides that a shareholder who

                                   continuously holds at least

                                   US$2,000 in market value or 1%

                                   of a company's voting securities

                                   for at least one year prior to

                                   the submission of a proposal and

                                   through the meeting date may,

                                   subject to certain conditions,

                                   include the proposal in the

                                   company's proxy materials sent

                                   to shareholders.

 

Annual Meeting                     The annual meeting of               The annual meeting of

                                   shareholders of Nabors Bermuda      stockholders of Nabors Delaware

                                   shall be held in each calendar      shall be held on the first

                                   year at such time and place as      Tuesday of June in each year if

                                   the board of directors shall        not a legal holiday, and if a

                                   appoint.                            legal holiday, then on the next

                                                                       succeeding day which is not a

                                                                       legal holiday at such place and

                                                                       time as the board of directors

                                                                       may designate.

 

AMENDMENTS TO ORGANIZATIONAL

  DOCUMENTS

 

Memorandum of                      Nabors Bermuda's memorandum of      Nabors Delaware's certificate of

  Association/Certificate          association may be amended in       incorporation may be amended if:

  of Incorporation                 accordance with the Companies

                                   Act by

</Table>

 

                                        35

<PAGE>

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

  Memorandum of

  Association/Certificate

  of Incorporation -

  (continued)

                                   the affirmative vote of a simple    - the Nabors Delaware board sets

                                   majority of the shareholders          forth the proposed amendment

                                   voting on the amendment.              in a resolution, declares the

                                                                         advisability of the amendment

                                                                         and directs that it be

                                                                         submitted to a vote at a

                                                                         meeting of stockholders; and

 

                                                                       - the holders of at least a

                                                                         majority of shares of stock

                                                                         entitled to vote on the matter

                                                                         approve the amendment.

 

                                                                       In addition, under Delaware law,

                                                                       class voting rights exist with

                                                                       respect to any amendments to the

                                                                       restated certificate of

                                                                       incorporation that adversely

                                                                       affect the terms of the shares

                                                                       of such class.

 

Bye-laws/By-laws                   The bye-laws may be restated or     Nabors Delaware's by-laws may be

                                   amended only by the board of        amended by:

                                   directors, but no such

                                   revocation or amendment shall be    - the stockholders by the

                                   operative unless and until it is      affirmative vote of the holders

                                   approved by a resolution of the       of a majority of the stock

                                   holders of a majority of the          entitled to vote at any annual

                                   issued shares entitled to vote.       or special meeting of stock-

                                                                         holders if notice of the

                                   If the amendment would affect         proposed amendment is

                                   any of the special rights             contained in the notice of the

                                   attached to any class of shares       special meeting; or

                                   there must also be a resolution

                                   passed by a majority at a           - the board of directors by the

                                   separate general meeting of the       affirmative vote of the majority

                                   holders of shares of that class.      of the board at any regular

                                                                         meeting of the board or at any

                                                                         special meeting of the board

                                                                         if notice of the proposed

                                                                         amendment is contained in the

                                                                         notice of the special meeting.

 

VOTING REQUIREMENT FOR             Except as otherwise specifically    Except as specifically provided

  STOCKHOLDER ACTION               provided in the bye-laws or the     in the restated certificate of

                                   Companies Act, any action to be     incorporation or the Delaware

                                   taken by the shareholders may be    General Corporation Law, any

                                   taken by the affirmative vote of    action, other than the elec-

                                   a simple majority of the shares     tion of directors, to be taken

                                   voting at a general meeting of      by stockholders may be taken by

                                   Nabors Bermuda.                     the affirmative vote of the

                                                                       holders of a majority of the

                                                                       shares of Nabors Delaware

                                                                       present in person or repre-

                                                                       sented by proxy at a meeting (at

                                                                       which a quorum is present) and

                                                                       entitled to vote.

 

PURCHASE OF SHARES                 The bye-laws provide that the       Under Delaware law, Nabors Dela-

                                   board of directors, at its          ware's board has substantially

                                   discretion, may authorize the       similar authority so long as

                                   purchase of Nabors                  such purchases

</Table>

 

                                        36

<PAGE>

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

PURCHASE OF SHARES -

  (CONTINUED)

                                   Bermuda's shares of any class at    comply with the Delaware General

                                   any price (whether at par or        Corporation Law.

                                   below par) provided such

                                   purchases are in accordance with

                                   the Companies Act.

 

OPTIONS AND WARRANTS               Directors may, in their             Under Delaware law, Nabors Dela-

                                   discretion, grant options for       ware's board has substantially

                                   any class or series of class, to    similar authority.

                                   any persons for any period and

                                   upon such terms as the board may

                                   deem advisable, and cause ap-

                                   propriate instruments evidencing

                                   such options to be issued.

 

ISSUANCE OF PREFERRED SHARES       The bye-laws provide that the       The provisions of Nabors

                                   board of directors of Nabors        Delaware's organizational

                                   Bermuda may from time to time       documents are substantially

                                   authorize by means of a board       similar.

                                   resolution the issuance of

                                   preferred shares in one or more

                                   class or series, and in the

                                   resolution or resolutions

                                   providing for the issue of such

                                   shares, the board of directors

                                   is expressly authorized to fix

                                   for each such class or series

                                   the number of shares which shall

                                   constitute such class or series,

                                   voting power, (full or limited,

                                   or no voting power) and des-

                                   ignations, preferences and

                                   relative, participating,

                                   optional or other special rights

                                   and qualifications, limita-

                                   tions or restrictions thereof.

                                   Such a "blank check" preferred

                                   share provision could have

                                   certain "anti-takeover" effects.

                                   See "Description of Authorized

                                   Shares of Nabors Industries

                                   Ltd. -- Anti-takeover Provi-

                                   sions" on page 27.

 

APPROVAL OF MERGER/SALE OF         The Companies Act permits an        In general, under Delaware law,

  ASSETS                           amalgamation or merger between      a plan of merger or

                                   two or more Bermuda companies,      consolidation must be approved

                                   or between one or more Bermuda      by the affirmative vote of

                                   "exempted companies" and one or     holders of a majority of shares

                                   more foreign companies. Under       of each such corporation

                                   Bermuda law, Nabors Bermuda will    entitled to vote thereon.

                                   be considered an "exempted

                                   company."                           Similarly, a sale of all or

                                                                       substantially all of such

                                   Nabors Bermuda's bye-laws           corporation's assets other than

                                   provide that shareholders           in the ordinary course of busi-

                                   holding a majority of the shares    ness, or a voluntary dissolution

                                   present and voting at a meeting     of such corporation, requires

                                   (and, in the event of a re-         the approval of such

                                   sulting variation in class          corporation's board of directors

                                   rights, a majority of each class    and the affirmative vote of

                                   of shares present                   holders of a majority of the

                                                                       shares

</Table>

 

                                        37

<PAGE>

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

APPROVAL OF MERGER/SALE OF

  ASSETS - (CONTINUED)

                                   and voting at a meeting), is        entitled to vote thereon.

                                   required to approve a merger or

                                   amalgamation.

 

                                   See "Description of Authorized

                                   Shares of Nabors Industries

                                   Ltd. -- Compulsory Acquisition

                                   of Shares Held by Minority

                                   Holders" on page 26.

 

SHAREHOLDER DERIVATIVE SUITS       Bermuda courts ordinarily follow    Delaware law requires that a

                                   English law precedent, which        stockholder bringing a

                                   permits a shareholder action:       derivative suit against a

                                                                       Delaware corporation have been a

                                   - where the act complained of is    stockholder at the time of the

                                     alleged to be beyond the          disputed transaction, or its

                                     corporate power of Nabors         shares thereafter passed to the

                                     Bermuda or to be illegal;         stockholder by operation of law

                                                                       from a person who was a holder

                                   - where an act requires approval    at that time.

                                     by a greater percentage of

                                     Nabors Bermuda's shareholders     Under Delaware law, a complaint

                                     than actually approved it; or     in a derivative suit must:

 

                                   - to restrain a violation of        - state the plaintiff was a

                                     Nabors Bermuda's organizational     stockholder at the time of the

                                     documents.                          transaction with respect to

                                                                         which the plaintiff com-

                                   A shareholder may also bring a        plains or that the plaintiff's

                                   derivative suit to enforce a          shares thereafter became the

                                   right of the company. In order        plaintiff's by operation of

                                   to bring a derivative suit the        law; and

                                   shareholder must establish two

                                   things. First, the shareholder      - (1) allege with particularity

                                   must establish that there is a        the efforts plaintiff has made

                                   "fraud on the minority." This         to obtain the action the

                                   concept includes any act that         plaintiff desires from the

                                   amounts to an unconscionable act      directors of the corporation,

                                   of majority power likely to           or (2) state the reasons for

                                   result in either financial loss       the plaintiff's failure to

                                   or unfair discriminatory              obtain the action or for not

                                   treatment of the minority             making the effort to obtain

                                   shareholders. Second, the             the action.

                                   shareholder must establish that

                                   the alleged wrongdoers, or those

                                   who are taking advantage of the

                                   fraud, control the company.

                                   Control for this purpose means

                                   sufficient influence such that

                                   it would be futile to call a

                                   meeting of shareholders, because

                                   the wrongdoers would exercise a

                                   decisive influence over the

                                   result.

 

                                   In general, it may be more

                                   difficult for you to bring a

                                   shareholder derivative suit on

                                   behalf of the company

</Table>

 

                                        38

<PAGE>

 

<Table>

<Caption>

PROVISION                                   NABORS BERMUDA                     NABORS DELAWARE

---------                                   --------------                     ---------------

<S>                                <C>                                 <C>

SHAREHOLDER DERIVATIVE

  SUITS - (CONTINUED)

                                   under Bermuda law than it is to

                                   bring such a suit under Delaware

                                   law.

 

ALTERATION OF CAPITAL              Nabors Bermuda may, by              Substantially similar rights are

                                   resolution of the shareholders      provided under Delaware law.

                                   or where required, of a separate

                                   class of shareholders:

 

                                   - increase its authorized share

                                     capital and par value;

 

                                   - divide its shares into several

                                     classes and attach thereto

                                     respectively any preferential,

                                     deferred, qualified or special

                                     rights, privileges or condi-

                                     tions;

 

                                   - consolidate and divide its

                                     share capital into shares of

                                     larger par value than any of

                                     its existing shares;

 

                                   - subdivide its shares into

                                     shares of smaller par value than

                                     is fixed by the memorandum of

                                     association;

 

                                   - make provision for the issue

                                     and allotment of shares which do

                                     not carry any voting rights;

 

                                   - cancel shares which, at the

                                     date of the passing of the

                                     resolution in that behalf,

                                     have not been taken or agreed

                                     to be taken by any person, and

                                     diminish the amount of its

                                     share capital by the amount of

                                     the shares cancelled; and

 

                                   - change the currency

                                     denomination of its share

                                     capital.

</Table>

 

                                        39

<PAGE>

 

                 INCOME TAX CONSEQUENCES OF THE REORGANIZATION

 

U.S. FEDERAL INCOME TAX CONSEQUENCES TO STOCKHOLDERS

 

     In the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, the following

general discussion constitutes a fair and accurate summary of the anticipated

principal U.S. federal income tax consequences of the receipt of Nabors Bermuda

common shares by certain holders of Nabors Delaware common stock pursuant to the

reorganization. This discussion does not address all of the U.S. federal income

tax consequences that may be relevant to particular Nabors Delaware stockholders

in light of their individual circumstances or to stockholders who, for U.S.

federal income tax purposes, are subject to special rules, such as:

 

     - dealers or traders in securities or currencies;

 

     - tax-exempt entities;

 

     - banks, financial institutions, or insurance companies;

 

     - grantor trusts;

 

     - real estate investment trusts or regulated investment companies;

 

     - holders who hold Nabors Delaware common stock as part of a position in a

       straddle or as part of a hedging or conversion transaction for U.S.

       federal income tax purposes;

 

     - investors whose functional currency is not the U.S. dollar;

 

     - holders who acquired their Nabors Delaware common stock within twelve

       months of the effective date of the merger pursuant to the exercise of

       employee stock options or otherwise as compensation;

 

     - holders that, for U.S. federal income tax purposes, are nonresident alien

       individuals, foreign corporations, foreign partnerships, foreign trusts,

       or foreign estates; and

 

     - holders who own, or are deemed to own, 10% or more, determined by voting

       power or value, of Nabors Delaware common stock or Nabors Bermuda common

       shares.

 

     Further, this discussion does not address any U.S. federal estate and gift

or alternative minimum tax consequences or any state, local, or foreign tax

consequences relating to the reorganization or the ownership and disposition of

Nabors Bermuda common shares. Nor does this discussion address the tax

consequences of the reorganization to Nabors Delaware or Nabors Bermuda.

 

     EACH NABORS DELAWARE STOCKHOLDER IS STRONGLY URGED TO CONSULT HIS OR HER

TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE RECEIPT

OF NABORS BERMUDA COMMON SHARES PURSUANT TO THE REORGANIZATION CONTEMPLATED BY

THIS PROXY STATEMENT/PROSPECTUS AND THE OWNERSHIP AND DISPOSITION OF NABORS

BERMUDA COMMON SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE,

LOCAL, AND FOREIGN INCOME AND OTHER TAX LAWS IN HIS OR HER PARTICULAR

CIRCUMSTANCES.

 

     This discussion is based on the Code, the Treasury regulations promulgated

thereunder, and judicial and administrative interpretations thereof, in each

case as in effect and available on the date of this proxy statement/prospectus.

All of the foregoing are subject to change, which change could apply with

retroactive effect and could affect the tax consequences described below.

Neither Nabors Delaware nor Nabors Bermuda will request any ruling from the IRS

as to the U.S. federal income tax consequences of the reorganization.

 

     This discussion assumes that Nabors Delaware stockholders hold their Nabors

Delaware common stock and will hold Nabors Bermuda common shares as capital

assets. In addition, this discussion is based on certain customary assumptions

and representations made or to be made by Nabors Delaware and Nabors Bermuda,

including (1) that the facts set forth in this registration statement are true,

accurate, and complete and (2) that the reorganization will be consummated as

described in this registration statement. Any change in the truth, accuracy or

completeness of any of the facts, assumptions or representations on which this

discussion is based could affect the tax consequences described below.

 

                                        40

<PAGE>

 

     For purposes of this discussion, a U.S. holder is a beneficial owner of

Nabors Delaware common stock that, for U.S. federal income tax purposes, is:

 

     - a citizen or resident of the U.S.;

 

     - a corporation or partnership created or organized in or under the laws of

       the U.S. or any State thereof, including the District of Columbia;

 

     - an estate, the income of which is subject to U.S. federal income taxation

       regardless of its source;

 

     - a trust, if such trust validly has elected to be treated as a U.S. person

       for U.S. federal income tax purposes or if (1) a U.S. court can exercise

       primary supervision over its administration and (2) one or more U.S.

       persons have the authority to control all of the substantial decisions of

       such trust; or

 

     - otherwise subject to U.S. federal income taxation on a net income basis

       on their shares of Nabors Delaware common stock.

 

  THE REORGANIZATION

 

     Receipt of Nabors Bermuda Common Shares.  Because Nabors Bermuda is not a

U.S. corporation, U.S. holders will recognize gain, but not loss, on the receipt

of Nabors Bermuda common shares in exchange for Nabors Delaware common stock

pursuant to the reorganization. Each U.S. holder will recognize gain on the

receipt of Nabors Bermuda common shares in exchange for Nabors Delaware common

stock pursuant to the reorganization in an amount equal to the excess, if any,

of (1) the fair market value on the effective date of the reorganization of the

Nabors Bermuda common shares received by such U.S. holder (which generally may

be determined by reference to the trading price of the Nabors Bermuda common

shares on the American Stock Exchange) over (2) such U.S. holder's adjusted tax

basis in its Nabors Delaware common stock surrendered in exchange therefor. Any

gain recognized will be capital gain and will be long-term capital gain if the

Nabors Delaware common stock has been held for more than 12 months at the time

of the reorganization. A U.S. holder that recognizes gain with respect to the

reorganization will have an aggregate adjusted tax basis in its Nabors Bermuda

common shares equal to the aggregate adjusted tax basis in the Nabors Delaware

common stock exchanged therefor, increased by the amount of gain recognized. A

U.S. holder will not be permitted to recognize any loss realized on the exchange

of his or her shares of Nabors Delaware common stock in the reorganization. In

such case, the aggregate adjusted tax basis of the Nabors Bermuda common shares

received by a U.S. holder with a loss on its Nabors Delaware common stock will

be equal to such U.S. holder's aggregate adjusted tax basis in its Nabors

Delaware common stock surrendered in exchange therefor. Thus, subject to any

subsequent changes in the fair market value of Nabors Bermuda common shares, any

loss would be preserved. The holding period for any Nabors Bermuda common shares

received by a U.S. holder recognizing gain with respect to the reorganization

should begin the day after the effective date of the reorganization. A U.S.

holder who has a gain with respect to some shares of Nabors Delaware common

stock, but a loss with respect to other shares of Nabors Delaware common stock

which cannot be recognized pursuant to the foregoing, will recognize the full

amount of the gain without any reduction for the loss. The holding period for

any Nabors Bermuda common shares received by U.S. holders with a loss on their

Nabors Delaware common stock will include the holding period of the Nabors

Delaware common stock exchanged therefor.

 

     Reporting Requirements.  In addition to the return and reporting

requirements imposed on taxpayers generally, additional requirements may be

applicable to U.S. holders. A U.S. holder will be subject to penalties if that

holder fails to report the gain recognized in the reorganization on that

holder's U.S. federal income tax return for the taxable year of the

reorganization.

 

  NABORS BERMUDA COMMON SHARES

 

     Distributions.  Nabors Bermuda does not anticipate that it will pay any

dividends on its common shares for the foreseeable future. Subject to this and

the discussion below under "-- Passive Foreign Investment Company

Considerations," the gross amount of any distribution by Nabors Bermuda of cash

or property (other than certain distributions, if any, of common shares

distributed pro rata to all shareholders of Nabors

                                        41

<PAGE>

 

Bermuda) with respect to common shares would be includible in income by a U.S.

holder as dividend income to the extent such distributions are paid out of the

current or accumulated earnings and profits of Nabors Bermuda as determined

under U.S. federal income tax principles. Such dividends would not be eligible

for the dividends received deduction generally allowed to U.S. holders that are

corporations. Subject to the discussion below under "-- Passive Foreign

Investment Company Considerations," to the extent, if any, that the amount of

any distribution by Nabors Bermuda exceeds Nabors Bermuda's current and

accumulated earnings and profits as determined under U.S. federal income tax

principles, it would be treated first as a tax-free return of the U.S. holder's

adjusted tax basis in the common shares and thereafter as capital gain. Nabors

Bermuda will maintain calculations of its earnings and profits under U.S.

federal income tax principles.

 

     The amount of any distribution of property other than cash would be the

fair market value of such property on the date of distribution.

 

     It is anticipated that only a portion of any dividends received by a U.S.

holder with respect to Nabors Bermuda common shares would be treated as foreign

source income for purposes of calculating such holder's foreign tax credit

limitation. This is because it is anticipated that (1) U.S. persons will own a

majority of the Nabors Bermuda common shares after the reorganization and (2) a

portion of the income derived by Nabors Bermuda will be U.S. source income. To

the extent that dividends distributed by Nabors Bermuda are treated as foreign

source income, they generally would constitute passive income, or, in the case

of certain U.S. holders, financial services income.

 

     Sale or Exchange of Common Shares.  Subject to the discussion below under

"-- Passive Foreign Investment Company Considerations," a U.S. holder generally

will recognize gain or loss on the sale or exchange of Nabors Bermuda common

shares equal to the difference between the amount realized on such sale or

exchange and the U.S. holder's adjusted tax basis in such Nabors Bermuda common

shares. Such gain or loss will be capital gain or loss. In the case of a

noncorporate U.S. holder, the maximum marginal U.S. federal income tax rate

applicable to such gain will be lower than the maximum marginal U.S. federal

income tax rate applicable to ordinary income if such U.S. holder's holding

period for such common shares exceeds 12 months. Gain or loss, if any,

recognized by a U.S. holder generally will be treated as U.S. source income or

loss for U.S. foreign tax credit purposes. The deductibility of capital losses

is subject to limitations.

 

     Passive Foreign Investment Company Considerations.  A non-U.S. corporation

will be classified as a passive foreign investment company (a "PFIC") for U.S.

federal income tax purposes in any taxable year in which, after applying certain

look-through rules, either (1) at least 75 percent of its gross income is

passive income or (2) at least 50 percent of the gross value of its assets is

attributable to assets that produce passive income or are held for the

production of passive income. Passive income for this purpose generally includes

dividends, interest, royalties, rents, and gains from commodities and securities

transactions.

 

     Based on certain estimates of its gross income and gross assets and the

nature of its business, Nabors Bermuda believes that it will not be classified

as a PFIC for its current taxable year. Nabors Bermuda's status in future years

will depend on its assets and activities in those years. Nabors Bermuda has no

reason to believe that its assets or activities will change in a manner that

would cause it to be classified as a PFIC. However, the tests for determining

PFIC status are applied annually, and it is difficult to predict accurately

future income and assets, which are relevant to this determination. Accordingly,

Nabors Bermuda cannot assure that it will not become a PFIC. If Nabors Bermuda

were a PFIC, a U.S. holder of common shares generally would be subject to

imputed interest charges and other disadvantageous tax treatment with respect to

any gain from the sale or exchange of, and certain distributions with respect

to, the Nabors Bermuda common shares.

 

     Alternatively, a U.S. holder generally could elect, subject to certain

limitations, to annually take into gross income the appreciation or depreciation

in its Nabors Bermuda common shares' value during the tax year (the

"mark-to-market election"). If a U.S. holder makes the mark-to-market election,

the U.S. holder will not be subject to the above-described rule. If a U.S.

holder makes the mark-to-market election, the U.S. holder recognizes each year

an amount equal to the difference as of the close of the taxable year between

the U.S. holder's fair market value of the common shares and the adjusted basis

in the common shares. Losses would be allowed only to the extent of net gain

previously included by the U.S. holder under the mark-to-market election for

prior taxable years. Amounts included in or deducted from income under the

mark-to-

                                        42

<PAGE>

 

market election and actual gains and losses realized upon the sale or

disposition of the common shares, subject to certain limitations, will be

treated as ordinary gains or losses. Another alternative election which would

allow a U.S. holder to elect to take its pro rata share of Nabors Bermuda's

undistributed income into gross income as it is earned by Nabors Bermuda (the

"QEF election") would only be available to a U.S. holder if Nabors Bermuda

provided certain information to the IRS. Because Nabors Bermuda generally will

not satisfy the IRS's record keeping requirements, a U.S. holder may only be

able to make the mark-to-market election and not the QEF election if Nabors

Bermuda were a PFIC.

 

     U.S. holders are strongly urged to consult their tax advisors regarding the

tax consequences that would arise if Nabors Bermuda were treated as a PFIC.

 

     Backup Withholding Tax and Information Reporting Requirements.  Currently,

any distributions with respect to Nabors Delaware common stock and proceeds from

the sale or redemption of Nabors Delaware common stock would be subject to U.S.

backup withholding tax and information reporting rules. After the

reorganization, it is anticipated that the same rules would apply to

distributions with respect to Nabors Bermuda common shares and to proceeds from

the sale or redemption of Nabors Bermuda common shares.

 

     In general, information reporting requirements will apply to dividends with

respect to the Nabors Bermuda common shares or the proceeds received on the sale

or redemption of the Nabors Bermuda common shares paid within the U.S., and in

some cases, outside of the U.S., to holders other than certain exempt

recipients, such as corporations. In addition, backup withholding at the then

applicable rate will apply to these payments unless the holder or beneficial

owner provides an accurate taxpayer identification number in the manner required

by U.S. law and applicable regulations, certifies that the holder or beneficial

owner is not subject to backup withholding, and the holder or beneficial owner

otherwise complies with applicable requirements of the backup withholding rules.

Amounts withheld under the backup withholding rules may be credited against a

U.S. holder's U.S. federal income tax liability, and a holder may obtain a

refund of any excess amounts withheld under the backup withholding rules by

filing the appropriate claim for refund with the IRS.

 

  BERMUDA INCOME TAX CONSEQUENCES OF THE REORGANIZATION

 

     Under current Bermuda law, Nabors Bermuda is not subject to tax on income

or capital gains. Furthermore, Nabors Bermuda has obtained from the Minister of

Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 (as

amended), an undertaking that, in the event that Bermuda enacts any legislation

imposing tax computed on profits, income, any capital asset, gain or

appreciation, or any tax in the nature of estate duty or inheritance tax, then

the imposition of such tax will not be applicable to Nabors Bermuda or to any of

its operations, or the shares, capital or common shares of Nabors Bermuda, until

March 28, 2016. This undertaking does not, however, prevent the imposition of

property taxes on Nabors Bermuda to the extent that it owns real property or

leasehold interests in Bermuda or certain other taxes on Nabors Bermuda if it

were to employ persons in Bermuda.

 

     Nabors Bermuda believes that no significant portion of its income or

capital gains will be subject to tax in Bermuda, which currently has no

corporate income tax. However, this belief is based upon the anticipated nature

and conduct of the business of Nabors Bermuda, which may change, and upon Nabors

Bermuda's understanding of its position under the tax laws of Bermuda and other

countries, which position is subject to review and possible challenge by taxing

authorities and to possible changes in law (which may have retroactive effect).

The extent to which certain taxing jurisdictions may require Nabors Bermuda to

pay tax or to make payments in lieu of tax cannot be determined in advance.

There can be no assurance that these factors will not have a material adverse

effect on Nabors Bermuda.

 

 

     Under existing Bermuda law, there will be no Bermuda income or withholding

tax on dividends, if any, paid by Nabors Bermuda to its shareholders.

Furthermore, no Bermuda tax or other levy is payable on the sale or other

transfer (including by gift or on the death of the shareholder) of Nabors

Bermuda common shares (other than by shareholders resident in Bermuda).

 

 

                                        43

<PAGE>

 

  BARBADOS INCOME TAX CONSEQUENCES OF THE REORGANIZATION

 

     Nabors Bermuda will be registered to operate as an IBC for Barbados tax

purposes and Nabors Bermuda will be legally managed and controlled through an

executive office located in Barbados.

 

     In the opinion of David King & Co., the following general discussion

constitutes a fair and accurate summary of the anticipated principal Barbados

income tax consequences of the reorganization. Under current Barbados law, an

IBC is subject to tax on its international business profits generated outside of

Barbados at a maximum rate of 2.5%. This tax rate gradually decreases to 1% as

taxable income increases. The benefits of these lower tax rates for companies

registered as IBCs can be guaranteed by the Minister for up to fifteen (15)

years. Barbados imposes no income tax on capital gains. In addition to Barbados

income tax, Nabors Bermuda will be subject to Barbados property transfer tax to

the extent that it transfers real property owned in Barbados and certain other

taxes to the extent that it employs persons in Barbados.

 

 

     Under existing Barbados law, there will be no Barbados income or

withholding tax imposed on any dividends, interest, royalties or other income

amounts paid by Nabors Bermuda to any person resident outside of Barbados.

Furthermore, U.S. shareholders will not be subject to any Barbados taxation on

the sale or other transfer (including by gift or on the death of the

shareholder) of Nabors Bermuda common shares.

 

 

                                    EXPERTS

 

     The consolidated financial statements incorporated in this proxy

statement/prospectus by reference to the Annual Report on Form 10-K of Nabors

Industries, Inc. for the year ended December 31, 2001 have been so incorporated

in reliance on the reports of PricewaterhouseCoopers LLP, independent

accountants, given on the authority of said firm as experts in auditing and

accounting.

 

                                 LEGAL MATTERS

 

     Certain legal matters in connection with the Nabors Bermuda common shares

have been passed upon for Nabors Bermuda by its Bermuda counsel, Appleby,

Spurling & Kempe. Appleby, Spurling & Kempe has also rendered an opinion to

Nabors Bermuda regarding Bermuda income tax consequences of the reorganization

described in "Income Tax Consequences of the Reorganization -- Bermuda Income

Tax Consequences of the Reorganization." Skadden, Arps, Slate, Meagher & Flom

LLP has rendered an opinion to Nabors Bermuda regarding U.S. federal income tax

consequences of the reorganization to stockholders of Nabors Delaware described

in "Income Tax Consequences of the Reorganization -- U.S. Federal Income Tax

Consequences to Stockholders." David King & Co. has rendered an opinion to

Nabors Bermuda regarding Barbados income tax consequences of the reorganization

described in "Income Tax Consequences of the Reorganization -- Barbados Income

Tax Consequences of the Reorganization."

 

                     SHAREHOLDER PROPOSALS AND NOMINATIONS

 

     The board of directors of Nabors Delaware is not aware of any matters that

are expected to come before the special meeting other than those referred to in

this proxy statement/prospectus. If other matters should properly come before

the meeting, the persons named in the proxy intend to vote the proxies in

accordance with their best judgment.

 

     The deadline for submitting shareholder proposals pursuant to Rule 14a-8

under the Securities Exchange Act of 1934, as amended, to be considered for

inclusion in Nabors Delaware's proxy statement and form of proxy for the 2002

annual meeting was January 7, 2002.

 

     Nabors Bermuda's bye-laws provide that all shareholder nominations for

nominees for election to the board of directors must be made following written

notice to the Secretary of Nabors Bermuda accompanied by certain background and

other information specified in the bye-laws. In connection with any annual

general meeting, written notice of a shareholder's intention to make such

nominations must be received by the Secretary at Nabors Bermuda's principal

executive offices and its registered office in Bermuda not less than

 

                                        44

<PAGE>

 

60 days nor more than 90 days prior to the anniversary date of the immediately

preceding annual general meeting, provided that in the event that the annual

general meeting is called for a date that is not within 30 days before or after

such anniversary date, not later than the 10th day following the day on which

such notice of the date of the annual general meeting was mailed or public

disclosure of the date of the annual general meeting was made, whichever occurs

first.

 

     In order for a shareholder to bring other business before a general meeting

of shareholders, timely notice must be received by the secretary of Nabors

Bermuda within the time limits described above. The notice must include a

description of the proposed item and other specified matters. These requirements

are separate from and in addition to the requirements you must meet to have a

proposal included in Nabors Bermuda's proxy statement. The foregoing time limits

also apply in determining whether notice is timely for purposes of rules adopted

by the Securities and Exchange Commission relating to the exercise of

discretionary voting authority.

 

                      WHERE YOU CAN FIND MORE INFORMATION

 

     Nabors Bermuda has filed with the Securities and Exchange Commission (the

"Commission") a registration statement on Form S-4 (herein, together with all

amendments and exhibits, referred to as the "Registration Statement") under the

Securities Act of 1933, as amended (the "Securities Act"). This proxy

statement/prospectus, which constitutes a part of the Registration Statement,

does not contain all of the information set forth in the Registration Statement,

certain parts of which are omitted as permitted by the rules and regulations of

the Commission. For further information, reference is hereby made to the

Registration Statement. Statements made in this proxy statement/prospectus as to

the contents of any contract, agreement or other document are not necessarily

complete. With respect to each such contract, agreement or other document filed

as an exhibit to the Registration Statement or otherwise filed with the

Commission, reference is made to the copy so filed, and each such statement

shall be deemed qualified in its entirety by such reference.

 

     Nabors Delaware is, and after the reorganization Nabors Bermuda will be,

subject to the informational requirements of the Securities Exchange Act of

1934, as amended (the "Exchange Act"), and in accordance therewith files and

will file reports, proxy and information statements, and other information with

the Commission. Such reports, proxy and information statements, and other

information filed with the Commission, can be inspected and copied at the SEC's

Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may

obtain information on the operation of the Public Reference Room by calling the

Commission at 1-800-SEC-0330. Copies of reports, proxy and information

statements and other information regarding registrants that file electronically

(including Nabors Industries, Inc.) are available on the Commission's website at

http://www.sec.gov.

 

     Upon completion of the reorganization, Nabors Bermuda common shares will be

traded on the American Stock Exchange. At the time of commencement of such

trading, Nabors Delaware common stock will be delisted and will no longer be

registered pursuant to Section 12 of the Exchange Act. At such time, your shares

will have automatically converted into the right to receive shares of Nabors

Bermuda and Nabors Bermuda will be registered pursuant to Section 12 of the

Exchange Act.

 

                                        45

<PAGE>

 

                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

 

     The following documents filed by Nabors Delaware with the Commission

pursuant to the Exchange Act are hereby incorporated by reference in this proxy

statement/prospectus:

 

<Table>

<Caption>

REPORT                                          DATE(S) FILED

------                                          -------------

<S>                                             <C>

Annual Report on Form 10-K for the fiscal       March 19, 2002

  year ended December 31, 2001 (File No.

  1-09245)

 

Current Reports on Form 8-K                     January 3, 2002, January 25, 2002 and April

                                                18, 2002

</Table>

 

     Each document filed by Nabors Delaware pursuant to Section 13(a), 13(c), 14

or 15(d) of the Exchange Act subsequent to the date of this proxy

statement/prospectus and prior to the date of the special meeting shall be

deemed to be incorporated by reference in this proxy statement/prospectus and to

be a part of this proxy statement/prospectus from the date of filing of such

document. Any statement contained in this proxy statement/prospectus or in a

document incorporated or deemed to be incorporated by reference in this proxy

statement/prospectus shall be deemed to be modified or superseded for purposes

of the Registration Statement and this proxy statement/prospectus to the extent

that a statement contained in this proxy statement/prospectus or in any

subsequently filed document that also is or is deemed to be incorporated by

reference in this proxy statement/prospectus modifies or supersedes such

statement. Any such statement so modified or superseded shall not be deemed,

except as so modified or superseded, to constitute a part of the Registration

Statement or this proxy statement/prospectus.

 

 

     THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE IMPORTANT

BUSINESS AND FINANCIAL INFORMATION ABOUT NABORS WHICH IS NOT INCLUDED IN OR

DELIVERED WITH THIS DOCUMENT. COPIES OF THE INCORPORATED DOCUMENTS (OTHER THAN

EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED

BY REFERENCE THEREIN) WILL BE FURNISHED UPON WRITTEN OR ORAL REQUEST WITHOUT

CHARGE TO EACH PERSON TO WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED.

REQUESTS SHOULD BE MADE BY JUNE 7, 2002 AND SHOULD BE DIRECTED TO NABORS

INDUSTRIES, INC., 515 WEST GREENS ROAD, SUITE 1200, HOUSTON, TEXAS 77067,

ATTENTION: INVESTOR RELATIONS, OR YOU MAY TELEPHONE (281) 874-0035, OR VISIT OUR

WEBSITE "HTTP://WWW.NABORS.COM". WEBSITE MATERIALS ARE NOT PART OF THIS PROXY

STATEMENT/PROSPECTUS.

 

 

     NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY

INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY

REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS AND, IF GIVEN OR MADE, SUCH

INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.

THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A

SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY

JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.

NABORS BERMUDA IS PROHIBITED FROM MAKING ANY INVITATION TO THE PUBLIC IN BERMUDA

TO SUBSCRIBE FOR ANY OF ITS SHARES.

 

                                        46

<PAGE>

 

                                                                         ANNEX I

 

                          AGREEMENT AND PLAN OF MERGER

 

     AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of January 2,

2002, among Nabors Industries Ltd., a Bermuda exempted company ("Nabors

Bermuda"), Nabors Industries, Inc., a Delaware corporation ("Nabors Delaware"),

Nabors US Holdings Inc., a Delaware corporation ("US Holdings") and Nabors

Acquisition Corp. VIII, a Delaware corporation ("Merger Sub") and a newly

formed, indirect wholly-owned subsidiary of Nabors Bermuda and a direct

wholly-owned subsidiary of US Holdings.

 

     WHEREAS, the respective Boards of Directors of Nabors Bermuda, Nabors

Delaware, US Holdings and Merger Sub deem it advisable and in the best interests

of their respective stockholders to reorganize such that the ultimate parent of

the Nabors group will effectively change its place of incorporation from

Delaware to Bermuda by merging Merger Sub with and into Nabors Delaware;

 

     WHEREAS, subject to the approval of the stockholders of Nabors Delaware,

the respective Boards of Directors of Nabors Bermuda, Nabors Delaware, US

Holdings and Merger Sub (and the stockholders of Nabors Bermuda, US Holdings and

Merger Sub) have each unanimously approved the merger of Merger Sub with and

into Nabors Delaware, pursuant to which Nabors Delaware will be the surviving

company in the merger and become a wholly-owned, indirect subsidiary of Nabors

Bermuda (and a wholly-owned, direct subsidiary of US Holdings), upon the terms

and subject to the conditions set forth in this Agreement (the "Merger"), and

whereby each outstanding share of common stock, par value US$.10 per share, of

Nabors Delaware ("Nabors Delaware Common Stock"), other than those shares of

Nabors Delaware Common Stock held by Nabors Delaware or any direct or indirect

wholly-owned subsidiary of Nabors Delaware, shall be automatically converted

into the right to receive one common share, par value US$.001 per share, of

Nabors Bermuda ("Nabors Bermuda Common Shares"); and

 

     WHEREAS, the consummation of the Merger requires, among other things, the

adoption of this Agreement by the affirmative vote of the holders of a majority

of the outstanding Nabors Delaware Common Stock entitled to vote on such

adoption (the "Nabors Delaware Stockholder Approval");

 

     NOW, THEREFORE, the parties agree as follows:

 

                                   ARTICLE I

 

                                     MERGER

 

     1.1  Merger.  Upon the terms and subject to the conditions set forth in

this Agreement, and in accordance with the Delaware General Corporation Law (the

"DGCL"), Merger Sub shall be merged with and into Nabors Delaware at the

Effective Time of the Merger. Following the Effective Time of the Merger, the

separate corporate existence of Merger Sub shall cease and Nabors Delaware shall

continue as the surviving corporation (the "Surviving Corporation"), becoming a

wholly-owned, indirect subsidiary of Nabors Bermuda (and a wholly-owned, direct

subsidiary of US Holdings), and shall succeed to and assume all the rights and

obligations of Merger Sub in accordance with the DGCL.

 

     1.2  Effective Time.  Subject to the provisions of this Agreement, as soon

as practicable following the satisfaction or waiver of the conditions set forth

in Section 5.1, the parties shall duly prepare, execute and file a certificate

of merger (the "Certificate of Merger") in accordance with Section 251 of the

DGCL with the Secretary of State of Delaware. The Merger shall become effective

upon the filing of the Certificate of Merger (or at such later time reflected in

such Certificate of Merger as shall be agreed to by Nabors Bermuda, US Holdings,

Nabors Delaware and Merger Sub). The date and time when the Merger shall become

effective is referred to as the "Effective Time."

 

     1.3  Effects of the Merger.  The Merger shall have the effects as provided

in the DGCL. The Surviving Corporation specifically assumes any obligation of

Merger Sub which requires that such obligation is specifically assumed by the

Surviving Corporation.

 

                                      A-I-1

<PAGE>

 

                                   ARTICLE II

 

                      NAME, CERTIFICATE OF INCORPORATION,

                             DIRECTORS AND OFFICERS

 

     2.1  Name of Surviving Corporation.  The name of the Surviving Corporation

shall be "Nabors Industries, Inc."

 

     2.2  Certificate of Incorporation; By-laws.

 

     (a) The Certificate of Incorporation of the Surviving Corporation shall be

amended as of the Effective Time pursuant to the Certificate of Merger to

contain the provisions in the Certificate of Incorporation of Merger Sub in

effect immediately prior to the Effective Time, except that Article FIRST of

such Certificate shall provide that the name of the Surviving Corporation shall

be "Nabors Industries, Inc."

 

     (b) The By-laws of Merger Sub in effect immediately prior to the Effective

Time shall be the by-laws of the Surviving Corporation until amended in

accordance with applicable law.

 

     2.3  Directors.  The directors of Merger Sub immediately prior to the

Effective Time shall be the directors of the Surviving Corporation, until his or

her successor shall be elected and qualify, subject to prior death, resignation

or removal in accordance with the Certificate of Incorporation and By-laws of

the Surviving Corporation, or as otherwise provided by applicable law.

 

     2.4  Officers.  Each officer of Nabors Delaware immediately prior to the

Effective Time shall be an officer of the Surviving Corporation, until his or

her successor shall be elected and qualify, subject to prior death, resignation

or removal in accordance with the Certificate of Incorporation and By-laws of

the Surviving Corporation, or as otherwise provided by applicable law.

 

                                  ARTICLE III

 

                        CONVERSION AND EXCHANGE OF STOCK

 

     3.1  Nabors Delaware Common Stock.  At the Effective Time, by virtue of the

Merger and without any action on the part of the holder of any shares:

 

          (a) Each issued and outstanding share of Nabors Delaware Common Stock,

     other than shares cancelled in accordance with 3.1(b), shall be converted

     into and become the right to receive one fully paid and nonassessable

     Nabors Bermuda Common Share.

 

          (b) Each issued share of Nabors Delaware Common Stock that is owned by

     Nabors Delaware or by any direct or indirect wholly-owned subsidiary of

     Nabors Delaware prior to the Effective Time shall automatically be canceled

     and retired and shall cease to exist, and no Nabors Bermuda Common Shares

     or other consideration shall be delivered or deliverable in exchange for

     such shares of Nabors Delaware Common Stock.

 

     3.2  Merger Sub Common Stock.  Each issued and outstanding share of common

stock, par value $.01 per share, of Merger Sub, shall be converted into and

become one share of common stock of the Surviving Corporation with the same

rights, power and privileges as the shares so converted and shall constitute the

only outstanding shares of capital stock of the Surviving Corporation.

 

     3.3  Stock Option and Award Plans.  Nabors Delaware currently maintains and

sponsors the 1994 Executive Officer's Stock Plan, the 1996 Employee Stock Plan,

the 1996 Executive Officers Stock Plan, the 1996 Executive Officers Incentive

Stock Plan, the 1998 Employee Stock Plan, the 1998 Chairman's Executive Stock

Plan, the 1996 Chairman's Executive Stock Plan, the 1997 Executive Officers

Incentive Stock Plan, the 1999 Pool Employee/Director Option Exchange Plan,

Options Originally Granted by Bayard Drilling Technologies, Inc. and Assumed by

Nabors Industries, Inc. and certain other plans and agreements providing for the

grant or award to its officers and employees of options or other rights to

purchase or receive Nabors Delaware Common Stock (the "Employee Stock Plans").

Nabors Delaware also maintains and sponsors the 1993 Stock Option Plan for

Non-Employee Directors and the 1999 Stock Option Plan for Non-Employee

                                      A-I-2

<PAGE>

 

Directors and certain other plans and agreements providing for the grant or

award to its directors of options or other rights to purchase or receive Nabors

Delaware Common Stock (the "Director Stock Plans"). Nabors Delaware shall

continue to maintain and sponsor the Employee Stock Plans and Nabors Bermuda

shall assume the rights and obligations of Nabors Delaware under the Director

Stock Plans. The outstanding options and other awards under the Employee Stock

Plans and Director Stock Plans shall be exercisable or issuable upon the same

terms and conditions as under such plans and the agreements relating thereto

immediately prior to the Effective Time of the Merger, except that upon the

exercise or issuance of such options or awards, Nabors Bermuda Common Shares

shall be issuable in lieu of shares of Nabors Delaware Common Stock. The number

of Nabors Bermuda Common Shares issuable upon the exercise or issuance of such

an option or award immediately after the Effective Time and the option price of

each such option or award shall be the number of shares and option price in

effect immediately prior to the Effective Time. All options or awards issued

under the Employee Stock Plans and Director Stock Plans after the Effective Time

shall entitle the holder thereof to purchase Nabors Bermuda Common Shares in

accordance with the terms of the Employee Stock Plans and Director Stock Plans.

 

     3.4  Exchange Agent; Exchange of Shares.

 

     (a) Exchange Agent.  As soon as reasonably practicable, US Holdings and

Merger Sub shall designate a bank or trust company reasonably acceptable to

Nabors Delaware (the "Exchange Agent") for the purpose of exchanging

certificates representing shares of Nabors Bermuda Common Shares (the "Bermuda

Certificates") upon surrender of certificates representing shares of Nabors

Delaware Common Stock (the "Delaware Certificates"). Not later than the

Effective Time, US Holdings and Merger Sub will cause to be deposited with the

Exchange Agent, for the benefit of the holders of shares of Nabors Delaware

Common Stock, certificates representing Nabors Bermuda Common Shares issuable

upon consummation of the Merger as set forth in Section 3.1(a) (the "Exchange

Fund").

 

     (b) Exchange Procedure.  As soon as reasonably practicable after the

Effective Time, the Exchange Agent shall mail to each holder of record of a

Delaware Certificate(s) that immediately prior to the Effective Time represented

outstanding shares of Nabors Delaware Common Stock whose shares were converted

into and became the right to receive Nabors Bermuda Common Shares pursuant to

Section 3.1(a), (i) a letter of transmittal (which shall specify that delivery

shall be effected, and risk of loss and title to the Delaware Certificates shall

pass, only upon delivery of the Delaware Certificates to the Exchange Agent and

shall be in such form and have such other provisions as Nabors Bermuda may

reasonably specify) and (ii) instructions for use in effecting the surrender of

the Delaware Certificates in exchange for Nabors Bermuda Common Shares. Upon

surrender of a Delaware Certificate for cancellation to the Exchange Agent,

together with such letter of transmittal, properly completed and duly executed,

and such other documents as may be reasonably required by the Exchange Agent,

the holder of such Delaware Certificate shall be entitled to receive in exchange

therefor a Bermuda Certificate or Bermuda Certificates representing the number

of Nabors Bermuda Common Shares which such holder has the right to receive

pursuant to the provisions of this Article III, and the Delaware Certificate so

surrendered shall be canceled. In the event of a transfer of ownership of a

Delaware Certificate after the Effective Time, exchange may be made to a person

other than the person in whose name the Delaware Certificate so surrendered is

registered, if such Delaware Certificate shall be properly endorsed or otherwise

in proper form for transfer and shall be accompanied by evidence satisfactory to

the Exchange Agent that any transfer or other taxes required by reason of such

exchange in the name other than that of the registered holder of such Delaware

Certificate or instrument either has been paid or is not payable. Until

surrendered as contemplated by this Section 3.4, each Delaware Certificate shall

be deemed at any time after the Effective Time to represent only the right to

receive upon such surrender Nabors Bermuda Common Shares in accordance with

Section 3.1(a).

 

     (c) No Further Ownership Rights in Nabors Delaware Common Stock.  All

Nabors Bermuda Common Shares issued upon the Merger, including any Bermuda

Certificates issued upon the surrender for exchange of Delaware Certificates in

accordance with the terms of this Article III, shall be deemed to have been

issued (and paid) in full satisfaction of all rights pertaining to the shares of

Nabors Delaware Common Stock theretofore represented by such certificates,

subject, however, to the Surviving Corporation's obligation (if any) to pay any

dividends or make any other distributions with a record date prior to the

Effective Time which

                                      A-I-3

<PAGE>

 

may have been declared or made by Nabors Delaware on such shares of Nabors

Delaware Common Stock in accordance with the terms of this Agreement or prior to

the date of this Agreement and which remain unpaid at the Effective Time, and

there shall be no further registration of transfers on the stock transfer books

of the Surviving Corporation of the shares of Nabors Delaware Common Stock which

were outstanding immediately prior to the Effective Time. If, after the

Effective Time, Delaware Certificates are presented to the Surviving Corporation

or Exchange Agent they shall be canceled and exchanged as provided in this

Article III, except as otherwise provided by law.

 

     (d) Termination of Exchange Fund; No Liability.  At any time following the

first anniversary of the Effective Time, the Surviving Corporation shall be

entitled to require the Exchange Agent to deliver to it any remaining portion of

the Exchange Fund, and holders shall be entitled to look only to the Surviving

Corporation (subject to abandoned property, escheat or other similar laws) with

respect to the Nabors Bermuda Common Shares and any dividends or other

distributions with respect thereto payable upon due surrender of their Delaware

Certificates, without any interest thereon. Notwithstanding the foregoing,

neither the Surviving Corporation nor the Exchange Agent shall be liable to any

holder of a Delaware Certificate for Nabors Bermuda Common Shares (or dividends

or distributions with respect thereto) from the Exchange Fund in each case

delivered to a public official pursuant to any applicable abandoned property,

escheat or similar law.

 

     (e) Lost, Stolen or Destroyed Certificates.  In the event any Delaware

Certificates shall have been lost, stolen or destroyed, upon the making of an

affidavit of that fact by the person claiming such Delaware Certificate(s) to be

lost, stolen or destroyed and, if required by Nabors Bermuda, the posting by

such person of a bond in such sum as Nabors Bermuda may reasonably direct as

indemnity against any claim that may be made against it or the Surviving

Corporation with respect to such Delaware Certificate(s), the Exchange Agent

will issue the Nabors Bermuda Common Shares pursuant to Section 3.1(a)

deliverable in respect of the shares of Nabors Delaware Common Stock represented

by such lost, stolen or destroyed Delaware Certificates.

 

     (f) Dividends; Distributions.  No dividends or other distributions with

respect to Nabors Bermuda Common Shares with a record date after the Effective

Time shall be paid to the holder of any unsurrendered Delaware Certificate with

respect to the Nabors Bermuda Common Shares represented thereby, and all such

dividends, other distributions, if any, shall be paid by Nabors Bermuda to the

Exchange Agent and shall be included in the Exchange Fund, in each case until

the surrender of such Delaware Certificate in accordance with this Article III.

Subject to the effect of applicable abandoned property, escheat or similar laws,

following surrender of any such Delaware Certificate there shall be paid to the

holder of a Delaware Certificate representing the right to receive Nabors

Bermuda Common Shares issued in exchange therefor, without interest, (i) at the

time of such surrender, the amount of dividends or other distributions with a

record date after the Effective Time theretofore paid with respect to such

Nabors Bermuda Common Shares and (ii) at the appropriate payment date, the

amount of dividends or other distributions with a record date after the

Effective Time but prior to such surrender and with a payment date subsequent to

such surrender payable with respect to such Nabors Bermuda Common Shares. Nabors

Bermuda shall make available to the Exchange Agent cash for these purposes, if

necessary.

 

     3.5  Warrants.  Effective at the Effective Time, the outstanding warrants

of Nabors Delaware to acquire Nabors Delaware Common Stock shall be thereafter

exercisable, in accordance with their terms, for the number of Nabors Bermuda

Common Shares to which a holder of the shares of Nabors Delaware Common Stock

issuable at the time of the Merger upon the exercise of such warrants would have

been entitled to receive as a result of the Merger, in accordance with this

Article III, if such exercise had taken place immediately prior to the Merger.

 

     3.6  Withholding Taxes.  US Holdings shall be entitled to deduct and

withhold, or cause the Exchange Agent to deduct and withhold, from the

consideration otherwise payable to any person pursuant to this Article III any

such amounts as are required under the Internal Revenue Code of 1986, as

amended, or any applicable provision of state, local or foreign tax law;

provided, however, that if such withholding may be eliminated or reduced through

the delivery of any certificate or other documentation, US Holdings shall

 

                                      A-I-4

<PAGE>

 

provide each holder of Nabors Delaware Common Stock with a reasonable

opportunity to deliver such certificate or other documentation. To the extent

that amounts are so withheld by US Holdings, such withheld amounts shall be

treated for all purposes of this Agreement as having been paid to the holder of

shares of Nabors Delaware Common Stock in respect of which such deduction and

withholding was made by US Holdings.

 

                                   ARTICLE IV

 

                         BENEFIT AND COMPENSATION PLANS

 

     4.1  At the Effective Time, (i) Nabors Delaware shall continue to sponsor

and maintain each employee benefit and program to which Nabors Delaware is then

a party (the "Employee Benefit Plans"), and (ii) Nabors Bermuda shall assume the

rights and obligations of Nabors Delaware under each director benefit plan and

program to which Nabors Delaware is then a party (the "Director Benefit Plans").

To the extent any Employee Benefit Plan or Director Benefit Plan provides for

the issuance or purchase of, or otherwise relates to, Nabors Delaware Common

Stock, after the Effective Time, such plan shall be deemed to provide for the

issuance or purchase of, or otherwise relate to, Nabors Bermuda Common Shares.

Nabors Delaware shall assign to Nabors Bermuda and Nabors Bermuda shall agree to

assume, on substantially similar terms and conditions, each employment agreement

with each executive officer and key employee of Nabors Delaware who, immediately

prior to the Effective Time, is a party to an employment agreement with Nabors

Delaware, subject to any required consent of any such executive officer or key

employee.

 

                                   ARTICLE V

 

                              CONDITIONS PRECEDENT

 

     5.1  The respective obligation of each party to effect the Merger is

subject to the satisfaction or waiver of the following conditions:

 

          (a) Stockholder Approval.  The Nabors Delaware Stockholder Approval

     shall have been obtained.

 

          (b) Form S-4.  The registration statement on Form S-4 filed with the

     Securities and Exchange Commission by Nabors in connection with the

     issuance of the Nabors Bermuda Common Shares in the Merger shall have

     become effective under the Securities Act of 1933, as amended, and shall

     not be the subject of any stop order or proceedings seeking a stop order.

 

          (c) AMEX Approval.  The American Stock Exchange (the "AMEX") shall

     have confirmed that the Nabors Bermuda Common Shares have been approved for

     listing on the AMEX, subject to notice of issuance, and may trade on the

     AMEX and succeed to the ticker symbol "NBR."

 

          (d) Governmental, Regulatory and Other Material Third-Party

     Consents.  All filings required to be made prior to the Effective Time of

     the Merger with, and all material consents, approvals, permits and

     authorizations required to be obtained prior to the Effective Time from,

     any court or governmental or regulatory authority or agency, domestic or

     foreign, or other person in connection with the execution and delivery of

     this Agreement and the consummation of the transactions contemplated hereby

     will have been made or obtained (as the case may be).

 

          (e) No Injunctions or Restraints.  No temporary restraining order,

     preliminary or permanent injunction or other order issued by any court of

     competent jurisdiction or other legal restraint or prohibition preventing

     the consummation of the Merger or any of the other transactions

     contemplated hereby shall be in effect.

 

          (f) Waivers.  The executive officers of the Company shall have agreed

     not to treat any of the transactions contemplated by this Agreement as a

     "Change in Control" within the meaning of their employment agreements with

     Nabors Delaware, if any, to the extent such concept is included in such

     agreements.

 

                                      A-I-5

<PAGE>

 

                                   ARTICLE VI

 

                       TERMINATION, AMENDMENT AND WAIVER

 

     6.1  Termination.  This Agreement may be terminated at any time prior to

the Effective Time, whether before or after the Nabors Delaware Stockholder

Approval, by action of the Board of Directors of Nabors Bermuda, Nabors

Delaware, US Holdings or Merger Sub.

 

     6.2  Effect of Termination.  In the event of termination of this Agreement

as provided in Section 6.1, this Agreement shall forthwith become void and have

no effect, without any liability or obligation on the part of Nabors Delaware,

US Holdings, Merger Sub or Nabors Bermuda, other than the provisions of this

Article VI and Article VII.

 

     6.3  Amendment.  This Agreement may be amended by the parties at any time

before or after the Nabors Delaware Stockholder Approval; provided, however,

that after any such approval, there shall not be made any amendment that alters

or changes the amount or kind of shares to be received by stockholders in the

Merger; alters or changes any term of the certificate of incorporation of the

Surviving Corporation; or alters or changes any other terms and conditions of

this Agreement if any of the alterations or changes, alone or in the aggregate,

would adversely affect the holders of shares of Nabors Delaware Common Stock.

This Agreement may not be amended except by an instrument in writing signed on

behalf of each of the parties.

 

     6.4  Waiver.  At any time prior to the Effective Time, the parties may

waive compliance by the other parties with any of the agreements or conditions

contained in this Agreement. Any agreement on the part of a party to any such

waiver shall be valid only if set forth in an instrument in writing signed on

behalf of such party. The failure of any party to this Agreement to assert any

of its rights under this Agreement or otherwise shall not constitute a waiver of

such rights.

 

     6.5  Procedure for Termination, Amendment, Extension or Waiver.  A

termination of this Agreement pursuant to Section 6.1, an amendment of this

Agreement pursuant to Section 6.3 or a waiver pursuant to Section 6.4 shall, in

order to be effective, require action by the Board of Directors of Nabors

Delaware, Nabors Bermuda, US Holdings and Merger Sub.

 

                                  ARTICLE VII

 

                               GENERAL PROVISIONS

 

     7.1  Notices.  All notices, requests, claims, demands and other

communications under this Agreement shall be in writing and shall be deemed

given if delivered personally, telecopied (which is confirmed) or sent by

overnight courier (providing proof of delivery) to the parties at the following

addresses (or at such other address for a party as shall be specified by like

notice):

 

        (a) if to Nabors Bermuda:

 

        Nabors Industries Ltd.

        c/o The Corporate Secretary Limited

        Whitepark House

        White Park Road

        Bridgetown, Barbados

        Attention: Office of the Secretary

 

        (b) if to Nabors Delaware:

 

        Nabors Industries, Inc.

        515 West Greens Road, Suite 1200

        Houston, Texas 77067

        Attention: Senior Counsel

 

                                      A-I-6

<PAGE>

 

        (c) if to Merger Sub:

 

        Nabors Acquisition Corp. VIII

        c/o Nabors US Holdings Inc.

        515 West Greens Road, Suite 1200

        Houston, Texas 77067

        Attention: Senior Counsel

 

        (d) if to US Holdings:

 

        Nabors US Holdings Inc.

        515 West Greens Road, Suite 1200

        Houston, Texas 77067

        Attention: Senior Counsel

 

     7.2  Entire Agreement; No Third-party Beneficiaries.  This Agreement

(including the documents and instruments referred to herein) (a) constitutes the

entire agreement and supersedes all prior agreements and understandings, both

written and oral, among the parties with respect to the subject matter of this

Agreement and (b) except for the provisions of Article III, is not intended to

confer upon any person other than the parties any rights or remedies.

 

     7.3  Governing Law.  This Agreement shall be governed by, and construed in

accordance with, the laws of the State of Delaware regardless of the laws that

might otherwise govern under applicable principles of conflicts of laws thereof.

 

                            [SIGNATURE PAGE FOLLOWS]

 

                                      A-I-7

<PAGE>

 

     IN WITNESS WHEREOF, Nabors Delaware, Nabors Bermuda, US Holdings and Merger

Sub have caused this Agreement to be signed by their respective officers

thereunto duly authorized, all as of the date first written above.

 

                                          NABORS INDUSTRIES LTD.

 

                                          By:      /s/ STEPHEN S JAMES

                                            ------------------------------------

                                                      Stephen S James

                                                          Director

 

                                          NABORS INDUSTRIES, INC.

 

                                          By:    /s/ ANTHONY G. PETRELLO

                                            ------------------------------------

                                                    Anthony G. Petrello

                                               President and Chief Operating

                                                           Officer

 

                                          NABORS ACQUISITION CORP. VIII

 

                                          By:     /s/ DANIEL MCLACHLIN

                                            ------------------------------------

                                                      Daniel McLachlin

                                                Vice President and Secretary

 

                                          NABORS US HOLDINGS INC.

 

                                          By:     /s/ DANIEL MCLACHLIN

                                            ------------------------------------

                                                      Daniel McLachlin

                                                Vice President and Secretary

 

                                      A-I-8

<PAGE>

 

                                                                        ANNEX II

 

                                      LOGO

 

                                    BERMUDA

 

                             THE COMPANIES ACT 1981

 

             MEMORANDUM OF ASSOCIATION OF COMPANY LIMITED BY SHARES

                              SECTION 7(1) AND (2)

 

                           MEMORANDUM OF ASSOCIATION

 

                                       OF

 

                             NABORS INDUSTRIES LTD.

                   (hereinafter referred to as "the Company")

 

     1. The liability of the members of the Company is limited to the amount (if

any) for the time being unpaid on the shares respectively held by them.

 

     2. We, the undersigned, namely,

 

<Table>

<Caption>

                                                     BERMUDIAN STATUS                 NUMBER OF SHARES

NAME AND ADDRESS                                       (YES OR NO)      NATIONALITY      SUBSCRIBED

----------------                                     ----------------   -----------   ----------------

<S>                                                  <C>                <C>           <C>

Timothy J. Counsell................................        Yes            British            1

Cedar House, 41 Cedar Avenue

Hamilton HM 12, Bermuda

Ruby L. Rawlins....................................        Yes            British            1

Cedar House, 41 Cedar Avenue

Hamilton HM 12, Bermuda

Rachael M. Lathan..................................        Yes            British            1

Cedar House, 41 Cedar Avenue

Hamilton HM 12, Bermuda

Angela R. B. Browne................................        Yes            British            1

Cedar House, 41 Cedar Avenue

Hamilton HM 12, Bermuda

</Table>

 

do hereby respectively agree to take such number of shares of the Company as may

be allotted to us respectively by the provisional directors of the Company, not

exceeding the number of shares for which we have respectively subscribed, and to

satisfy such calls as may be made by the directors, provisional directors or

promoters of the Company in respect of the shares allotted to us respectively.

 

     3. The Company is to be an Exempted Company as defined by the Companies Act

1981.

 

     4. The Company, with the consent of the Minister of Finance, has power to

hold land situate in Bermuda not exceeding      in all, including the following

parcels:

 

          Not applicable.

 

     5. The authorised share capital of the Company is US$12,000.00 divided into

12,000 shares of US$1.00 each. The minimum subscribed share capital of the

Company is $12,000.00 in United States currency.

 

                                      A-II-1

<PAGE>

 

     6. The objects for which the Company is formed and incorporated are:

 

          As set forth in paragraphs (b) to (n) and (p) to (u) inclusive of the

     Second Schedule to The Companies Act 1981.

 

     7. The Company has the powers set out in The Schedule annexed hereto.

 

                                      A-II-2

<PAGE>

 

                               THE COMPANIES ACT

 

                                SECOND SCHEDULE

                                (SECTION 11(2))

 

     Subject to Section 4A, a company may by reference include in its memorandum

any of the following objects, that is to say the business of --

 

(a)  insurance and re-insurance of all kinds;

 

(b)  packaging of goods of all kinds;

 

(c)  buying, selling and dealing in goods of all kinds;

 

(d)  designing and manufacturing of goods of all kinds;

 

(e)  mining and quarrying and exploration for metals, minerals, fossil fuels and

     precious stones of all kinds and their preparation for sale or use;

 

(f)  exploring for, the drilling for, the moving, transporting and refining

     petroleum and hydro carbon products including oil and oil products;

 

(g)  scientific research including the improvement, discovery and development of

     processes, inventions, patents and designs and the construction,

     maintenance and operation of laboratories and research centres;

 

(h)  land, sea and air undertakings including the land, ship and air carriage of

     passengers, mails and goods of all kinds;

 

(i)  ships and aircraft owners, managers, operators, agents, builders and

     repairers;

 

(j)  acquiring, owning, selling, chartering, repairing or dealing in ships and

     aircraft;

 

(k)  travel agents, freight contractors and forwarding agents;

 

(1)  dock owners, wharfingers, warehousemen;

 

(m)  ship chandlers and dealing in rope, canvas oil and ship stores of all

     kinds;

 

(n)  all forms of engineering;

 

(o)  developing, operating, advising or acting as technical consultants to any

     other enterprise or business;

 

(p)  farmers, livestock breeders and keepers, graziers, butchers, tanners and

     processors of and dealers in all kinds of live and dead stock, wool, hides,

     tallow, grain, vegetables and other produce;

 

(q)  acquiring by purchase or otherwise and holding as an investment inventions,

     patents, trade marks, trade names, trade secrets, designs and the like;

 

(r)  buying, selling, hiring, letting and dealing in conveyances of any sort;

     and

 

(s)  employing, providing, hiring out and acting as agent for artists, actors,

     entertainers of all sorts, authors, composers, producers, directors,

     engineers and experts or specialists of any kind;

 

(t)  to acquire by purchase or otherwise and hold, sell, dispose of and deal in

     real property situated outside Bermuda and in personal property of all

     kinds wheresoever situated;

 

(u)  to enter into any guarantee, contract of indemnity or suretyship and to

     assure, support or secure with or without consideration or benefit the

     performance of any obligations of any person or persons and to guarantee

     the fidelity of individuals filling or about to fill situations of trust or

     confidence;

 

(v)  to be and carry on business of a mutual fund within the meaning of section

     156A.