As filed with the Securities and Exchange Commission on June 5, 1998
SECURITIES AND EXCHANGE COMMISSION
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BLACK WARRIOR WIRELINE CORP.
(Exact Name of Registrant as specified in its Charter)
DELAWARE 11-2904094
(State or other jurisdiction of (IRS Employer
incorporation ororganization) Identification Number)
3748 HIGHWAY #45 NORTH, COLUMBUS, MISSISSIPPI 39701
(601) 329-1047
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
WILLIAM L. JENKINS, PRESIDENT
3748 HIGHWAY #45 NORTH, COLUMBUS, MISSISSIPPI 39701
(601) 329-1047
(Name, address, including zip code, and telephone number, including area code,
of Agent for service)
With a Copy to:
WILLIAM S. CLARKE, ESQUIRE
457 NORTH HARRISON STREET, SUITE 103, PRINCETON, NEW JERSEY 08540
(609) 921-3663
Approximate date of commencement of proposed sale to public:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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(c)
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 delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock, 666,000 $2.75 (1) $1,831,500 $540.00
$.0005 par value (2)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Common Stock, 792,727 $2.75 (1) $2,179,999 $643.00
$.0005 par value (3)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Common Stock, 725,000 $4.6327 (1) $3,358,708 $990.00
$.0005 par value (4)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Common Stock, 654,345 $4.6327 (1) $3,031,384 $894.00
$.0005 par value (5)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Common Stock, 2,000,000 $5.50 (1) $11,000,000 $3,245.00
$.0005 par value (6)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Common Stock, 1,847,137 $5.50 (1) $10,159,253 $2,997.000
$.0005 par value (7)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Common Stock, 1,419,933 $6.281 (8) $8,918,599 $2,630.00
$.0005 par value
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Common Stock, 236,250 $2.00 (1) $472,500 $139.00
$.0005 par value (9)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
Common Stock, 80,000 $1.50 (1) $120,000 $35.00
$.0005 par value (10)
- ------------------------ ---------------------- ---------------------- ----------------------- ----------------------
TOTAL $12,113.00
- ---------------------------------------------------------------------- ----------------------- ----------------------
</TABLE>
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- ----------
(1) The Registration Fee has been calculated pursuant to Rule 457(g) based on
the maximum exercise or conversion price of the warrants or notes.
(2) Shares issuable on exercise of the Registrant's outstanding common stock
purchase warrants expiring June 5, 2002 exercisable at a maximum exercise
price of $2.75 per share to purchase an aggregate of 666,000 shares of
Common Stock.
(3) Shares issuable on conversion of the Registrant's 9% Convertible Promissory
Note due June 6, 2002 in the principal amount of $2,000,000 together with
accrued interest through May 31, 1998 of $179,999 convertible into shares
of Common Stock at a current conversion price of $2.75 per share.
(4) Shares issuable on exercise of the Registrant's outstanding common stock
purchase warrants expiring October 10, 2002 exercisable at $4.6327 per
share to purchase an aggregate of 725,000 shares of Common Stock.
(5) Shares issuable on conversion of the Registrant's outstanding 7%
Convertible Promissory Note due October 10, 1999 in the principal amount of
$2,900,000 together with accrued interest through May 31, 1998 of $131,384
convertible into shares of Common Stock at a conversion price of $4.6327
per share.
(6) Shares issuable on exercise of the Registrant's outstanding common stock
purchase warrants expiring January 23, 2003 exercisable at $5.50 per share
to purchase an aggregate of 2,000,000 shares of Common Stock.
(7) Shares issuable on conversion of the Registrant's outstanding 8%
Convertible Promissory Note due July 23, 1999 in the principal amount of
$10,000,000 together with accrued interest through May 31, 1998 of $159,253
convertible into shares of Common Stock at a conversion price of $5.50 per
share.
(8) The Registration Fee has been calculated pursuant to Rule 457(c) on the
basis of the average of the high and low prices reported on the OTC
Bulletin Board on June 2, 1998.
(9) Includes shares issuable on exercise of the Registrant's outstanding common
stock purchase warrants expiring September 30, 2001 exercisable at $2.00
per share to purchase an aggregate of 236,250 shares of Common Stock.
(10) Includes shares issuable on exercise of the Registrant's outstanding option
expiring October 31, 2001 exercisable at $1.50 per share to purchase an
aggregate of 80,000 shares of Common Stock.
Also registered hereunder pursuant to Rule 416(a) are such indeterminate
number of shares which may be issuable pursuant to the anti-dilution provisions
included in such common stock purchase warrants and promissory notes.
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, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
Subject to Completion, dated June 5, 1998
PROSPECTUS
BLACK WARRIOR WIRELINE CORP.
This Prospectus relates to the resale by the holders thereof of up to an
aggregate of 8,421,392 shares of Common Stock, par value $.0005 per share (the
"Common Stock") of Black Warrior Wireline Corp., a Delaware corporation (the
"Company"). Of the shares of Common Stock to which this Prospectus relates,
1,419,933 shares are issued and outstanding (the "Outstanding Shares"),
3,707,250 shares are issuable on exercise of outstanding common stock purchase
warrants and options (the "Warrants") at exercise prices, as of May 31, 1998,
ranging from $1.50 to $6.50 per share, and 3,294,209 shares are issuable on
conversion of an aggregate of $14.9 million principal amount of the Company's
outstanding convertible promissory notes plus accrued interest thereon (the
"Convertible Notes"). The Outstanding Shares, Warrants and the Convertible Notes
are herein collectively referred to as the "Securities."
The Common Stock is quoted on the OTC Bulletin Board(R) with a trading
symbol of "BWWL." On June 2, 1998, the closing bid quotation of the Common Stock
as reported on the OTC Bulletin Board(R) was $6.281. See "Price Range of Common
Stock; Dividend Policy." The shares of Common Stock are being registered under
the Securities Act of 1933, as amended (the "Securities Act") pursuant to the
terms of agreements entered into by the Company upon issuance of the Securities
granting certain rights to have the shares of Common Stock registered under the
Securities Act. The shares of Common Stock may be offered (the "Offering") for
sale by the holders, their transferees or their pledgees (the "Selling
Securityholders").
The shares of Common Stock may be sold or distributed from time to time by
or for the account of Selling Securityholders through underwriters or dealers,
through brokers or other agents, or directly to one or more purchasers,
including pledgees, at market prices prevailing at the time of sale or at prices
otherwise negotiated. This Prospectus may also be used, with the Company's
consent, by donees of the Selling Securityholders, or by other persons acquiring
shares and who wish to offer and sell such Securities requiring or making
desirable its use. The Company will receive no portion of the proceeds from the
sale of the securities offered hereby, other than the exercise price from any
exercise of the common stock purchase warrants, and will bear certain expenses
incident to their registration. See "Selling Securityholders" and "Plan of
Distribution."
<PAGE>
INVESTORS SHOULD CAREFULLY CONSIDER CERTAIN RISKS AND OTHER CONSIDERATIONS
RELATING TO THE SECURITIES OF THE COMPANY. SEE "RISK FACTORS" STARTING ON PAGE 9
OF THIS PROSPECTUS.
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 PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The Securities were sold by the Company to the Selling Securityholders in
transactions not registered under the Securities Act in reliance upon the
exemption provided in Section 4(2) of the Securities Act and Regulation D under
the Securities Act.
JUNE [_____], 1998
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<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
SECURITYHOLDERS. NEITHER THE DELIVERY OF THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder, and, in accordance therewith, files reports,
proxy and information statements and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy and information
statements and other information concerning the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, Northwest, Washington, DC 20549; and at the Commission's
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and at Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can also be obtained from the Commission at
prescribed rates through its Public Reference Section at 450 Fifth Street,
Northwest, Washington, DC 20549. The Commission maintains a Web site that
contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission and the address
of that Web site is http://www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the securities offered hereby
(including all amendments and supplements thereto, the "Registration
Statement"). This Prospectus, which forms a part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of certain documents are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The Registration
Statement and the exhibits thereto can be inspected and copied at the public
reference facilities and regional offices of the Commission.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, including financial statements, filed by the
Company with the Commission are hereby incorporated by reference in this
Prospectus:
(a) The Annual Report of the Company on Form 10-KSB for the fiscal year
ended December 31, 1997;
(b) The Quarterly Report of the Company on Form 10-QSB for the fiscal
quarter ended March 31, 1998;
(c) The Current Report of the Company on Form 8-K for November 19, 1996,
the Current Report on Form 8-K/A filed February 7, 1997, the Current Report on
Form 8-K for June 6, 1997, the Current Report on Form 8-K/A filed August 21,
1997, the Current Report on Form 8-K for October 9, 1997; the Current Report on
Form 8-K/A filed December 24, 1997; the Current Report on Form 8-K for January
23, 1998; the Current Report on Form 8-K for March 16, 1998; the Current Report
on Form 8-K/A filed May 29, 1998; and Current Report on Form 8-K/A filed June 4,
1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, subsequent to the date of this Prospectus and prior
to the termination of the offering to which this Prospectus relates shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded by this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein 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 this Prospectus.
The Company hereby undertakes to provide without charge copies of all
documents incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference in
such documents) to each person, including any beneficial owner, to whom a copy
of this Prospectus has been delivered on the written or oral request of such
person to:
William L. Jenkins, President
Black Warrior Wireline Corp.
3748 Highway #45 North
Columbus, Mississippi 39701
5
<PAGE>
TABLE OF CONTENTS
Available Information..........................................................4
Incorporation of Certain Information by Reference..............................5
Table of Contents..............................................................6
The Company....................................................................7
Risk Factors...................................................................9
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the
Private Securities Litigation Reform Act of 1995.........................16
Capitalization................................................................17
Price Range of Common Sock; Dividend Policy...................................19
Use of Proceeds...............................................................20
Selling Securityholders.......................................................21
Certain Transactions..........................................................28
Plan of Distribution..........................................................32
Description of Capital Stock..................................................33
Legal Matters.................................................................34
Experts.......................................................................34
Glossary......................................................................35
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THE COMPANY
Black Warrior Wireline Corp. (the "Company") is an oil and gas service
company currently providing various services to oil and gas well operators
primarily in the Black Warrior and Mississippi Salt Dome Basins in Alabama and
Mississippi, the Permian Basin in West Texas and New Mexico, the East Texas and
Austin Chalk Basins in East Texas, the Anadarko Basin in Oklahoma, the Powder
River and Green River Basins in Wyoming and Montana, and the Williston Basin in
North Dakota. The Company's principal lines of business include (a) wireline
services, (b) directional oil and gas well drilling activities, and (c) workover
services. At March 31, 1998, the Company owned 41 operational motor vehicle
mounted wireline units, of which 23 are equipped with a state-of-the-art
computer system, nine are equipped with an earlier generation computer system,
four are analog equipped and five are devoted exclusively to steering tool work.
Also as of March 31, 1998, it owned seven workover rigs.
The Company's recent growth and increased revenues has been principally the
result of five acquisitions completed since November 1996. On November 19, 1996,
the Company acquired the outstanding stock of DynaJet, Inc., which has been
engaged in the wireline business in the Gillette, Wyoming area for more than
eighteen years. Its service area includes the states of Wyoming, South Dakota,
Montana and New Mexico. On June 6, 1997, the Company completed the acquisition
of Production Well Services, Inc. which has been engaged in the wireline
business in southern Alabama and southern Mississippi. On June 9, 1997, the
Company completed the acquisition of Petro-Log, Inc. which has been engaged in
the wireline business in Wyoming, Montana and South Dakota. On October 9, 1997,
the Company completed the acquisition, effective September 1, 1997, of
Diamondback Directional, Inc. ("Diamondback") which has been engaged in
providing directional drilling and other oil and gas well drilling services in
the Texas and Louisiana areas. On December 15, 1997, the Company completed the
acquisition of the assets of Cam Wireline Services, Inc., which provides
wireline services in the Permian Basin.
On March 16, 1998, the Company acquired from Phoenix Drilling Services,
Inc. ("Phoenix") its domestic oil and gas well directional drilling and downhole
survey service business including the related operating assets (such acquisition
is herein referred to as the "Phoenix Acquisition"). The purchase price was
approximately $19.0 million payable in cash at the closing. The operations of
the business acquired are conducted throughout the primary oil and gas producing
areas of the continental United States and employ approximately 100 persons.
Financing for the transaction was obtained through secured borrowings of $9.0
million from a commercial lender and the sale of convertible notes and warrants
to St. James Capital Partners, L.P. ("St. James") for $10.0 million.
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The domestic oil and gas industry has experienced a significant increase in
drilling and workover activity since 1995 which has stimulated the demand for
oil and gas well services, including the services offered by the Company. This
increased activity has been the result of a combination of improved oil and gas
prices and advances in technology. The technological advances in 3-D seismic and
directional drilling in particular have had an impact.
Through its recent acquisition of Diamondback and the completion of the
Phoenix Acquisition, the Company has expanded its activities to include
directional drilling as well as providing downhole steering tools. Directional
drilling entails entering a producing zone directionally, using specialized
drilling equipment, which expands the area of interface with hydrocarbons and
thereby greatly enhancing recoverability. The Company engages in directional
drilling activities as well as providing steering services to other drilling
contractors which do not have "in house" steering tools. The Phoenix Acquisition
also includes the multi-shot downhole well services survey division, which
provides survey services to the oil and gas industry.
In February 1996, the Company began to assemble and install wireline
service equipment on motor vehicles. During the year ended December 31, 1997,
the Company completed four new and seven remanufactured vehicles and its current
plans call for the Company to continue its production at the rate of two
vehicles per month through the remainder of 1998. To date, except for one
vehicle to be delivered in 1998, all of the vehicles produced have been used by
the Company in its operations. The Company may in the future produce and sell
additional vehicles to others. The Company is equipping all new cased hole
wireline trucks with a state-of-the-art computer system.
The Company was incorporated under the laws of the State of Delaware in
1987 under the name Teletek, Ltd. and in June 1989 Teletek, Ltd. merged with a
predecessor of the Company incorporated under the laws of the State of Alabama
and concurrently changed its name to Black Warrior Wireline Corp. The Company
and its predecessors have been engaged in providing wireline and other oil and
gas well support services since 1984.
8
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RISK FACTORS
In addition to the other information set forth elsewhere in this
Prospectus, the following factors relating to the Company should be considered
by prospective investors when evaluating an investment in the securities offered
hereby.
Substantial Indebtedness. At March 31, 1998, the Company's total
indebtedness, including current maturities, was approximately $33.6 million. In
addition the Company has an available borrowing ability of an additional $10.0
million, substantially all of which is expected to be borrowed during the
current year. The Company expects that if it acquires additional oil and gas
well service companies that it may incur additional indebtedness. The Company's
level of indebtedness may pose substantial risks to the Company and the holders
of its securities, including the possibility that the Company may not be able to
refinance such indebtedness or generate sufficient cash flow to pay the
principal of and interest on the indebtedness when due. During the years ending
December 31, 1998 and December 31, 1999, reflecting the indebtedness incurred
through March 31, 1998 the Company is obligated to repay approximately $2.2
million and $8.3 million, respectively, principal amount of such indebtedness,
plus interest payments. The Company anticipates that such indebtedness will be
repaid out of the public or private sale of its debt or equity securities as
well as from its cash flow from operations. There can be no assurance that the
Company will be able to consummate a public or private sale of debt or equity
securities or otherwise be successful in refinancing this indebtedness or that
the terms of any such sale of securities or refinancing may not dilute the
interests of the Company's stockholders.
Restrictions Imposed by Lenders; Secured Borrowing. The Company has
outstanding indebtedness aggregating approximately $19.0 million under a Loan
and Security Agreement (the "Loan Agreement") with Fleet Capital Corporation
("Fleet") dated March 16, 1998. The instruments governing the Company's
indebtedness to Fleet impose significant operating and financial restrictions on
the Company. Such restrictions will affect, and in many respects significantly
limit or prohibit, among other things, the ability of the Company to incur
additional indebtedness, pay dividends, repay indebtedness prior to its stated
maturity, sell assets or engage in mergers or acquisitions. These restrictions
could also limit the ability of the Company to effect future financings, make
needed capital expenditures, withstand a future downturn in the Company's
business or economy in general, or otherwise conduct necessary corporate
activities. A failure by the Company to comply with these restrictions could
lead to a default under the terms of such indebtedness. In the event of default,
Fleet could elect to declare all of the funds borrowed pursuant thereto to be
due and payable together with accrued and unpaid interest. In such event, there
can be no assurance that the Company would be able to make such payments or
borrow sufficient funds from alternative sources to make any such payment. If
the Company were unable to repay all amounts declared due and payable under the
Loan Agreement, Fleet could proceed against the collateral granted to satisfy
the indebtedness and other obligations due
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and payable. If the indebtedness owing to Fleet were to be accelerated, there
can be no assurance that the assets of the Company would be sufficient to repay
in full such indebtedness and the Company's other liabilities. Under such
circumstances, the holders of the Company's Common Stock may realize little or
nothing on their investment in the Company. Even if additional financing could
be obtained, there can be no assurance that it would be on terms that are
favorable or acceptable to the Company. In addition, the Company's indebtedness
under the Loan Agreement is secured by substantially all of the assets of the
Company. The pledge of such collateral to existing lenders could impair the
Company's ability to obtain favorable financing from other sources.
Availability of Trained Personnel. The operation of the wireline,
directional drilling and other oil and gas well service equipment utilized by
the Company requires the services of employees having the technical training and
experience necessary to obtain the proper reports and operational results.
Currently, such personnel are in considerable demand. The number of employees of
the Company has increased from 197 at December 31, 1996 to approximately 280 as
of March 31, 1998, and the Company expects that its number of employees may
increase further to support its anticipated level of operations. The Company's
operations are to a considerable extent dependent upon the continuing
availability of personnel with the necessary level of training and experience to
adequately operate its equipment. The Company has historically experienced a
high rate of employee turnover. In the event the Company should suffer any
material loss of personnel to competitors or be unable to employ additional or
replacement personnel with the requisite level of training and experience to
adequately operate its equipment its operations could be adversely affected.
While the Company believes that its wage rates are competitive and that its
relationship with its workforce is good, a significant increase in the wages
paid by other employers could result in a reduction in the Company's workforce,
increases in wage rates, or both. If either of these events occurred for a
significant period of time, the Company's revenues could be impaired.
Dependence on Volatile Oil and Gas Industry. Demand and prices for the
Company's services depend upon the level of activity in the oil and gas
exploration and production industry in those areas of the United States where
the Company offers its services. This activity depends upon numerous factors
over which the Company has no control, including the level of oil and gas
prices, expectations about future oil and gas prices, the ability of the
Organization of Petroleum Exporting Countries ("OPEC") to set and maintain
production levels and prices, the cost of exploring for, producing and
delivering oil and gas, the level and price of foreign imports of oil and
natural gas, the discovery rate of new oil and gas reserves, available pipeline
and other oil and gas transportation capacity, worldwide weather conditions,
international political, military, regulatory and economic conditions and the
ability of oil and gas companies to raise capital. Recently, oil prices have
decreased primarily as a result of, among other things, decreased international
demand and economic uncertainty in the Far East. Domestic exploration activity
10
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also has been particularly affected by an increase in the exploration and demand
for gas. The level of drilling activity in the onshore oil and gas exploration
and production industry in the United States has been volatile and no assurance
can be given that current levels of oil and gas exploration activities in the
areas where the Company offers its services will continue or that demand for the
Company's services will correspond to the level of activity in the industry
generally. Further, any material changes in the demand for or supply of natural
gas could materially impact the demand for the Company's services. Prices for
oil and gas are expected to continue to be volatile and to affect the demand for
and pricing of the Company's services. A material decline in oil or gas prices
or industry activity in the United States could have a material adverse effect
on the Company's results of operations and financial condition.
Market Conditions Affecting Demand for the Company's Services. The oil and
gas well service industry has been recently characterized by an increased level
of demand for wireline, directional drilling, recompletion and other oil and gas
well services and a limited supply of equipment available to perform these
services in a timely manner. The industry has been characterized by substantial
fluctuations in the demand for such services and the supply of equipment. There
can be no assurance that this increased level of demand for services will
continue. Recent declines in prices for oil and gas can be expected to impact
the Company's revenues. The Company's revenues in the future also can be
expected to be impacted to a material extent not only by the demand throughout
the industry but the supply of oil and gas well service equipment available to
operators to perform these services. The Company's revenues could be adversely
affected by a substantial increase in the equipment available to other providers
of oil and gas well services to perform these services.
Dependence on Major Customers. Historically, a large portion of the
Company's revenues has been generated from a relatively small number of
companies. While the Company believes its relationship with its customers is
good, the loss of any of its principal customers, or a significant reduction in
business done with the Company by these customers, if not offset by revenues
from new or existing customers, could have a material adverse effect on the
Company's business, results of operations and prospects.
Substantial Control by Principal Investor. As of May 31, 1998, St. James,
including its affiliates and limited partners, held promissory notes of the
Company convertible into an aggregate of 3,294,209 shares of Common Stock and
held warrants to purchase an additional 3,391,000 shares of Common Stock. Upon
conversion of the notes and exercise of the warrants, St. James would hold an
aggregate of 6,685,209 shares representing approximately 69% of the Company's
shares of Common Stock then outstanding. In addition, St. James has certain
additional contractual rights which, among other things, give to St. James the
right to nominate one person for election to the Company's Board of Directors,
certain preferential rights to provide future financings for the Company,
subject to certain exceptions, prohibitions against the Company consolidating,
merging or entering into a share exchange with
11
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another person, with certain exceptions, without the consent of St. James. St.
James has agreed to convert an aggregate of $4.9 million principal amount of its
notes into an aggregate of 1,353,257 shares of Common Stock (approximately 31%
of the shares then issued and outstanding) at such time as the Company files a
registration statement under the Securities Act of 1933, as amended, relating to
the shares of Common Stock issuable on conversion and exercise of all the notes
and warrants held by St. James, and such registration statement is declared
effective. The foregoing give St. James the ability to exert significant
influence over the business and affairs of the Company. The interests of St.
James may not always be the same as the interests of the Company's other
securityholders.
Under the terms of the Company's Loan Agreement with Fleet, in the event
that St. James ceases to own and control beneficially and of record (a) at least
55% of each class of issued and outstanding capital stock of the Company (on a
fully diluted basis) prior to a secondary public offering of stock or other
securities acceptable to Fleet, or (b) pursuant to a secondary public offering
of capital stock (or other securities acceptable to Fleet), at least 30% of each
class of issued and outstanding capital stock of the Company (on a fully diluted
basis), the Company will be in breach of a covenant in the Loan Agreement. In
order to remain in compliance with the foregoing covenant, prior to a secondary
public offering of stock or other securities acceptable to Fleet, St. James must
continue to own and control not less than 2,388,932 shares of Common Stock, on
the basis of the number of shares of Common Stock and options, warrants and
convertible securities outstanding on March 31, 1998. Under such circumstances,
if St. James no longer owned and controlled beneficially that number of shares,
at the option of Fleet, the indebtedness outstanding under the Loan Agreement
would become immediately due and payable. See "Risk Factors - Substantial
Indebtedness" and "- Restrictions Imposed by Lenders."
Acquisition Activity Dependent Upon Availability of Capital. Since November
1996, the Company's growth has been substantially impacted by the acquisition of
other oil and gas well service businesses. The Company intends to continue to
seek to expand its business through further acquisitions. In order to complete
additional acquisitions, the Company will need to have available to it on
acceptable terms the capital necessary to meet the purchase price for any
businesses acquired. Financing obtained to date has included borrowings secured
by substantially all of the Company's assets. Additionally, the Company's
acquisition activity will be substantially dependent upon stock market
conditions in general as well as the price for its common equity being such as
to enable its securities to be used in completing such transactions. In the
event the Company should be unable to raise additional capital or stock market
or other economic conditions become unfavorable, the Company may be unable to
pursue its business strategy of acquiring additional companies in the oil and
gas well service industry.
12
<PAGE>
Availability and Assimilation of Acquisitions. The Company's growth has
been enhanced materially by strategic acquisitions that have substantially
increased the Company's operating activities and revenues. While the Company
believes that the oil and gas wireline service and drilling industry is highly
fragmented and that significant acquisition opportunities are available, there
can be no assurances that suitable acquisition candidates can be found, and the
Company faces increased competition from other companies for available
acquisition opportunities. If the prices paid by other buyers for the available
acquisition opportunities continue to rise, the Company may find fewer
acceptable acquisition opportunities. The Company may elect or be required to
incur substantial indebtedness to finance future acquisitions and also may issue
equity securities or convertible securities in connection with such
acquisitions. Additional debt service requirements could represent a significant
burden on the Company's results of operations and financial condition, and the
issuance of additional equity or convertible securities could result in dilution
to stockholders. In addition, there can be no assurance that the Company will
successfully integrate the operations and assets of its recent or any future
acquisition with its own, that the Company's management will be able to manage
effectively the growth and increased size of the Company or that the Company
will be successful in deploying wireline service and other equipment acquired by
it or in maintaining the crews and market share attributable to wireline service
and other equipment acquired by the Company. Any failure by the Company to
successfully effect and implement its acquisition strategy could have a material
adverse effect on the Company's future results of operations and financial
condition.
Competition. The wireline, directional drilling, workover and well
servicing industry is a highly-fragmented, intensely competitive and cyclical
business. A number of large and small contractors provide competition in all
areas of the Company's business. The wireline service trucks and other equipment
used is mobile and can be moved from one region to another in response to
increased demand. Many of the Company's competitors have greater financial
resources than the Company, which may enable them to better withstand industry
downturns, to compete more effectively on the basis of price, and to acquire
existing or new equipment.
Labor Shortages. Increases in domestic drilling demand since mid-1995 and
increases in oil and gas service activities have resulted in a shortage in many
areas of qualified personnel in the industry. These shortages make it more
difficult for the Company and other contractors to utilize available equipment
and to retain crews. If the Company is unable to attract and retain sufficient
qualified personnel, its ability to market and operate its equipment will be
restricted, which could have a material adverse effect on the Company's results
of operations. Further, wage rates of qualified crews have begun to rise in the
oil and gas service industry in response to the increasing competition, which
could ultimately have the effect of reducing the Company's operating margins and
results of operations.
13
<PAGE>
Operating Hazards and Uninsured Risks. The Company's oil and gas well
service operations are subject to the many hazards inherent in the oil and gas
drilling and production industry. These hazards can result in personal injury
and loss of life, severe damage to or destruction of property and equipment,
pollution or environmental damage and suspension of operations. The Company
maintains insurance protection as it deems appropriate. Such insurance coverage,
however, may not in all situations provide sufficient funds to protect the
Company from all liabilities that could result from its operations.
Environmental Risks. The Company is subject to numerous domestic
governmental regulations that relate directly or indirectly to its operations,
including certain regulations controlling the discharge of materials into the
environment, requiring removal and cleanup under certain circumstances, or
otherwise relating to the protection of the environment. Laws and regulations
protecting the environment have become more stringent in recent years and may in
certain circumstances impose "strict liability" and render a company liable for
environmental damage without regard to negligence or fault on the part of such
company. Such laws and regulations may expose the Company to liability for the
conduct of, or conditions caused by, others, or for acts of the Company that
were in compliance with all applicable laws at the time such acts were
performed. The application of these requirements or the adoption of new
requirements could have a material adverse effect on the Company.
Seasonality and Weather Risks. The Company's operations in the Rocky
Mountain area and certain other of its service areas are subject to seasonal
variations in weather conditions and daylight hours. Since the Company's
activities take place outdoors, the average number of hours worked per day, and
therefore the number of wells serviced per day, generally is less in winter
months than in summer months, due to an increase in snow, rain, fog and cold
conditions and a decrease in daylight hours. Furthermore, demand for the
Company's wireline services by oil and gas companies in the first quarter is
generally lower than at other times of the year. As a result, the Company's
revenue and gross profit during the first quarter of each year are typically low
as compared to the other quarters.
Dependence on Key Personnel. The Company's success depends on, among other
things, the continued active participation of William L. Jenkins, President,
Allen R. Neel, Executive Vice-President, Danny Ray Thronton, Vice-President,
Operations, and certain of the Company's other officers and key operating
personnel. The loss of the services of any one of these persons could have a
material adverse effect on the Company. The Company has entered into employment
agreements with each of its executive officers, including Messrs. Jenkins
(through September 1999) and Thornton and Neel (through April 1, 2000), and has
purchased "key-man" life insurance with respect to Mr. Jenkins.
14
<PAGE>
Absence of Dividends. The Company has not declared or paid any cash
dividends on the Common Stock and currently anticipates that, for the
foreseeable future, any earnings will be retained for the development of the
Company's business. Accordingly, no cash dividends are contemplated to be
declared or paid on the Common Stock. In addition, the Company's existing loan
agreements prohibit the payment of cash dividends. See "Price Range of Common
Stock; Dividend Policy."
15
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE
"SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
With the exception of historical matters, the matters discussed in this
Prospectus are "forward-looking statements" as defined under the Securities
Exchange Act of 1934, as amended, that involve risks and uncertainties.
Forward-looking statements include, but are not limited to, statements under the
heading "Risk Factors - Substantial Indebtedness," "-Restrictions Imposed by
Lenders; Secured Borrowing," "- Availability of Trained Personnel," "-
Dependence on Major Customers," "- Dependence on Volatile Oil and Gas Industry,"
"- Market Conditions Affecting Demand for the Company's Services," "-
Acquisition Activity Dependent Upon Availability of Capital," "- Availability
and Assimilation of Acquisitions," "- Labor Shortages," "- Operating Hazards and
Uninsured Risks," "- Environmental Risks," and "- Seasonality and Weather
Risks." Such forward-looking statements relate to the Company's ability to
attain and maintain profitability and cash flow, the stability of and future
prices for oil and gas, pricing in the oil and gas services industry and the
ability of the Company to compete in the premium services market, the ability of
the Company to expand through acquisitions and to redeploy its equipment among
regional operations, the ability of the Company to upgrade, modernize and expand
its equipment, including its wireline fleet, the ability of the Company to
expand its tubing conveyed perforating services, the ability of the Company to
provide services using the newly acquired state of the art tooling, and the
ability of the Company to raise additional capital to meet its requirements and
to obtain additional financing, its ability to successfully implement its
business strategy, and its ability to maintain compliance with the covenants of
its various loan documents and other agreements pursuant to which securities
have been issued. Declines in the market prices for oil and gas may have an
adverse impact on the Company's revenues for the year ended December 31, 1998.
The inability of the Company to meet its objectives or the consequences on the
Company from adverse developments in general economic conditions, adversed
developments in the oil and gas industry, and other factors could have a
material adverse effect on the Company. The Company cautions readers that
various risk factors referred to herein could cause the Company's operating
results to differ materially from those expressed in any forward-looking
statements made by the Company and could adversely affect the Company's
financial condition and its ability to pursue its business strategy.
16
<PAGE>
CAPITALIZATION
The following table sets forth the cash and cash equivalents and the
capitalization of the Company (i) at March 31, 1998 and (ii) as adjusted on a
pro forma basis to reflect pursuant to its agreement with the Company the
conversion by St. James of $4,900,000 of outstanding indebtedness into an
aggregate of 1,353,258 as if such conversion took place on March 31, 1998. This
information should be read in conjunction with the financial statements of the
Company incorporated herein by reference. Dollar amounts in the table are in
thousands.
<TABLE>
<CAPTION>
AS OF MARCH 31, 1998
-------------------------------------------------------------------------------
THE COMPANY PRO FORMA
HISTORICAL (1) DEBT CONVERSION (2) AS ADJUSTED (3)
-------------------------- ------------------------- --------------------------
<S> <C> <C> <C>
Cash and equivalents $1,948 $1,948
========================== ========================= ==========================
Total debt, including current
portion (4):
Notes payable to related parties $18,071 $(4,900) $13,171
Long-term debt and capital
lease obligations 15,129 15,129
Mortgage notes payable,
related parties 380 380
Other debt 194 194
-------------------------- ------------------------- --------------------------
TOTAL DEBT 33,774 (4,900) 28,874
-------------------------- ------------------------- --------------------------
Stockholders' equity:
Preferred Stock, $0.0005 par
value, 2,500,0009 shares
authorized, -0- shares issued
and outstanding
Common Stock, $0.0005 par value,
12,500,000 shares authorized,
2,990,254 and 4,343,512
shares issued and outstanding
at March 31, 1998 on an
historical and pro forma as
adjusted basis, respectively 2 2
Additional paid-in capital 11,160 4,900 16,060
Accumulated deficit (1,695) (1,695)
Treasury stock, at cost,
814,626 shares (583) (583)
-------------------------- ------------------------- --------------------------
TOTAL STOCKHOLDERS' EQUITY 8,884 4,900 13,784
-------------------------- ------------------------- --------------------------
TOTAL CAPITALIZATION $42,658 $42,658
========================== ========================= ==========================
</TABLE>
17
<PAGE>
- ----------
(1) Reflects the Company's cash and cash equivalents, total debt, total
stockholders' equity and total capitalization at March 31, 1998.
(2) Assumes conversion by St. James of $4,900 of indebtedness into 1,353,258
shares of Common Stock as more fully described in "Certain Transactions."
(3) This table does not reflect the effects on the Company's capitalization
that would result from the exercise of all outstanding warrants and the
conversion of all outstanding convertible debt.
(4) Includes the current portions of long-term debt.
18
<PAGE>
PRICE RANGE OF COMMON STOCK; DIVIDEND POLICY
The Company's Common Stock is quoted in the OTC Bulletin Board under the
trading symbol BWWL. The following table sets forth the bid prices for the
Company's Common Stock for the periods indicated as provided by the OTC Bulletin
Board:
<TABLE>
<CAPTION>
BID PRICES
--------------------------------------------
1996 HIGH LOW
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
First Quarter $6.50 $2.00
Second Quarter $6.50 $4.00
Third Quarter $6.50 $1.06
Fourth Quarter $4.55 $1.75
<CAPTION>
BID PRICES
--------------------------------------------
1997 HIGH LOW
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
First Quarter $4.44 $2.75
Second Quarter $4.19 $2.56
Third Quarter $6.81 $3.13
Fourth Quarter $9.63 $6.00
<CAPTION>
BID PRICES
--------------------------------------------
1998 HIGH LOW
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
First Quarter $8.00 $5.88
Second Quarter $8.00 $6.28
(through June 2)
</TABLE>
The foregoing amounts represent inter-dealer quotations without adjustment
for retail markups, markdowns or commissions, and do not represent the prices of
actual transactions. On June 2, 1998, the closing bid quotation for the Common
Stock, as reported by the OTC Bulletin Board, was $6.281.
As of March 31, 1998, the Company had approximately 345 shareholders of
record and believes it has in excess of 500 beneficial holders of its Common
Stock, including in excess of 350 holding 100 shares or more. The Company has
never paid a cash dividend on its Common Stock and management has no present
intention of commencing to pay dividends.
19
<PAGE>
USE OF PROCEEDS
This Prospectus relates solely to the securities being offered and sold for
the account of the Selling Securityholders. The Company will not receive any of
the proceeds from the sale of the securities being offered by the Selling
Securityholders but will pay all expenses related to the registration of the
securities. The proceeds, if any, received from the exercise of any Warrants
included among the Securities will be used for general corporate purposes. If
all the Warrants were exercised at their current exercise prices, the Company
would receive proceeds of approximately $16,782,708. There can be no assurance
that any of such Warrants will be exercised. See "Selling Securityholders."
20
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth the aggregate numbers of securities
beneficially owned by each Selling Securityholder as of May 31, 1998 and the
aggregate number of securities registered hereby that each Selling
Securityholder may offer and sell pursuant to this Prospectus. Because the
Selling Securityholders may sell all or a portion of the securities at any time
and from time to time after the date hereof, no estimate can be made of the
number of shares of Common Stock that each Selling Securityholder may retain
upon the completion of the Offering. See "Certain Transactions" for information
as to certain material relationships between certain of the Selling
Securityholders and the Company. The shares of Common Stock have been included
in this Prospectus pursuant to contractual rights granted to the Selling
Securityholders to have their shares of Common Stock registered under the
Securities Act, which contractual rights contain, with respect to certain of the
Selling Securityholders, mutual indemnification provisions.
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES
COMMON STOCK OF COMMON STOCK
BENEFICIALLY OWNED OFFERED FOR SELLING
NAME OF SELLING SECURITYHOLDER PRIOR TO THIS OFFERING SECURITYHOLDERS' ACCOUNT
- ---------------------------------------------------- ----------------------------- -----------------------------
<S> <C> <C>
St. James Capital Partners, L.P. 1,447,072 (1) 1,447,072 (1)
SJMB, L.P. 1,662,423 (2) 1,662,423 (2)
Falcon Seaboard
Investment Company, L.P. 184,714 (2) 184,714 (2)
St. James Capital Corp. 168,999 (3) 168,999 (3)
SV Capital Partners, L.P. 192,422 (3) 192,422 (3)
Charles E. Underbrink 57,348 (3) 57,348 (3)
Charles E. Underbrink Irrevocable Trust 10,000 (3) 10,000 (3)
Dated October 10, 1992 FBO
Piper Aurora Rosales Underbrink
Guadalupe Funding Company 50,512 (3) 50,512 (3)
Thomas M. Vertin 34,997 (3) 34,997 (3)
Dennis J. LaValle 28,864 (3) 28,864 (3)
Ronald E. Clark 14,432 (3) 14,432 (3)
Equity Resource Group of Indian River 24,052 (3) 24,052 (3)
County, Inc.
Blake T. Liedtke 24,052 (3) 24,052 (3)
Harry H. Cullen 12,026 (3) 12,026 (3)
George V. Burkholder 6,013 (3) 6,013 (3)
1959 Trust for Robert Tilly Arnold 4,810 (3) 4,810 (3)
Isaac Arnold, Jr. 4,810 (3) 4,810 (3)
Pinkye Lou Blair Estate Trust 2,405 (3) 2,405 (3)
The Lillie C. Cullen Estate Trust for 2,405 (3) 2,405 (3)
Isaac Arnold, Jr.
The Hugh Roy Cullen Estate Trust for 2,405 (3) 2,405 (3)
Isaac Arnold, Jr.
Todd M. Binet 2,405 (3) 2,405 (3)
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES
COMMON STOCK OF COMMON STOCK
BENEFICIALLY OWNED OFFERED FOR SELLING
NAME OF SELLING SECURITYHOLDER PRIOR TO THIS OFFERING SECURITYHOLDERS' ACCOUNT
- ---------------------------------------------------- ----------------------------- -----------------------------
<S> <C> <C>
James W. Hanson 2,405 (3) 2,405 (3)
E. Scott Crist 962 (3) 962 (3)
Titus H. Harris, Jr. 2,405 (3) 2,405 (3)
Alan D. Feinsilver 24,052 (3) 24,052 (3)
Michael J. Reilly 1,203 (3) 1,203 (3)
James G. Reilly 4,810 (3) 4,810 (3)
The Douglas B. Marshall Management Trust 9,622 (3) 9,622 (3)
The Robert J. Barnhart Revocable Trust 9,622 (3) 9,622 (3)
Arnold Corporation 12,026 (3) 12,026 (3)
Antar & Co. 31,268 (3) 31,268 (3)
David Ball Trust, UTD 12/16/88 3,607 (3) 3,607 (3)
James A. Belushi as TTEE of 4,810 (3) 4,810 (3)
J.A. Belushi Declaration of Trust
U/A/D 12/21/90
John Bramsen 24,052 (3) 24,052 (3)
Katherine H. Buchanan 2,406 (3) 2,406 (3)
Woodrow Chamberlain 14,432 (3) 14,432 (3)
Cole Family Trust 1,203 (3) 1,203 (3)
James M. Connelly 1,203 (3) 1,203 (3)
David J. Doerge Trust 4,810 (3) 4,810 (3)
Mark D. Dorian 4,810 (3) 4,810 (3)
Shanna M. Foster Trust 1,203 (3) 1,203 (3)
Victoria M. Foster Trust 1,203 (3) 1,203 (3)
Diane & Edward Gerch 1,203 (3) 1,203 (3)
Lakeside Capital, LLC 24,052 (3) 24,052 (3)
Ronald J. Judy 96,211 (3) 96,211 (3)
Russell E. Leatherby, Tee R and S Leatherby 2,406 (3) 2,406 (3)
Living Trust
Mary Pat Lucas, IRA 1,203 (3) 1,203 (3)
R. & J. Lucas Living Trust 19,242 (3) 19,242 (3)
Robert Kent Lucas, IRA 1,203 (3) 1,203 (3)
D. Michael Meyer 4,810 (3) 4,810 (3)
Mark S. Mooschekian 2,886 (3) 2,886 (3)
Ted Mooschekian Family Trust 2,406 (3) 2,406 (3)
Neff Family Trust 9,622 (3) 9,622 (3)
Mesirow Financial Inc. Cust. FBO: 4,810 (3) 4,810 (3)
Thomas Phillipsborn IRA
Marcie K. Steffes Pfingsten 1,443 (3) 1,443 (3)
Michael J. and Gloria G. Plautz 2,406 (3) 2,406 (3)
Charles Reeder 4,810 (3) 4,810 (3)
Gregory A. Reid 1,443 (3) 1,443 (3)
Evan Davis Ritchie 1,203 (3) 1,203 (3)
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES
COMMON STOCK OF COMMON STOCK
BENEFICIALLY OWNED OFFERED FOR SELLING
NAME OF SELLING SECURITYHOLDER PRIOR TO THIS OFFERING SECURITYHOLDERS' ACCOUNT
- ---------------------------------------------------- ----------------------------- -----------------------------
<S> <C> <C>
S.B. Partners 48,106 (3) 48,106 (3)
Lenore M. Schmick Trust 38,484 (3) 38,484 (3)
James A. Shepherdson 1,203 (3) 1,203 (3)
Mary M. Sievers 4,810 (3) 4,810 (3)
Avery J. Stone Trust 9,622 (3) 9,622 (3)
Jessica M. Swift and Douglas B. Nelson 14,432 (3) 14,432 (3)
Shepard C. Swift Trust 19,242 (3) 19,242 (3)
Tarrson Foundation 7,215 (3) 7,215 (3)
E.B. Tarrson 48,106 (3) 48,106 (3)
E.B. Tarrson CRAT(1) 14,432 (3) 14,432 (3)
E.B. Tarrson CRAT(3) 14,432 (3) 14,432 (3)
Ronald E. Tarrson 48,106 (3) 48,106 (3)
Steven Tarrson Trust 4,818 (3) 4,818 (3)
Gregory M. Tomlinson 1,203 (3) 1,203 (3)
Roderick S. Walker 2,406 (3) 2,406 (3)
Thomas L. Whitney 4,818 (3) 4,818 (3)
Stephen P. Vertin 1,924 (3) 1,924 (3)
D & C Zellner Revocable Trust DTD 6/25/87 12,026 (3) 12,026 (3)
Arnold Corporation 100,000 100,000
Barbara C. Bailey 2,000 2,000
Lee C. Blask 2,000 2,000
Darrell Blandford 5,000 5,000
Kelly D. Bolin 2,000 2,000
William M. Bouyer 2,000 2,000
Michael R. Burns 5,000 5,000
Holden W. Burrow 2,500 2,500
Chifam, Ltd. 5,000 5,000
Jerald S. Cobbs 3,000 3,000
Tracey D. Conwell 20,000 20,000
Mary H. Cooper 4,000 4,000
James C. Dale 2,000 2,000
Richard H. Davis 4,000 4,000
Phillip V. Duggan 2,000 2,000
Robert D. Duncan 5,000 5,000
Anthony V. Fabbie 1,000 1,000
Brad Farr 1,500 1,500
Roy J. Farr 1,000 1,000
George R. Farris 4,000 4,000
W. Scott Fourtney 1,000 1,000
G.G. Moore III Limited Family Partnership 4,000 4,000
Sheldon C. Garrett 4,000 4,000
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES
COMMON STOCK OF COMMON STOCK
BENEFICIALLY OWNED OFFERED FOR SELLING
NAME OF SELLING SECURITYHOLDER PRIOR TO THIS OFFERING SECURITYHOLDERS' ACCOUNT
- ---------------------------------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Cowen & Co. Custodian FBO 5,000 5,000
Robert Garrison IRA
Robert Garrison 45,000 45,000
Bobby Small & Mark Nelson Trustees 12,000 12,000
Gemini Plumbing Trust
Gary Gerhart 4,000 4,000
Giannukos Family Trust 10,000 10,000
Cowen & Co. Custodian FBO 4,500 4,500
James N. Giannukos
John & Lesli Giannukos 4,000 4,000
Lesli Laneri Giannukos 1,000 1,000
Cowen & Co. Custodian FBO 12,000 12,000
Victoria P. Giannukos IRA
Marymargaret Giglio 5,000 5,000
Cowen & Co. Custodian FBO 6,000 6,000
Diane D. Goodwin IRA
Roger Goodwin 10,000 10,000
Katherin F. Grabill 1,000 1,000
William James Graber 1,500 1,500
James Michael Haggar 4,500 4,500
Marc Haggar 3,000 3,000
Sue M. Harris 15,000 15,000
Titus H. Harris, Jr. 12,500 12,500
Jeff T. Harvey 1,000 1,000
Cowen & Co. Custodian FBO 1,000 1,000
Jeff T. Harvey IRA
James M. Henderson 7,000 7,000
J. Webb Jennings III 1,000 1,000
KDM I Properties, Ltd., Inc. 5,000 5,000
Michael M. Kelley 10,000 10,000
David Kelly & Linda Kelly 10,000 10,000
Cowen & Co. Custodian FBO 2,000 2,000
Stuart R. Kensinger IRA
Cowen & Co. Custodian FBO 1,000 1,000
Brit W. King IRA
Cowen & Co. Custodian FBO 1,000 1,000
Nanette F. King IRA
Neil Lande 7,200 7,200
Neil Lande Custodian for Carol Lande 2,700 2,700
Neil Lande Custodian for Lynne Lande 2,700 2,700
Neil Lande Custodian for Sara Lande 2,700 2,700
Neil Lande Custodian for Stephen Lande 2,700 2,700
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES
COMMON STOCK OF COMMON STOCK
BENEFICIALLY OWNED OFFERED FOR SELLING
NAME OF SELLING SECURITYHOLDER PRIOR TO THIS OFFERING SECURITYHOLDERS' ACCOUNT
- ---------------------------------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Judith P. Latta 5,000 5,000
Doug C. Launius 15,000 15,000
William D. Lowrey 2,000 2,000
Paul Michael Mann 5,000 5,000
Whitney C. Mann 2,000 2,000
A. Nelson McCarter 8,000 8,000
Theron C. McLaren 4,000 4,000
Pat McPhearson 3,000 3,000
Meridian Fund, Ltd. 20,000 20,000
Cowen & Co. Custodian FBO 1,000 1,000
Don K. Milner, Jr. SEP IRA
David W. Moore 3,000 3,000
Mary Lee Moore 3,000 3,000
Cowen & Co. Custodian FBO 1,000 1,000
Jerry Moren SEP IRA
Ewell H. Muse III 4,000 4,000
Mark Nelson 3,500 3,500
Carla H. Northington 10,000 10,000
McCann H. Northington 3,000 3,000
Mona Gay Northington 3,000 3,000
Thomas P. Northington 10,000 10,000
Gerald Opatrny 1,000 1,000
Peka, Ltd. 10,000 10,000
Pinkye Lou Blair Estate Trust 8,000 8,000
Danny D. Pounds 10,000 10,000
Michael H. Richmond 6,000 6,000
Cowen & Co. Custodian FBO 4,000 4,000
Louis Rosen IRA
George Santikos 1,000 1,000
Paula L. Santoski 10,000 10,000
Robert J. Santoski 10,000 10,000
Michael Schelbert 1,000 1,000
Lester H. Soresby, Jr. 1,000 1,000
Donald K. Springer 4,000 4,000
Michael H. Tyson 2,000 2,000
John Urbanik 1,000 1,000
Kase Velasco 1,000 1,000
Nathan D. Webb III 1,000 1,000
Cowen & Co. Custodian FBO 4,000 4,000
Richard C. Webb IRA
Robert J. Wilson 5,000 5,000
Shirley C. Wozencraft Goodwin 5,500 5,500
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
TOTAL NUMBER OF SHARES
COMMON STOCK OF COMMON STOCK
BENEFICIALLY OWNED OFFERED FOR SELLING
NAME OF SELLING SECURITYHOLDER PRIOR TO THIS OFFERING SECURITYHOLDERS' ACCOUNT
- ---------------------------------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Farrile Young III 2,000 2,000
Bill J. Zaleski 5,000 5,000
Matthew Zaleski & Piper H. Zaleski 2,000 2,000
Scott M. Zaleski 1,000 1,000
Bendover Corp. 647,569 647,569
Douglas Nelson and Jessica Swift 27,273 27,273
Peter Huizenga 54,545 54,545
PAL Investments, LLC 27,273 27,273
Woody Chamberlain 9,091 9,091
Thomas Whitney 9,091 9,091
Douglas Heltne 40,000 40,000
Joseph Fant 9,091 9,091
Selma Seider 1,500 (4) 1,500 (4)
Mark Flanders 750 (4) 750 (4)
Roger Loeb 750 (4) 750 (4)
Delaware Trust 3,750 (4) 3,750 (4)
Robert Runyon 1,500 (4) 1,500 (4)
Helen Margulies 1,500 (4) 1,500 (4)
B. and E. Deeds 7,500 (4) 7,500 (4)
Rebecca Plevinsky 1,500 (4) 1,500 (4)
Cary Fishman 750 (4) 750 (4)
Lena Giordano 750 (4) 750 (4)
Jane Prall 750 (4) 750 (4)
Martha Heyman 2,250 (4) 2,250 (4)
Henry Klein 1,500 (4) 1,500 (4)
Rebecca Goldman 1,500 (4) 1,500 (4)
Lorin Silverman 15,000 (4) 15,000 (4)
Stewart Cahn 37,500 (4) 37,500 (4)
Henry Hoffman 67,500 (4) 67,500 (4)
Morgan Devin Everett & Co., Ltd. 39,375 (4) 39,375 (4)
International Trust Company of Bermuda, Ltd. 39,375 (4) 39,375 (4)
Mansfield Soderberg & Co., Ltd. 39,375 (4) 39,375 (4)
Pangaea Investment Consultants, Ltd. 39,375 (4) 39,375 (4)
Robert Weston 7,500 (3) 7,500 (3)
T. Marshall Swartwood 40,000 (5) 40,000 (5)
Swartwood, Hesse Inc. 40,000 (5) 40,000 (5)
SJMB, L.P 1,800,000 (6) 1,800,000 (6)
Falcon Seaboard 200,000 (6) 200,000 (6)
Investment Company, L.P.
</TABLE>
26
<PAGE>
(1) Includes an aggregate of 1,447,072 shares issuable on conversion of $4.9
million of convertible notes held by St. James Capital Partners, L.P. and
accrued interest thereon through May 31, 1998 aggregating $470,636. St.
James Capital Partners has agreed to convert $4.9 million principal amount
into 1,353,258 shares of Common Stock on the effective date of the
registration statement of which this Prospectus is a part. Under the terms
of the Company's Loan Agreement with Fleet, in the event that St. James
ceases to own and control beneficially and of record (a) at least 55% of
each class of issued and outstanding capital stock of the Company (on a
fully diluted basis) prior to a secondary public offering of stock or other
securities acceptable to Fleet, or (b) pursuant to a secondary public
offering of capital stock (or other securities acceptable to Fleet), at
least 30% of each class of issued and outstanding capital stock of the
Company (on a fully diluted basis), the Company will be in breach of a
covenant in the Loan Agreement. In order to remain in compliance with the
foregoing covenant, prior to a secondary public offering of stock or other
securities acceptable to Fleet, St. James must continue to own and control
not less than 2,388,932 shares of Common Stock, on the basis of the number
of shares of Common Stock and options, warrants and convertible securities
outstanding on March 31, 1998. Under such circumstances, if St. James no
longer owned and controlled beneficially that number of shares, at the
option of Fleet, the indebtedness outstanding under the Loan Agreement
would become immediately due and payable. See "Risk Factors - Substantial
Indebtedness" and "- Restrictions Imposed by Lenders."
(2) Includes an aggregate of 1,662,423 shares issuable on conversion of $9.0
million of convertible notes held by SJMB, L.P., an affiliate of St. James
Capital Partners, L.P. and accrued interest thereon through May 31, 1998
and 184,714 shares issuable on conversion of $1.0 million of convertible
notes held by Falcon Seaboard Investment Company, L.P. and accrued interest
thereon through May 31, 1998.
(3) Shares issuable on exercise of outstanding common stock purchase warrants
originally issued in transactions with St. James entered into on June 6,
1997 and October 9, 1997 (the "St. James Warrants") of which an aggregate
of 666,000 warrants are exercisable at $2.75 per share and 725,000 warrants
are exercisable at $4.63 per share.
(4) Shares issuable on exercise of outstanding common stock purchase warrants
exercisable at $2.00 per share.
(5) Shares issuable on exercise of outstanding options exercisable at $1.50 per
share. Herein such options are referred to as the "$1.50 Options."
(6) Shares issuable on exercise of outstanding common stock purchase warrants
at an exercise price of $5.50 per share.
27
<PAGE>
CERTAIN TRANSACTIONS
Commencing in June 1997 through March 31, 1998, the Company entered into a
series of transactions with St. James whereby the Company sold to St. James on
the following dates for an aggregate purchase price of $14.9 million, the
following securities:
<TABLE>
<CAPTION>
DATE SECURITY PRINCIPAL AMOUNT
---- -------- ----------------
<S> <C> <C>
June 6, 1997 9% Convertible Promissory Note $2.0 million (1)
October 9, 1997 7% Convertible Promissory Note $2.9 million (2)
January 23, 1998 8% Convertible Promissory Note $10.0 million(3)
<CAPTION>
DATE NUMBER OF WARRANTS (4) EXERCISE PRICE EXPIRATION DATE
---- ---------------------- -------------- ---------------
<S> <C> <C> <C>
June 6, 1997 666,000 $2.75(5) June 5, 2002
October 9, 1997 725,000 $4.6327(5) October 10, 2002
January 23,1998 2,000,000 $5.50(5) (6) January 23, 2003
</TABLE>
- ----------
(1) Convertible at a current exercise price of $2.75 per share, subject to
anti-dilution adjustments, into an aggregate of 727,272 shares of Common
Stock. Effective June 5, 1998, the conversion price increases to $3.75 per
share.
(2) Convertible at an exercise price of $4.6327 per share, subject to
anti-dilution adjustments, into an aggregate of 625,985 shares of Common
Stock.
(3) Convertible at an exercise price of $5.50 per share, as adjusted and
subject to further anti-dilution adjustments, into an aggregate of
1,847,137 shares of Common Stock.
(4) Each warrant represents the right to purchase one share of Common Stock at
the exercise price.
(5) As adjusted and subject to further anti-dilution adjustment.
(6) Adjusted exercise price pursuant to anti-dilution adjustments.
On each of June 6, 1997, October 9, 1997 and January 23, 1998, the Company
entered into Purchase Agreements, and related notes, warrants and security
documents (the "Agreements") with St. James regarding the purchase by St. James
of the securities referred to in the tables above. Except for those terms
relating to the amounts of securities purchased, maturity and expiration dates,
interest rates, and conversion and exercise prices, each of such Agreements
contained substantially identical terms and conditions relating to the purchase
of the securities
28
<PAGE>
involved. Payment of principal and interest on all the notes is collateralized
by substantially all the assets of the Company, subordinated, as of March 16,
1998, to borrowings by the Company from Fleet in the maximum aggregate amount of
$19.0 million. The notes are convertible into shares of the Company's Common
Stock at the conversion prices set forth in the tables above, subject to
anti-dilution adjustments for certain issuances of securities by the Company at
prices per share of Common Stock less than the conversion price then in effect.
St. James agreed to subordinate its security interests and rights to the
indebtedness and security interests of the lenders providing up to $4.5 million
pursuant to a term loan and $3.0 million pursuant to a revolving credit
facility. Pursuant to the Agreements, the Company agreed to issue to St. James
for nominal consideration the warrants to purchase shares of Common Stock of the
Company exercisable at the prices set forth in the tables above, subject to
anti-dilution adjustment for certain issuances of securities by the Company at
prices per share of Common Stock less than the exercise prices then in effect.
In March 1998, the Company issued in a private placement 596,000 shares of
Common Stock at a price of $5.50 per share which resulted in an anti-dilution
adjustment of the exercise price of the warrants and conversion price of the
notes issued pursuant to the January 23, 1998 Agreement. The shares issuable on
conversion of the notes and exercise of the warrants have demand and piggy-back
registration rights under the Securities Act of 1933. The Company agreed that
one person designated by St. James will be nominated for election to the
Company's Board of Directors. Mr. John L. Thompson, currently a Director of the
Company, serves in this capacity. The Agreements grant St. James certain
preferential rights to provide future financings to the Company, subject to
certain exceptions. The notes also contain various affirmative and negative
covenants, including a prohibition against the Company consolidating, merging or
entering into a share exchange with another person, with certain exceptions,
without the consent of St. James. Events of default under the notes include,
among other events, (i) a default in the payment of principal or interest; (ii)
a default under any of the notes and the failure to cure such default for five
days, which will constitute a cross default under each of the other notes; (iii)
a breach of the Company's covenants, representations and warranties under any of
the Agreements; (iv) a breach under any of the Agreements between the Company
and St. James, subject to certain exceptions; (v) any person or group of persons
acquiring 40% or more of the voting power of the Company's outstanding shares
who was not the owner thereof as of January 23, 1998, a merger of the Company
with another person, its dissolution or liquidation or a sale of all or
substantially all its assets; and (vi) certain events of bankruptcy. In the
event of a default under any of the notes, subject to the terms of an agreement
between St. James and Fleet, St. James could seek to foreclose against the
collateral for the notes.
In the October 1997 and January 1998 agreements, St. James agreed to
convert its $2.0 million convertible note dated June 5, 1997 and its $2.9
million convertible note dated October 10, 1997 into shares of the Company's
Common Stock at such time as the Company has filed a registration statement
under the Securities Act of 1933 relating to the shares issuable on
29
<PAGE>
conversion of such notes and on exercise of the warrants issued to St. James and
such registration statement has been declared effective.
In March 1998, St. James agreed to certain amendments to its agreements
with the Company in connection with the Company's borrowings from Fleet to
finance the completion of the Phoenix Acquisition. Among other things, these
amendments required St. James to extend the maturity date of $10.0 million of
indebtedness owing to it from maturing in 18 months to maturing in 36 months,
required St. James to fully subordinate the payment of principal and interest on
the indebtedness owing to it to the prior payment in full of the Company's
indebtedness to Fleet, and required St. James and its affiliates to refrain from
selling shares of Common Stock of the Company below certain percentage levels of
the Company's shares outstanding so long as the indebtedness remains owing to
Fleet. In consideration for these amendments, the Company agreed to reduce the
exercise and conversion prices of the common stock purchase warrants and note
issued to St. James in January 1998 to $5.50 per share and to provide that in
the event shares are issued by the Company thereafter at a price less than $5.50
per share such exercise and conversion prices will be reduced to a price equal
to the price at which the shares are issued. The $5.50 price was based on a
price at which the Company issued shares of Common Stock in a private placement
in March 1998, at the time St. James agreed to the amendments to its agreements.
The Company executed Reorganization Agreements with the holders of certain
debentures of the Company on November 30, 1995 (the "1995 Reorganization
Agreements"), including Pangaea Investment Consultants, Ltd., Morgan Devin
Everett & Co. Ltd., International Trust Company of Bermuda Ltd. and Mansfield
Soderberg & Co. Ltd. (the "Shareholder Group"), pursuant to which such persons
agreed to exchange the debentures held by them for shares of the Company's
Common Stock In accordance with the terms of the agreements, through December
31, 1995, the Shareholder Group exchanged an aggregate of $656,250 principal
amount of debentures for an aggregate of 299,586 shares of Common Stock. Morgan
Devin Everett & Co. Ltd., International Trust Company of Bermuda Ltd. and
Mansfield Soderberg & Co. Ltd. continued to hold at December 31, 1995 an
aggregate of $393,750 principal amount of debentures which were to be exchanged
in the aggregate for an additional 225,414 shares of Common Stock and two new
classes of Common Stock Purchase Warrants. Pursuant to the 1995 Reorganization
Agreements, the first series of warrants (the "Class A Warrants") were to be
exercisable at $3.00 per share for a period of four (4) years and the second
series of warrants (the "Class B Warrants") were to be exercisable at prices
increasing in annual increments over the first three (3) years after issuance
from $3.00 per share to $5.00 per share and were to expire five (5) years after
issuance. On September 20, 1996, the Company and the Shareholder Group, as well
as certain other debtholders, amended the terms of the 1995 Reorganization
Agreements to provide for the exchange of the $393,750 of debentures three
members of the Shareholder Group continued to hold for an aggregate of 225,414
shares of Common Stock and also so as to provide that in lieu of the issuance of
the Class A warrants to the Shareholder Group, an aggregate of 52,500 shares of
Common Stock would be issued to the Shareholder Group and the exercise price of
the Class B warrants would be reduced to $2.00 per share throughout the
five-year term of such warrants. As a consequence of these agreements entered
into in 1995 and 1996, the Company's warrants exercisable at $2.00 per share
(the "$2.00 Warrants") were issued (see "Selling Securityholders"). In addition
to the Shareholder Group, each of the other Selling Securityholders holding the
$2.00 Warrants were parties to similar agreements entered into in 1995 and 1996
and surrendered in those transactions an aggregate of $975,000 principal amount
of the Company's debentures in exchange for an aggregate of 536,250 shares of
Common Stock and 146,250 $2.00 Warrants.
30
<PAGE>
During the year ended December 31, 1997, the Company issued 65,000 shares
of Common Stock valued at $136,500 to Pangaea Investment Consultants, Ltd. in
exchange for consulting services to be rendered through May 1999.
During the year ended December 31, 1996, the Company issued 12,000 shares
of Common Stock, valued at $15,000 to Pangaea Investment Consultants, Ltd. in
reimbursement of expenses.
The $1.50 Options were issued in September 1996 for investment banking
services.
31
<PAGE>
PLAN OF DISTRIBUTION
The Selling Securityholders may sell or distribute some or all of the
Common Stock from time to time through underwriters or dealers or brokers or
other agents or directly to one or more purchasers, including pledgees, in
transactions (which may involve block transactions) on the OTC Bulletin Board(R)
or in privately negotiated transactions (including sales pursuant to pledges),
or in a combination of such transactions. Such transactions may be effected by
the Selling Securityholders at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices, or at
fixed prices, which may be changed. Brokers, dealers, agents or underwriters
participating in such transactions as agent may receive compensation in the form
of discounts, concessions or commissions from the Selling Securityholders (and,
if they act as agent for the purchaser of such shares, from such purchaser).
Such discounts, concessions or commissions as to a particular broker, dealer,
agent or underwriter might be in excess of those customary in the type of
transaction involved.
The Selling Securityholders and any such underwriters, brokers, dealers or
agents that participate in such distribution may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by any such underwriters, brokers, dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
Neither the Company nor the Selling Securityholders can presently estimate the
amount of such compensation. The Company knows of no existing arrangements
between the Selling Securityholders and any underwriter, broker, dealer or other
agent relating to the sale or distribution of the Selling Securityholders
Securities.
Under applicable rules and regulations currently in effect under the
Exchange Act, any person engaged in a distribution of any of the shares of
Common Stock may not simultaneously engage in market activities with respect to
the Common Stock for a period of five business days prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Securityholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation Regulation M
thereunder, which provisions may limit the timing of purchases and sales of any
of the shares of Common Stock by the Selling Securityholders. All of the
foregoing may affect the marketability of the Common Stock.
The Company will pay substantially all of the expenses incident to this
offering of the Securities to the public other than commissions and discounts of
underwriters, brokers, dealers or agents. The Selling Securityholders may
indemnify any broker, dealer, agent or underwriter that participates in
transactions involving sales of the Securities against certain liabilities,
including liabilities arising under the Securities Act.
32
<PAGE>
DESCRIPTION OF CAPITAL STOCK
GENERAL
Under its Certificate of Incorporation, the total number of shares of all
classes of stock that the Company has authority to issue is 15,000,000
consisting of 2,500,000 shares of preferred stock, par value $.01 per share, and
12,500,000 shares of common stock, $.0005 par value.
PREFERRED STOCK
Up to 2,500,000 shares of preferred stock, par value $.01 per share, may be
issued from time to time in one or more series. The Board of Directors, without
further approval of the stockholders, is authorized to fix the rights and terms
relating to dividends, conversion, voting, redemption, liquidation preferences,
sinking funds and any other rights, preferences, privileges and restrictions
applicable to each such series of preferred stock. The issuance of preferred
stock, while providing flexibility in connection with possible financings,
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of Common Stock and, under certain
circumstances, be used as a means of discouraging, delaying or preventing a
change in control of the Company. As of March 31, 1998, the Company had no
shares of preferred stock outstanding and has no present plans to issue any
shares of Preferred Stock.
COMMON STOCK
The holders of common stock are entitled to one vote per share on all
matters voted on by stockholders, including elections of Directors, and, except
as otherwise required by law or provided in any resolution adopted by the Board
of Directors with respect to any series of preferred stock establishing the
powers, designations, preferences and relative, participating, option or other
special rights of such series ("Preferred Stock Designation"), the holders of
such shares exclusively possess all voting power. The Certificate of
Incorporation does not provide for cumulative voting in the election of
directors. Subject to any preferential rights of any outstanding series of
preferred stock, the holders of common stock are entitled to such distributions
as may be declared from time to time by the Board of Directors from funds
available therefor, and upon liquidation are entitled to receive pro rata all
assets of the Company available for distribution to such holders. All shares of
common stock outstanding are fully paid and non-assessable and the holders
thereof have no preemptive rights.
33
<PAGE>
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for the
Company by William S. Clarke, P.A., 457 North Harrison Street, Suite 103,
Princeton, New Jersey 08540.
EXPERTS
Coopers & Lybrand L.L.P. serves as the independent accountants for the
Company. The consolidated financial statements of the Company as of December 31,
1997 and 1996 and for each of the three years ended December 31, 1997; the
consolidated financial statements of Phoenix Drilling Services, Inc. (domestic
operations only) for the year ended December 31, 1997; the financial statements
of Diamondback Directional, Inc. for the year ended December 31, 1996 and the
period March 1, 1995 (inception of the business) to December 31, 1997; the
financial statements of Petro-Log, Inc. for the years ended March 31, 1997 and
1996; and the financial statements of DynaJet, Inc. for the year ended May 31,
1996 are incorporated by reference in this Prospectus in reliance upon the
report of such firm, given on the authority of that firm as experts in
accounting and auditing.
The audited historical combined financial statements of the domestic
operations of Phoenix Drilling Services, Inc. for the year ended December 31,
1996 and for the period from June 15, 1995 (inception) through December 31, 1995
included on pages F-13 to F-27 of Black Warrior Wireline Corp.'s Form 8-K/A
dated June 4, 1998 have been incorporated in this Prospectus by reference in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
34
<PAGE>
GLOSSARY
GLOSSARY OF INDUSTRY TERMS
The following are definitions of certain technical terms used in this
Annual Report relating to the Company's business:
"3-D Seismic" Involves the acquisition of a dense grid of seismic data over
a precisely defined area. An energy source creates an acoustic impulse that
penetrates the subsurface and is reflected off underlying rock layers. This
reflected energy is recorded by sensitive receivers (geophones connected to
sophisticated computers). The resulting data is then analyzed and interpreted by
geophysicists and used by oil and natural gas producing companies in the
acquisition of new leases, the selection of drilling locations and for reservoir
management. The technology is particularly useful with directional drilling. 3-D
Seismic data provides greater precision and improved subsurface resolution than
is provided by 2-D seismic surveys.
"Casing" Steel pipe lowered into the drilled hole (borehole) to prevent
"caving in" and to provide isolation of zones and permit production of
hydrocarbons
"Cased Hole" The drilled hole after casing has been lowered and cemented in
place.
"Directional Drilling" Enables the drilling of computer guided directional
wellbores from existing or newly drilled wells intended to increase the exposure
of the well bore to producing hydrocarbon zones. Directional drilling is
facilitated through the use of 3-D Seismic technology.
"Downhole" Any part of the borehole below the ground surface.
"Junk Basket" A mechanical device lowered into the borehole with wireline
to remove extraneous or unwanted debris. A gauge ring is run simultaneously to
check conformity of hole size.
"Cement Bond Log" A cement quality and bonding evaluation performed with
sonic transmitters and receivers lowered into the borehole with wireline. This
survey is recorded by surface computers.
"Hoisting and Steering Services" Services provided utilizing the Company's
wireline trucks and equipment for operating surveying equipment and steering
tools owned and operated by others.
35
<PAGE>
"Logs" (a) Open Hole: The measurement of properties of formations to
determine hydrocarbon bearing characteristics. Open hole logs are mainly
radioactive (porosity) and electric (resistivity).
(b) Cased Hole: The measurement of gamma rays (different formations
have different levels), casing collars (joints in casing) for correlation to
open hole depths, and cement quality and bonding. Porosity logs can be run in
cased holes with Compensation Neutron Tools.
"Rigs" (a) A drilling rig is one which drills the borehole. This rig
normally is used for setting the casing in the borehole.
(b) A completion or workover rig is used to position tubing, pumps
and other production equipment in the cased hole. As the name plies, this is
used for subsequent "workover" or remedial service.
"Winch Unit" A powerful machine with one or more drums on which to coil a
cable or chain for hauling or hoisting.
"Workover" Operations pertaining to work on wells previously placed in
production but needing additional work in order to restore or increase
production.
36
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of
the securities to be registered are as follows:
Securities and Exchange $12,113.00
Commission Registration Fee
Blue Sky Fees and Expenses * $
Printing * $
Legal fees of Counsel
for the Registrant * $
Accounting Fees * $
Miscellaneous * $
TOTAL $
- ----------
* To be provided by amendment.
ITEM 15: INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law and Article VII of the
Registrant's Restated By-Laws provide for indemnification of present and former
officers, directors, employees and agents.
II-1
<PAGE>
ITEM 16: EXHIBITS
The information required by this Item 16 is set forth in the Index to
Exhibits accompanying this Registration Statement and is incorporated herein by
reference.
ITEM 17: UNDERTAKINGS
(a) The small business issuer will:
1. File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and
(iii) Include any additional or changed material information on
the plan of distribution.
2. For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
3. File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the provisions of the Delaware
General Corporation Law, the Registrant's Articles of Incorporation, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
II-2
<PAGE>
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(c) The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference to this Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(d) The Registrant hereby undertakes to deliver, or cause to be delivered
with the Prospectus, to each person to whom the Prospectus is sent or given the
latest annual report to security holders that is incorporated by reference in
the Prospectus and proxy or information statement furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the Prospectus, to
deliver, or cause to be delivered to each person to whom the Prospectus is sent
or given, the latest quarterly report that is specifically incorporated by
reference in the Prospectus to provide such interim financial information.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Columbus, State of
Mississippi, on the 2nd day of June, 1998.
BLACK WARRIOR WIRELINE CORP.
By: /s/ William L. Jenkins
------------------------------
William L. Jenkins, President,
Principal Executive Officer
and Principal Financial
and Accounting Officer
II-4
<PAGE>
BLACK WARRIOR WIRELINE CORPORATION
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors and
officers of Black Warrior Wireline Corp., a Delaware corporation, which is
filing a Registration Statement on Form S-3 with the Securities and Exchange
Commission, Washington, D.C. 20549 under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), hereby constitutes and appoints William
L. Jenkins and Allen Neel, and each of them, the individual's true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the person and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments,
including post-effective amendments, to the Registration Statement, including a
Prospectus or an amended Prospectus therein and any registration statement for
the same offering that is to be effective upon filing pursuant to Rule 462(b)
under the Securities Act, and all other documents in connection therewith to be
filed with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact as agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ William L. Jenkins Director, President, Chief Executive May 30, 1998
- -------------------------------------- Officer and Chief Financial Officer
William L. Jenkins (Principal Executive Officer and
Principal Financial Officer)
/s/ John A. McNiff Director May 30, 1998
- --------------------------------------
John A. McNiff
/s/ Michael Brod Director May 18, 1998
- --------------------------------------
Michael Brod
/s/ John Thompson Director June 4, 1998
- --------------------------------------
John Thompson
/s/ Charles Underbrink Director May 18, 1998
- --------------------------------------
Charles Underbrink
</TABLE>
II-5
<PAGE>
BLACK WARRIOR WIRELINE CORP.
REGISTRATION STATEMENT ON FORM S-3
INDEX TO EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
3.1 Restated Certificate of Incorporation of Teletek, Ltd.,
a Delaware corporation, filed with the State of Delaware
on June 21, 1989
3.2 Certificate of Merger of Black Warrior Wireline Corp.
and Teletek, Ltd. filed with the State of Delaware on
June 22, 1989
3.3 Certificate of Amendment filed July 2, 1990
3.4 Certificate of Amendment filed July 22, 1997
3.5 Certificate of Amendment filed October 31, 1997
3.6 By-Laws of Registrant
5.1 Opinion of William S. Clarke, P.A.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Price Waterhouse LLP
23.3 Consent of William S. Clarke, P.A. (included in Exhibit
5.1)
24.1 Power of Attorney (included on the signature pages of
this Registration Statement)
RESTATED CERTIFICATE OF INCORPORATION
OF
TELETEK, LTD.
(UNDER SECTION 245 OF THE GENERAL CORPORATION LAW)
Teletek, Ltd., a Corporation organized and existing under the laws of the
State of Delaware, hereby certifies as follows:
1. The name of the Corporation is Teletek, Ltd. The original Certificate of
Incorporation of the Corporation was filed with the Secretary of State of the
State of Delaware on August 28, 1987.
2. The provisions of the Certificate of Incorporation as amended and/or
supplemented were restated and integrated into a single instrument entitled
"Restated Certificate of Incorporation of Teletek, Ltd.," filed with the
Secretary of State of the State of Delaware on October 6, 1988.
3. The Restated Certificate of Incorporation of the Corporation is hereby
further amended and restated in its entirety to read as follows:
First: The name of the corporation is Teletek, Ltd. (the
"Corporation").
Second: Its registered office within the State of Delaware is to be
located at One American Avenue, in the City of Dover, County of Kent, State
of Delaware. The name of its registered agent at that address is the
Corporate Service Bureau, Inc.
Third: The purpose of the Corporation is to engage in any lawful act
of activity for which corporation may be organized under the General
Corporation Law of Delaware.
Fourth: The total number of shares of stock which the Corporation is
authorized to issue is two billion five hundred million (2,500,000,000)
shares of Common Stock having a par value of $.00001 ("Common Stock").
I. Subject to the limitations that may be prescribed in or
pursuant to this Article Fourth, the holders of shares of Common Stock
shall be entitled to receive, as and when declared by the Board of
Directors, out of the assets of the Corporation that are by law
available therefor, dividends payable either in cash or in property,
including securities of the Corporation.
II. Except as may otherwise be required by law or as prescribed
in or pursuant to this Article Fourth, each holder of Common Stock
<PAGE>
shall have one vote in respect of each share of Common Stock held by
him, on all matters voted upon by the stockholders.
Fifth: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors are expressly authorized:
To make, alter or repeal the By-Laws of the corporations.
To authorize and cause to be executed mortgages and liens upon
the real and personal property of the Corporation.
To set apart out of any of the funds of the Corporation available
for dividends a reserve or reserves for any proper purpose and to
abolish any such reserve in the manner in which it was created.
By resolution passed by a majority of the whole Board, to
designate one or more committee, each committee to consist of two or
more of the Directors of the Corporation, which, to the extent
provided in the resolution or in the By-Laws of the Corporation, shall
have and may exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers
which may require it. Such committee or committees shall have such
name or names as may be stated in the By-Laws of the Corporation or as
may be determined from time to time by resolution adopted by the Board
of Directors.
Sixth: Whenever a compromise or arrangement is proposed between
this Corporation and its creditors or any class of them and/or between
this Corporation and its stockholders or any class of them, any court
of equitable jurisdiction within the State of Delaware may, on the
application in a summary way of this Corporation or of any creditor or
stockholder thereof, or on this application of any receiver or
receivers appointed for this Corporation under the provisions of
Section 291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for
this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or
arrangement and the said organization shall, if sanctioned by the
court to which the said application has been made, be binding on all
the creditors or class of creditors, and/or on all the stockholders or
class of stockholders, of this Corporation, as the case may be, and
also of this Corporation.
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<PAGE>
Seventh: Meetings of stockholders may be held outside the State
of Delaware, if the By-Laws so provide. The books of the Corporation
may be kept (subject to any provision contained in the statutes)
outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the
By-Laws of the Corporation. Elections of Directors need not be by
ballot unless the By-Laws of the Corporation shall so provide.
Eighth: No Director of the Corporation shall be personally liable
to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a Director, provided that this Article Eighth
shall not eliminate or limit the liability of a director (i) for any
breach of such Director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions of such Director not in good
faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation
Law, or (iv) for any transaction from which such Director derived an
improper personal benefit; nor shall this Article Eighth eliminate or
limit the liability of a director for any act or omission occurring
prior to the date this Article Eighth becomes effective.
Ninth: The Corporation is to have perpetual existence.
Tenth: Except as may be specifically provided otherwise in this
Restated Certificate of Incorporation, no provision of this Restated
Certificate of Incorporation is intended by the Corporation to be
construed as limiting, prohibiting, denying or abrogating any of the
general or specific powers or rights conferred under the General
Corporation Law, or otherwise under the law, upon the Corporation and
its shareholders, Directors, officers and other corporate personnel.
4. The Restated Certificate of Incorporation herein certified has been duly
adopted in accordance with the provisions of Sections 228, 242 and 245 of the
Delaware General Corporation Law, signed and attested to on June 20, 1989.
Attest:
/s/ David Lynfield /s/ Alan Berkun
- -------------------------- --------------------------
David Lynfield, Secretary Alan Berkun, President
CERTIFICATE OF MERGER
OF
BLACK WARRIOR WIRELINE CORP.
AND
TELETEK, LTD.
It is hereby certified that:
1. The constituent business corporations participating in the merger herein
certified are:
(i) Black Warrior Wireline Corp., which is incorporated under the laws
of the State of Alabama; and
(ii) Teletek, Ltd., which is incorporated under the laws of the State
of Delaware.
2. An Agreement of Merger has been approved, adopted, certified, executed,
and acknowledged by each of the aforesaid constituent corporations in accordance
with the provisions of subsection (c) of Section 252 of the General Corporation
Law of the State of Delaware, to wit, by Black Warrior Wireline Corp. in
accordance with the laws of the State of its incorporation and by Teletek, Ltd.
in the same manner as is provided in Section 251 of the General Corporation Law
of the State of Delaware.
3. The name of the surviving corporation in the merger herein certified is
Teletek, Ltd., which will continue its existence as said surviving corporation
under the name of Black Warrior Wireline Corp. upon the effective date of said
merger pursuant to the provisions of the General Corporation Law of the State of
Delaware.
4. The Restated Certificate of Incorporation of Teletek, Ltd. is to be
amended and changed by reason of the merger herein certified by striking out
Article One thereof, relating to the name of said surviving corporation, and by
substituting in lieu thereof the following article:
"The name of the corporation is Black Warrior Wireline Corp."
and said Certificate of Incorporation as so amended and changed shall continue
to be the Certificate of Incorporation of said surviving corporation until
further amended and changed in accordance with the provisions of the General
Corporation Law of the State of Delaware.
<PAGE>
5. The executed Agreement of Merger between the aforesaid constituent
corporations is on file at the principal place of business of the aforesaid
surviving corporation, the address of which is as follows:
647 Church Avenue
Woodmere, New York 11598
6. A copy of the aforesaid Agreement of Merger will be furnished by the
aforesaid surviving corporation, on request, and without cost, to any
stockholder of each of the aforesaid constituent corporations.
7. The authorized capital stock of Black Warrior Wireline Corp. consists of
1,000 shares of a par value of $1.00 each.
Dated: June 20, 1989
Attest: Black Warrior Wireline Corp.
/s/ Arthur Kronenberg By: /s/ Fred J. Miller
- ---------------------------- ---------------------------------------
Arthur Kronenberg, Secretary Fred J. Miller, Chief Executive Officer
Attest: Teletek, Ltd.
/s/ David Lynfield By: /s/ Alan Berkun
- ---------------------------- ---------------------------------------
David Lynfield, Secretary Alan Berkun, President
2
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION
(PURSUANT TO SECTION 242)
Black Warrior Wireline Corp., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, hereby
certifies:
First: That the written consent of the necessary number of shares required
by statute of the stockholders of Black Warrior Wireline Corp. was given
pursuant to Section 228 of the General Corporation Law of Delaware, setting
forth an amendment to the Certificate of Incorporation of said Corporation as
follows:
"Fourth: The corporation shall be authorized to issue the following shares:
CLASS NUMBER OF SHARES PAR VALUE
----- ---------------- ---------
Common 50,000,000 $0.0005
I. Subject to the limitations that may be prescribed in or pursuant to this
Article Fourth, the holders of shares of Common Stock shall be entitled to
receive, as and when declared by the Board of Directors, out of the assets
of the Corporation that are by law available therefor, dividends payable
either in cash or in property, including securities of the Corporation.
II. Except as may otherwise be required by law or as prescribed in or
pursuant to this Article Fourth, each holder of Common Stock shall have one
vote in respect of each share of Common Stock held by him, on all matters
voted upon by the stockholders.
Second: Prompt notice of the taking of the corporate action amending the
Certificate of Incorporation in the manner set forth above is being given to the
stockholders who had not previously consented in writing, as provided by Section
228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by William Jenkins, its President, and attested by Fred Miller, its
Assistant Secretary, this 7th day of May, 1990.
Attest: Black Warrior Wireline Corp.
/s/ Fred Miller By: /s/ William Jenkins
- ---------------------------- ---------------------------------------
Fred Miller, Assistant Secretary William Jenkins, President
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
BLACK WARRIOR WIRELINE CORP.
Black Warrior Wireline Corp., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, does
hereby certify:
FIRST: That at a Meeting of the Board of Directors of Black Warrior
Wireline Corp., resolutions were duly adopted setting forth a proposed amendment
to the Certificate of Incorporation of said Corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
Corporation for consideration thereof or directing that said amendment be
submitted to stockholders for action without a meeting by consents in writing.
The resolution setting forth the proposed amendment is as follows:
RESOLVED, that Article Fourth of the Certificate of Incorporation of the
Corporation be hereby amended to read in its entirety as follows:
FOURTH: The total number of shares of Capital Stock which the
Corporation shall have authority to issue is Twelve Million Five Hundred
Thousand (12,500,000) shares, of a par value of $.0005 per share.
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
a meeting of the stockholders of said Corporation was duly called and held, upon
notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware, at which meeting the necessary number of shares as required
by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said Corporation shall not be reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, said Black Warrior Wireline Corp. has caused this
Certificate to be signed by William L. Jenkins, its President, and John A.
McNiff, Sr., its Secretary, this __________ day of July, 1997.
Attest: Black Warrior Wireline Corp.
- ----------------------------- -------------------------------------
John A. McNiff, Sr., Secretary William L. Jenkins, President
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
BLACK WARRIOR WIRELINE CORP.
Black Warrior Wireline Corp., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, does
hereby certify:
FIRST: That at a Meeting of the Board of Directors of Black Warrior
Wireline Corp., resolutions were duly adopted setting forth a proposed amendment
to the Certificate of Incorporation of said Corporation, declaring said
amendment to be advisable and calling a meeting of the stockholders of said
Corporation for consideration thereof or directing that said amendment be
submitted to stockholders for action without a meeting by consents in writing.
The resolution setting forth the proposed amendment is as follows:
RESOLVED, that Article Fourth of the Certificate of Incorporation of this
corporation be hereby amended to read in its entirety as follows:
FOURTH: The total number of shares of capital stock of all classes
which the Corporation shall have authority to issue is Fifteen Million
(15,000,000) shares, of which Twelve Million Five Hundred Thousand
(12,500,000) shares, of a par value of $.0005 per share, shall be
designated "Common Stock", and Two Million Five Hundred Thousand
(2,500,000) shares, of a par value of $.01 per share, shall be designated
"Preferred Stock."
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
a meeting of the stockholders of said Corporation was duly called and held, upon
notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware, at which meeting the necessary number of shares as required
by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said Corporation shall not be reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, said Black Warrior Wireline Corp. has caused this
Certificate to be signed by William L. Jenkins, its President, and Melissa
Clark, its Assistant Secretary, this __________ day of October, 1997.
Attest: Black Warrior Wireline Corp.
- ----------------------------- -------------------------------------
Melissa Clark, Assistant Secretary William L. Jenkins, President
RESTATED BY-LAWS
OF
BLACK WARRIOR WIRELINE CORP
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
The Corporation shall maintain a registered office in the State of Delaware
as required by law. The Corporation may also have offices at other places,
within and without the State of Delaware.
ARTICLE II
STOCKHOLDERS
Section 1. Annual meetings of stockholders shall beheld once in each year
at such times and such places, within or without the State of Delaware, as may
be fixed from time to time by the Board of Directors.
Section 2. Except as otherwise required by statute or the Corporation's
Restated Certificate of Incorporation, special meetings of stockholders may be
called by the Board of Directors or the Chairman of the Board. Special meetings
of stockholders shall be held on such dates and at such times and such places,
within or without the State of Delaware, as shall be stated in the notices of
such meetings. Notice of any special meeting shall state the purpose or purposes
for which the meeting is to be held and no other business shall be transacted
except as stated in such notice.
Section 3. The holders of a majority of the issued and outstanding shares
of the capital stock of the Corporation entitled to vote thereat, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business at all meetings of stockholders.
Section 4. Except as otherwise required by statute, the Corporation's
Restated Certificate of Incorporation or these Restated By-Laws, all matters
coming before any meeting of stockholders shall be decided by the vote of the
holders of a majority of the shares of capital stock of the Corporation present
in person or represented by proxy at such meeting and voting thereon, a quorum
being present.
Section 5. The Board of Directors, or, if the Board shall not have made the
appointment, the chairman presiding at any meeting of stockholders, shall have
the power to appoint two or more persons to act as inspectors, to receive,
canvass, and report the votes cast by the stockholders at such meeting.
<PAGE>
Section 6. The Chairman of the Board, or in his absence, the President,
shall preside at all meetings of stockholders; and in their absence, the Board
of Directors may appoint a person to act as chairman of the meeting.
Section 7. The Secretary or an Assistant Secretary shall act at all
meetings of stockholders; and in their absence, the chairman of the meeting
shall appoint a person to act as secretary of the meeting.
ARTICLE III
BOARD OF DIRECTORS
Section 1. The business and affairs of the Corporation shall be managed by
or under the direction of the Board of Directors.
Section 2. Regular meetings of the Board of Directors shall be held on such
dates and at such times and such places, within or without the State of
Delaware, as shall be fixed from time to time by the Board.
Section 3. Special meetings of the Board of Directors may be called by the
Chairman of the Board and shall be called by the Chairman of the Board or the
Secretary upon a request in writing by any two Directors. Notice shall be given
of the date, time and place of each special meeting by mailing the same at least
three days before the meeting or by telephoning, telegraphing or delivering
personally the same before the meeting to each Director. If a Director is unable
to personally attend a Special Meeting, he or she shall be entitled to
participate in the meeting by telephone. Except as otherwise specified in the
notice thereof, or as required by statute, any and all business may be
transacted at any special meeting of the Board of Directors.
Section 4. The Chairman of the Board shall preside at all meetings of the
Board of Directors; and in his absence, the Board of Directors may appoint any
other person to act as chairman of the meeting. Less than a quorum of the Board
may adjourn any meeting from time to time until a quorum shall be present,
whereupon the meeting may be held, as adjourned, without further notice.
Section 5. A quorum of the Board of Directors shall consist of a majority
of its members. Unless otherwise required by law, the Board of Directors may
take action by the act of a majority of those Directors present and voting.
Section 6. In addition to meeting in person, the Board of Directors may
conduct its business by (i) written action by unanimous consent, (ii) telephone
conference call, provided that written minutes of such telephone meeting are
prepared and executed by all Directors. To
2
<PAGE>
facilitate necessary corporate action, minutes of telephone meetings and records
of action undertaken by unanimous consent may be executed by the Directors by
facsimile transmission or confirmed by telegram, telex or similar means,
provided that such minutes or records shall thereafter be promptly submitted to
all Directors for personal execution.
ARTICLE IV
COMMITTEES
Section 1. The Corporation may have an Audit Committee, which shall have
such powers of the Board of Directors, not prohibited by statute, as the Board
shall from time to time authorize. The Audit Committee shall consist of two or
more Directors.
Section 2. The Board of Directors may, by resolution passed by a majority
of the whole Board, designate from among its own members such other committees,
including, without limitation, an Executive Committee and/or a Compensation
Committee, as the Board may determine. Each such committee shall have such
powers of the Board of Directors, not prohibited by statute, as the Board shall
from time to time authorize.
Section 3. A majority of a committee shall constitute a quorum for the
transaction of business. Each committee shall keep regular minutes of its
meetings and shall report the same to the Board of Directors when requested. The
Board of Directors may discharge any committee or any member thereof either with
or without cause at any time.
Section 4. In the case of the absence or disqualification of a member of a
committee, the member of members thereof present at any meeting and not
disqualified from voting, whether or not constituting a quorum, may unanimously
appoint another member of the Board of Directors to act at the meeting in place
of such absent or disqualified member.
ARTICLE V
OFFICERS
Section 1. The Board of Directors shall elect the following officers:
Chairman of the Board of Directors, President, Treasurer, Secretary and
Assistant Secretary, and such other officers as it may from time to time
determine.
Section 2. The term of office of all officers shall be for one year and
until their respective successors are elected and qualified. The Board of
Directors may remove any officer either with or without cause at any time.
3
<PAGE>
Section 3. Subject to Section 5 of this Article V, the officers of the
Company shall each have the following powers and duties, as well as such other
powers and duties as from time to time may be conferred by the Board of
Directors:
A. The Chairman of the Board shall preside at the meeting of the Board
of Directors.
B. The President shall (i) supervise the day-to-day operations of the
Company; (ii) establish company bank accounts and execute and/or authorize all
checks, drafts, bills of exchange, wire transfer instructions and other
instructions regarding the transfer of money; (iii) provide for settlement of
the obligations of the Company; and (iv) generally supervise and authorize all
functions on behalf of the Company that do not require approval of the Board of
Directors.
C. The Treasurer shall verify all financial statements issued by the
Company, and in conjunction with the President, review and verify the books and
records of the Company.
D. The Secretary shall supervise preparation of the minutes of meeting
of the Board of Directors and the Shareholders.
E. The Secretary shall attest to the signature of the Chairman,
President, Vice-President, or other officer of the Company on various documents
and shall oversee the keeping of the official corporate record book, and a list
of shareholders and warrant holders.
F. The Assistant Secretary shall attest to the signature of the
Chairman, President, Vice-President, or other officer of the Company on
corporate documents which require attestation.
Section 4. From time to time, the Board of Directors shall appoint an
officer who shall have full power and authority on behalf of the Corporation to
attend and to vote at any meetings of stockholders of any corporation in which
this Corporation may hold stock, and may exercise on behalf of this Corporation
any and all of the rights and powers incident to the ownership of such stock at
any such meeting, and shall have power and authority to execute and deliver
proxies, waivers and consents on behalf of the Corporation in connection with
the exercise by the Corporation of the rights and powers incident to the
ownership of such stock. The Board of Directors may from time to time confer
like powers upon any other person or persons.
Section 5. No officer shall undertake any action on behalf of the Company,
other than actions undertaken in the day-to-day operations of the Company,
without the express approval of the Board of Directors at a meeting of the
Board. Actions which shall require express approval of the Board shall include,
but are not limited to, execution of contracts, other than contracts
4
<PAGE>
relating to the day-to-day operations of the Company; execution of notes,
debentures, or other evidence of debt; all securities transactions, including,
but not limited to, sales or issuance of stock and warrants; execution of or
negotiation toward agreements providing for payment of commissions, "finders'
fees," transaction fees or similar arrangements. Any officer who takes any
action in excess of his authority may be dismissed by the Board.
ARTICLE VI
CAPITAL STOCK
Section 1. Certificates for stock of the Corporation shall be in such form
as the Board of Directors may from time to time prescribe.
Section 2. The Board of Directors shall have power to appoint one or more
transfer agents and/or registrars for the transfer and/or registration of
certificates for shares of stock of any class or series and may require that
stock certificates shall be countersigned and/or registered by one or more of
such transfer agents and/or registrars.
Section 3. Shares of capital stock of the Corporation shall be
transferrable on the books of the Corporation only by the holder of record
thereof in person or by his duly authorized attorney, upon surrender and
cancellation of certificates for a like number of shares, with an assignment or
power of transfer endorsed thereon or delivered therewith, duly executed, and
with such proof of the authenticity of the signature and of authority to
transfer, and of payment of transfer taxes, as the Corporation or its agents may
require.
Section 4. In case any certificate for the capital stock of the Corporation
shall be lost, stolen or destroyed, the Corporation may require such proof of
the fact and such indemnity to be given to it and/or to its transfer agent
and/or registrar, if any, as it shall deem necessary or advisable.
Section 5. The Corporation shall be entitled to treat the holder of record
of any share or shares of stock as the holder thereof in fact, and shall not be
bound to recognize any equitable or other claim to or interest in such shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise expressly provided by law.
ARTICLE VII
INDEMNIFICATION
Section 1. The Corporation shall indemnify any person who was or is a party
to or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding,
5
<PAGE>
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Corporation) by reason of the fact that he is or was a
director, officer, or employee of the Corporation, or is or was serving at the
request of the Corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, actually and reasonably incurred by him in connection with such
action, suit or proceeding, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction or upon a
plea of nolo contendere or its equivalent, shall not, in itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. The Corporation shall indemnify any person who was or is a party
to or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer or
employee of the Corporation, or is or was serving at the request of the
Corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjusted to be liable for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. To the extent that a director, officer or employee of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 1 and 2 of this Article VII,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of this Article VII
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer or employee is proper in the circumstances, because he has met the
applicable standard of conduct set forth in said Sections 1
6
<PAGE>
and 2. Such determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (3) by the stockholders.
Section 5. Expenses incurred in defending a civil, criminal, administrative
or investigation action, suit or proceeding, or threat thereof, may be paid by
the Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the specific case upon
receipt of an understanding by or on behalf of the director, officer or employee
to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized in this Article VII.
Section 6. The indemnification provided by this Article VII shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any By-Law, agreement, vote of stockholders or disinterested
directors, statute, court decision, insurance policy or otherwise, now or
hereafter in effect, and shall continue as to a person who has ceased to be a
director, officer or employee and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 7. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer or employee of the Corporation, or
is or was serving at the request of the Corporation as a director, officer or
employee of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of this Article VII or of the General Corporation Law of the
State of Delaware.
Section 8. For purposes of this Article VII, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any services as a director, officer or employee of the Corporation
which imposes duties on or involves services by, such director, officer, or
employee with respect to any employee benefit plan, its participants or
beneficiaries; and a person who is "acting in good faith and in a manner he
reasonably believes to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner not
opposed to the best interests of the Corporation" as referred to in this Article
VII.
7
<PAGE>
ARTICLE VIII
MISCELLANEOUS
Section 1. The seal of the Corporation shall be circular in form and shall
contain the name of the Corporation and the year and state of the incorporation.
Section 2. The Board of Directors shall have power to fix, and from time to
time change, the fiscal year of the corporation.
ARTICLE IX
AMENDMENT
The Board of Directors shall have the power to adopt, alter and repeal the
By-Laws of the Corporation at any regular or special meeting of the Board,
subject to the power of the stockholders to alter or repeal any By-Law adopted
or altered by the Board of Directors. By-Laws may be adopted, altered or
repealed by the stockholders by the vote of the holders of a majority of the
outstanding shares entitled to vote thereon provided that notice of the proposed
adoption, alteration or repeal shall have been given in the notice of such
meeting of stockholders.
8
EXHIBIT 5.1
WILLIAM S. CLARKE, P.A.
ATTORNEY-AT-LAW
457 NORTH HARRISON STREET - SUITE 103
PRINCETON, NEW JERSEY 08540
----------
TELEPHONE: (609) 921-3663
FAX: (609) 921-3933
June 4, 1998
Black Warrior Wireline Corp.
3748 Highway #45 North
Columbus, Mississippi 39701
Gentlemen:
I have acted as counsel for Black Warrior Wireline Corp. (the "Company") in
connection with the preparation of a Registration Statement filed by the Company
under the Securities Act of 1933, as amended (File No. 333-__________) relating
to a proposed public offering by certain holders thereof of an aggregate of
8,421,392 shares of Common Stock, $.01 par value (the "Common Stock"). Of such
shares, 1,419,933 shares are issued and outstanding (the "Outstanding Shares"),
3,707,250 shares are issuable on exercise of outstanding common stock purchase
warrants and options (the "Warrants"), and 3,294,209 shares are issuable on
conversion of outstanding convertible notes (the "Convertible Notes").
In my capacity as counsel to you, I have examined the original, certified,
conformed photostats or xerox copies of all such agreements, certificates of
public officials, certificates of officers, representatives of the Company and
others and such other documents as I have deemed necessary or relevant as a
basis for the opinions herein expressed. In all such examinations I have assumed
the genuineness of all signatures on original and certified documents and the
conformity to original and certified documents of all copies submitted to me as
conformed, photostat or duplicate copies. As to various questions of fact
material to such opinions, I have relied upon statements or certificates of
officials and representatives of the Company and others.
On the basis of such examination, I advise you that, in my opinion (i) the
shares of Outstanding Stock are validly issued, fully paid and non-assessable,
and (ii) the shares of Common Stock, when sold, issued and paid for in
accordance with the terms of the Warrants and on conversion of the Convertible
Notes, will be legally issued, fully paid and non-assessable.
I consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference of my firm in the prospectus forming a part of
such Registration Statement.
Very truly yours,
William S. Clarke, P.A.
By: /s/ William S. Clarke
------------------------
William S. Clarke
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-3 (File No. 333-__________) of our report dated March 19, 1998, except
Note 18, as to which the date is April 2, 1998, on our audits of the
consolidated financial statements of Black Warrior Wireline Corp. and
Subsidiaries; our report dated March 16, 1998, on our audits of the consolidated
financial statements of Phoenix Drilling Services, Inc. (domestic operations
only); our report dated October 9, 1997, on our audits of the financial
statements of Diamondback Directional, Inc.; our report dated July 15, 1997, on
our audits of the financial statements of Petro-Log, Inc.; and our report dated
January 20, 1997, on our audits of the financial statements of DynaJet, Inc.
We also consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND, L.L.P.
Birmingham, Alabama
June 3, 1998
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 (File No.
333-__________) of our report dated March 10, 1998, which appears on pages F-13
and F-14 of the Current Report on Form 8-K/A dated June 4, 1998 of Black Warrior
Wireline Corp. We also consent to the reference to us under the heading
"Experts."
PRICE WATERHOUSE LLP
Houston, Texas
June 4, 1998
