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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
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COMMISSION FILE NUMBER 1-10570
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BJ SERVICES COMPANY
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 63-0084140
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5500 NORTHWEST CENTRAL DRIVE, 77092
HOUSTON, TEXAS (Zip Code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (713) 462-4239
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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<S> <C>
COMMON STOCK $.10 PAR VALUE NEW YORK STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
WARRANTS TO PURCHASE COMMON STOCK NEW YORK STOCK EXCHANGE
12 7/8% SENIOR NOTES DUE DECEMBER 1, 2002 NEW YORK STOCK EXCHANGE
</TABLE>
Securities Registered Pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES /X/ NO / /.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (sec.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K / /.
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At December 8, 1995, the registrant had outstanding 28,011,972 shares of
Common Stock, $.10 par value per share. The aggregate market value of the Common
Stock on such date (based on the closing prices in the daily composite list for
transactions on the New York Stock Exchange) held by nonaffiliates of the
registrant was approximately $750,622,842.
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DOCUMENTS INCORPORATED BY REFERENCE:
Portions of Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held January 25, 1996 are incorporated by reference into Part
III.
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PART I
ITEM 1. BUSINESS
GENERAL
BJ Services Company (the "Company"), whose operations trace back to the
Byron Jackson Company (which was founded in 1872), was organized in 1990 under
the corporate laws of the State of Delaware. The Company is a leading provider
of pressure pumping and other oilfield services serving the petroleum industry
worldwide. The Company's pressure pumping services consist of well stimulation,
cementing, sand control and coiled tubing services used in the completion of new
oil and natural gas wells and in remedial work on existing wells, both onshore
and offshore. Other oilfield services include casing and tubular services
provided to the oil and gas exploration and production industry, commissioning
and leak detection services provided to offshore platforms and pipelines,
primarily in the United Kingdom, and specialty chemical services.
On April 13, 1995, the Company completed the acquisition (the
"Acquisition") of The Western Company of North America ("Western") for a total
purchase price of approximately $511 million. The Acquisition provides the
Company with a greater "critical mass" with which to compete in both the U.S.
and international markets and the opportunity to realize significant
consolidation benefits. On an annual basis, the Acquisition is expected to
increase the Company's existing total revenue base by approximately 75% and more
than double the Company's existing U.S. revenue base. In addition, it is
estimated that approximately $40 million of annual overhead and redundant
operating costs will be eliminated by combining the two companies. During the
year ended September 30, 1995, giving effect to the Acquisition since April 1,
1995, the Company generated approximately 86% of its revenue from pressure
pumping services and 14% of its revenue from product and equipment sales and
other oilfield services (85% and 15%, respectively, since the Acquisition). Over
the same period, the Company generated approximately 55% of its revenue from
domestic operations and 45% from international operations (59% and 41%,
respectively, since the Acquisition).
PUMPING SERVICES
CEMENTING SERVICES. The Company's cementing services, which accounted for
approximately 39% of the Company's total revenue during 1995 (37% since the
Acquisition), consist of blending cement and water with various solid and liquid
additives to create a slurry that is pumped into a well between the casing and
the wellbore. The additives and the properties of the slurry are designed to
ensure the proper pump time, compressive strength and fluid loss control, and
vary depending upon the well depth, downhole temperatures and pressures, and
formation characteristics.
The Company provides regional laboratory testing services to evaluate
slurry properties, which vary with cement supplier and local water properties.
Job design recommendations are developed by the Company's field engineers to
achieve desired porosity and bonding characteristics.
There are a number of specific applications for cementing services used in
oilfield operations. The principal application is the cementing between the
casing pipe and the wellbore during the drilling and completion phase of a well
("primary cementing"). Primary cementing is performed to (1) isolate fluids
behind the casing between productive formations and other formations which would
damage the productivity of hydrocarbon producing zones or damage the quality of
freshwater aquifers, (2) seal the casing from corrosive formation fluids, and
(3) provide structural support for the casing string. Cementing services are
also utilized when recompleting wells from one producing zone to another and
when plugging and abandoning wells.
STIMULATION SERVICES. The Company's stimulation services, which accounted
for approximately 47% of the Company's total revenue during 1995 (48% since the
Acquisition), consist of hydraulic fracturing, acidizing, sand control, nitrogen
and coiled tubing services designed to improve the flow of oil and gas from
producing formations and are summarized as follows:
Fracturing. Fracturing is performed to enhance the production of oil and
gas from formations having such low permeability that the natural flow is
restricted. The fracturing process consists of pumping a fluid gel into a cased
well at sufficient pressure to "fracture" the formation. Sand, bauxite or
synthetic proppant which is
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suspended in the gel is pumped into the fracture to prop it open. The size of a
fracturing job is generally expressed in terms of the pounds of proppant. The
main pieces of equipment used in the fracturing process are the blender, which
blends the proppant and chemicals into the fracturing fluid, and the pumping
unit, which is capable of pumping significant volumes at high pressures. The
Company's fracturing pump units are capable of pumping slurries at pressures of
up to 14,000 pounds per square inch at rates of up to four barrels per minute.
In some cases, fracturing is performed by an acid solution pumped under pressure
without a proppant or with small amounts of proppant.
An important element of fracturing services is the design of the fracturing
treatment, which includes determining the proper fracturing fluid, proppants and
injection program to maximize results. The Company's field engineering staff
provides technical evaluation and job design recommendations as an integral
element of its fracturing service for the customer. Technological developments
in the industry over the past three to four years have focused on proppant
concentration control (i.e., proppant density), liquid gel concentrate
capabilities, computer design and monitoring of jobs and cleanup properties for
fracturing fluids. Over the past decade, the Company has successfully introduced
equipment to respond to these technological advances. During 1991, the Company
introduced a patented, borate-based fracturing fluid, Spectra Frac G(R). During
1993, the Company introduced two additional fracturing fluids, Medallion FracSM
and Spartan FracSM. These fracturing fluids are now used in most of the
Company's fracturing treatments. During 1994, the Company commercialized a
proprietary enzyme chemistry used in conjunction with the three fracturing
fluids. These "enzyme breakers" can significantly enhance the production of oil
and gas in a wide range of wells.
Acidizing. Acidizing is performed to enhance the flow rate of oil and gas
from wells with reduced flow caused by formation damage due to drilling or
completion fluids, or the buildup over time of various materials that block the
formation. Acidizing entails pumping large volumes of specially formulated acids
into reservoirs to dissolve barriers and enlarge crevices in the formation,
thereby eliminating obstacles to the flow of oil and gas. The Company maintains
a fleet of mobile acid transport and pumping units to provide acidizing services
for the onshore market.
Sand Control. Sand control services involve the pumping of gravel to fill
the cavity created around the wellbore during drilling. The gravel provides a
filter for the exclusion of formation sand from the producing pathway. Oil and
gas is then free to move through the gravel into the wellbore to be produced.
These services are primarily provided in the Gulf of Mexico, the North Sea,
Venezuela, Trinidad and Indonesia.
Nitrogen. There are a number of uses for nitrogen, an inert gas, in
pressure pumping operations. Used alone, it is effective in displacing fluids
during drill stem testing. However, nitrogen services are used principally in
applications which support the Company's cementing and fracturing services.
Coiled Tubing Services. Coiled tubing services involve the injection of
coiled tubing into wells to perform various applications and functions for use
principally in well-servicing operations. The application of coiled tubing to
drilling operations also has increased in recent years due to improvements in
coiled tubing technology. Coiled tubing is a flexible steel pipe with a diameter
of less than three inches manufactured in lengths of thousands of feet and wound
or coiled along a large reel on a truck or skid-mounted unit. Due to the small
diameter of coiled tubing, it can be inserted through production pipe and used
to perform workovers without using a larger, more costly workover rig. The other
principal advantages of employing coiled tubing in a workover include (i) not
having to "shut-in" the well during such operations, thereby allowing production
to continue and reducing the risk of formation damage to the well, (ii) the
ability to reel continuous coiled tubing in and out of a well significantly
faster than conventional pipe, which must be jointed and unjointed, (iii) the
ability to direct fluids into a wellbore with more precision, allowing for
localized stimulation treatments and providing a source of energy to power a
downhole motor or manipulate downhole tools and (iv) enhanced access to remote
or offshore fields due to the smaller size and mobility of a coiled tubing unit.
Recent technological improvements to coiled tubing have increased its
dependability and durability, expanding coiled tubing's potential uses and
markets.
The Company participates in the offshore stimulation market through the use
of skid-mounted pump units and through operation of several stimulation vessels
including the "Renaissance" and the "Vestfonn" in
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the North Sea, the "Sea Hero," "Tad Tide" and "Jan Tide" in the Gulf of Mexico
and the "BJ003" and "BJ007" on Lake Maracaibo in Venezuela. The Jan Tide and
BJ003 were commissioned in the spring of 1994 and the BJ007 in the summer of
1995.
The Company believes that as production continues to decline in key
producing fields of the U.S. and certain international regions, the demand for
fracturing and stimulation services is likely to increase. The Company has
recently increased its pressure pumping capabilities in certain international
markets.
OTHER
The Company's other businesses, including product and equipment sales for
cementing and stimulation services, as well as the following services, accounted
for approximately 14% of the Company's total revenue in 1995 (15% since the
Acquisition). Such products and equipment sales to customers are generally made
in the course of providing cementing and stimulation services to certain
customers and, other than the specialty chemical business, the Company generally
does not sell proprietary products to other companies involved in well
servicing.
CASING AND TUBULAR SERVICES. Casing services principally consist of
installing (or "running") pipe in a wellbore to protect the structural integrity
of the wellbore and to seal various zones in the well. These services are
primarily provided during the drilling and completion phases of a well. Tubular
services, which consist of running pipe inside the casing to improve the flow of
oil and gas, are principally provided during workovers. The Company expects that
workover activity and the demand for tubular services in the North Sea should
increase during at least the next several years as operators there attempt to
mitigate the decline in production from the North Sea's mature fields.
COMMISSIONING AND LEAK DETECTION SERVICES. Leak detection services,
provided through the Company's Comtec division, involve the inspection and
testing of the integrity of pipe connections in offshore drilling and production
platforms, onshore and offshore pipelines and industrial plants, and are
provided during the commissioning, decommissioning, installation or construction
stages of these infrastructures, as well as during routine maintenance checks.
As a result of the Piper Alpha disaster in 1988 and regulations issued
thereafter by the U.K. Department of Energy, the Company expects the demand for
these services to grow due to increased interest in environmental protection and
enhanced safety measures and the need to maintain, upgrade and replace aging
pipeline infrastructures.
SPECIALTY CHEMICAL SERVICES. Specialty chemical services, provided through
the Company's Unichem division acquired from Western, include corrosion and
scale inhibitors, as well as process chemicals and paraffin control for the
treatment of oil wells and for refining, gas processing plant and petrochemical
facility maintenance and flow improvement.
OPERATIONS
Pressure pumping services are provided to both land-based and offshore
customers on a 24-hour, on-call basis, through regional and district facilities
in over 70 locations worldwide, utilizing complex, truck- or skid-mounted
equipment designed and constructed for the particular pressure pumping service
furnished. After such equipment is moved to a well location, it is configured
with appropriate connections to perform the specific services required. The
mobility of this equipment permits the Company to provide pressure pumping
services to changing geographic areas. Management believes that the Company's
pressure pumping equipment is adequate to service both current and projected
levels of market activity in the near term.
The Company maintains a fleet of mobile cement blending and pumping
equipment for onshore operations. Offshore operations are performed with
skid-mounted cement pumping units. The Company has successfully utilized its
patented RAM (Recirculating Averaging Mixer) both for onshore applications and
as an offshore skid. In 1991, the Company introduced a sand control blender, the
Cyclone, which also has pressure pumping and fracturing applications. Responding
to its customers' monitoring needs, in 1992 the Company introduced its
computerized monitor which allows for real-time monitoring of the cementing
process.
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Principal materials utilized in the pressure pumping business include
cement, fracturing proppants, acid and bulk chemical additives. Generally, these
items are available from several suppliers, and the Company utilizes more than
one supplier for each item. The Company also produces certain of its specialized
products through company-owned blending facilities in Germany and Singapore.
Sufficient material inventories are maintained to allow the Company to provide
oncall services to its customers to whom the materials are resold in the course
of providing pressure pumping services. Repair parts and maintenance items for
pressure pumping equipment are carried in inventory to ensure continued
operations without significant downtime caused by parts shortages. The Company
has not experienced significant difficulty in obtaining necessary supplies of
these materials or replacing equipment parts and does not anticipate a shortage
in the foreseeable future.
The Company believes that coiled tubing and other materials utilized in
performing coiled tubing services are and will continue to be widely available
from a number of manufacturers. Although there are only two principal
manufacturers of the reels around which the coiled tubing is wrapped, the
Company is not aware of any difficulty in obtaining coiled tubing reels in the
past, and the Company anticipates no such difficulty in the future.
ENGINEERING AND SUPPORT SERVICES
The Company maintains a manufacturing and research and development center
near Houston, Texas. The Company's research and development organization is
divided into three distinct areas - Petroleum Engineering, Instrumentation
Engineering and Mechanical Engineering.
Petroleum Engineering. The Petroleum Engineering laboratory specializes in
designing fluids with enhanced performance characteristics in the fracturing,
acidizing and cementing operations (i.e., "frac fluids" and "cement slurries").
As fluids must perform under a wide range of downhole pressures, temperatures
and other conditions, this design process is a critical element in developing
products to meet customer needs.
In addition to fluids technology, the Company's Petroleum Engineering group
develops and supports a wide range of proprietary software utilized in the
monitoring of both cement and stimulation job parameters. This software,
combined with the Company's internally developed monitoring hardware, allows for
real-time job control as well as post-job analysis.
Instrumentation Engineering. The pumping services industry utilizes an
array of both monitoring and control instrumentation as an integral element of
providing cementing and stimulation services. The Company's monitoring and
control instrumentation, developed by its Instrumentation Engineering group,
complements its products and equipment and provides customers with desired
real-time monitoring of critical applications.
Mechanical Engineering. Though similarities exist between the major
competitors in the general design of their pumping equipment, the actual
engine/transmission configurations as well as the mixing and blending systems
differ significantly. Additionally, different approaches to the integrated
control systems result in equipment designs which are usually distinct in
performance characteristics for each competitor. The Company's Mechanical
Engineering group is responsible for the design and manufacturing of virtually
all of the Company's primary pumping and blending equipment. However, some
peripheral support equipment which is generic to the industry is purchased
externally. The Company's Mechanical Engineering group provides new product
design as well as support to the rebuilding and field maintenance functions.
MANUFACTURING
In addition to the engineering facility, the Company's technology and
research center houses its main equipment and instrumentation manufacturing
facility. This operation currently occupies approximately 65,000 square feet and
includes complete fabrication, engine and transmission rebuilding, pump
manufacturing and assembly capabilities. As a result of the Acquisition, the
Company acquired a research and engineering center located in The Woodlands,
north of Houston, Texas. The Company also has ancillary
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manufacturing facilities in Singapore and Scotland. The Company employs outside
vendors for some fabrication but is not dependent on any one source.
COMPETITION
Pressure Pumping Services. The Company competes with larger pumping service
companies, in particular the Halliburton Company ("Halliburton") and Dowell, a
division of Schlumberger Ltd. ("Dowell Schlumberger"), in all areas of the U.S.
in which the Company participates and in most international regions. In
addition, Nowsco Well Service Ltd. ("Nowsco") competes with the Company in the
U.S. and some international markets. Nowsco has recently been expanding its
presence in the U.S. market through acquisitions and increased capital
investment. Several smaller companies compete with the Company in certain areas
of the U.S. and in certain foreign countries. The principal methods of
competition which apply to the Company's business are its prices, service record
and reputation in the industry. While Halliburton and Dowell Schlumberger are
significantly larger in terms of overall revenues, the Company has a number one
or a number two share position in several markets, including many regions in the
United States, the North Sea and Latin America.
Other Services: The Company believes that it is one of the largest
suppliers of casing and tubular services in the U.K. North Sea and is expanding
such services in Latin America. The largest provider of casing and tubular
services in Europe is Weatherford Enterra, Inc. In the U.K., casing and tubular
services are typically provided under long-term contracts which limit the
opportunities to compete for business until the end of the contract term. In
continental Europe, shorter-term contracts are typically available for bid by
the provider of casing and tubular services. The Company believes it and Nowsco
are the largest suppliers of commissioning and leak detection services in the
U.K. North Sea. In specialty chemical services, there are several major chemical
suppliers significantly larger than the Company's Unichem division.
MARKETS AND CUSTOMERS
Demand for the Company's services and products depends primarily upon the
number of oil and gas wells being drilled, the depth and drilling conditions of
such wells, the number of well completions and the level of workover activity
worldwide.
The Company's principal customers consist of major and independent oil and
gas producing companies. During 1995, the Company provided oilfield services to
over 2,500 customers, none of which accounted for more than 5% of consolidated
revenues. While the loss of certain of the Company's largest customers could
have a material adverse effect on Company revenues and operating results in the
near term, management believes the Company would be able to obtain other
customers for its services in the event it lost any of its largest customers.
In both the U.S. and internationally, there has been a continuing trend by
oil and gas companies toward "alliances" with the service companies. These
alliances take various forms including packaged or integrated services, single
source suppliers and turnkey agreements. During 1995, approximately $117 million
of the Company's revenues were generated under such alliances.
United States. The Company provides its pumping services to its U.S.
customers through a network of over 40 locations, a majority of which offer both
cementing and stimulation services. Demand for the Company's services in the
U.S. is primarily driven by oil and natural gas drilling activity, which is
affected by the current and anticipated prices of oil and natural gas. Due to
weak energy prices and lower-cost sources of oil internationally, drilling
activity in the U.S. has declined more than 75% from its peak in 1981. Record
low drilling activity levels were experienced in 1986 and 1992. As a result,
pumping service companies have been unable to recapitalize their aging U.S.
fleets due to the inability, under current market conditions, to generate
adequate returns on new capital investments. Management believes it is important
to operate with a greater "critical mass" in key U.S. markets to improve returns
in this environment. This conclusion led to the decision to withdraw from
certain low activity areas in the past several years and to consolidate the
Company's operations with those acquired from Western, which had a larger
presence in the U.S.
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International. The Company operates in over 30 countries in the major
international oil and natural gas producing areas of Latin America, Europe,
Africa, Southeast Asia and the Middle East. The Company generally provides
services to its international customers through wholly-owned foreign
subsidiaries. Additionally, the Company holds certain controlling and minority
interests in joint venture companies, through which it conducts a portion of its
international operations. For geographic information, see Note 8 of the Notes to
Consolidated Financial Statements.
The international market is somewhat less volatile than the U.S. market
despite energy price fluctuations. Due to the significant investment and
complexity in international projects, management believes drilling decisions
relating to such projects tend to be evaluated and monitored with a longer-term
perspective with regard to oil and gas pricing. Additionally, the international
market is dominated by major oil companies and national oil companies which tend
to have different objectives and more operating flexibility than the typical
independent producer in the U.S. International activities have been increasingly
important to the Company's results of operations since 1992, when it implemented
a strategy to expand its international presence.
In general, the Company operates in those international markets where it
can achieve and maintain both a significant share position and achieve and
maintain an attractive return on its investment. The Company's major
international revenue and income producing operations are in the North Sea in
the European market; Indonesia and Malaysia in the Southeast Asian market; and
Argentina, Venezuela, Ecuador and Colombia in the Latin American market. Foreign
operations are subject to special risks that can materially affect the sales and
profits of the Company, including currency exchange rate fluctuations, the
impact of inflation, governmental expropriation, exchange controls, political
instability and other risks.
EMPLOYEES
At September 30, 1995, the Company had a total of 4,777 employees.
Approximately 37% of the Company's employees are employed outside the United
States.
GOVERNMENTAL AND ENVIRONMENTAL REGULATION
The Company's business is affected both directly and indirectly by
governmental regulations relating to the oil and gas industry in general, as
well as environmental and safety regulations which have specific application to
the Company's business.
The Company, through the routine course of providing its services, handles
and stores bulk quantities of hazardous materials. In addition, leak detection
services involve the inspection and testing of facilities for leaks of hazardous
or volatile substances. If leaks or spills of hazardous materials handled,
transported or stored by the Company occur, the Company may be responsible under
applicable environmental laws for costs of remediating damage to the surface,
sub-surface or aquifers incurred in connection with such occurrence.
Accordingly, the Company has implemented and continues to implement various
procedures for the handling and disposal of hazardous materials. Such procedures
are designed to minimize the occurrence of spills or leaks of these materials.
The Company has implemented and continues to implement various procedures
to further assure its compliance with environmental regulations. Such procedures
generally pertain to the operation of underground storage tanks, disposal of
empty chemical drums, improvement to acid and wastewater handling facilities and
cleaning of certain areas at the Company's facilities. The estimated cost for
such procedures, including other environmental investigations and remedial
actions, is approximately $14 million which will be distributed over a period of
several years, for which the Company has provided appropriate reserves. In
addition, the Company maintains insurance for certain environmental liabilities
which the Company believes is reasonable based on its knowledge of the industry.
The Comprehensive Environmental Response, Compensation and Liability Act,
also known as "Superfund," imposes liability without regard to fault or the
legality of the original conduct, on certain classes of persons that contributed
to the release of a "hazardous substance" into the environment. Certain disposal
facilities used by the Company or its predecessors have been investigated under
state and federal superfund
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statutes, and the Company has been named as a potentially responsible party for
cleanup at 10 such sites. Although the Company's level of involvement varies at
each site, in general, the Company is one of numerous parties named and will be
obligated to pay an allocated share of the cleanup costs. While it is not
feasible to predict the outcome of these matters with certainty, management is
of the opinion that their ultimate resolution should not have a material effect
on the Company's operations or financial position.
RESEARCH AND DEVELOPMENT; PATENTS
Research and development activities are directed primarily toward
improvement of existing products and services and the design of new products and
processes to meet specific customer needs. Research and development expenses for
each of the three fiscal years ended September 30, 1995 were $6,801,000,
$6,421,000 and $6,500,000, respectively.
The Company currently holds numerous patents relating to products and
equipment used in its pumping services business. While such patents, in the
aggregate, are important to maintaining the Company's competitive position, no
single patent is considered to be of a critical or essential nature.
Additionally, the Company operates under various license arrangements,
generally ranging from 10 to 20 years in duration, relating to certain products
or techniques. None of these license arrangements is of a material nature.
To remain competitive, the Company devotes significant resources to
developing technological improvements to its products. In 1991, the Company
introduced a borate based fracturing fluid, Spectra Frac G(R), which is being
widely used in the U.S. stimulation market and the North Sea. In 1993, this
product was complemented with two additional fracturing fluids, Spartan FracSM
and Medallion FracSM, which have expanded the Company's services line offering
to cover a broader range of economic and downhole design variables. These
products replaced several products previously made available to customers.
During 1994, the Company commercialized a proprietary enzyme chemistry used in
conjunction with the three fracturing fluids. These "enzyme breakers"
significantly enhance the production of oil and gas in a wide range of wells. In
1991, the Company introduced its "Cyclone" blender which, along with Western's
completion tool technology, have helped address the growing sand control and
frac pack markets in the Gulf of Mexico and the North Sea. The Company believes
that these products and equipment have enabled the Company to maintain or
increase its market share in the United States, the Gulf of Mexico and the North
Sea.
In 1995, the Company developed Sandstone Acid(TM), a matrix acidizing
chemistry used in sandstone formations. While still in the early stages of
testing, management believes this product offers significant advantages over
conventional acidizing methods in sandstone reservoirs. The Company intends to
continue to devote significant resources to its research and development
efforts.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The current executive officers of the Company and their positions and ages
are as follows:
<TABLE>
<CAPTION>
OFFICE
NAME AGE POSITION WITH THE COMPANY HELD SINCE
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<S> <C> <C> <C>
J. W. Stewart.................... 51 Chairman of the Board, President and Chief 1986
Executive Officer
Michael McShane.................. 41 Vice President -- Finance and Chief 1987
Financial Officer
David Dunlap..................... 34 Vice President -- International Operations 1995
Thomas H. Koops.................. 49 Vice President -- Technology and Logistics 1988
Margaret B. Shannon.............. 46 Vice President -- General Counsel 1994
Kenneth A. Williams.............. 45 Vice President -- North American Operations 1991
Matthew D. Fitzgerald............ 38 Controller 1989
Taylor M. Whichard............... 37 Treasurer 1992
Stephen A. Wright................ 48 Director of Human Resources 1987
</TABLE>
Mr. Stewart joined Hughes Tool Company in 1969 as Project Engineer. He
served as Vice President -- Legal and Secretary of Hughes Tool Company and as
Vice President -- Operations for a predecessor of the Company prior to being
named President of the Company in 1986.
Mr. McShane joined the Company in 1987 from Reed Tool Company, an oilfield
tool company, where he was employed for seven years. At Reed Tool Company he
held various financial management positions including Corporate Controller and
Regional Controller of Far East Operations.
Mr. Dunlap joined the Company in 1984 as a District Engineer and was named
Vice President -- International Operations in December 1995. He has previously
served as Vice President -- Sales for the Coastal Division of North America and
U.S. Sales and Marketing Manager.
Mr. Koops joined the Company as Manager -- Products and Technical Services
in 1976, prior to being named Vice President -- Manufacturing and Logistics of
the Company in 1988 and to his current position in 1992.
Ms. Shannon joined the Company in 1994 as Vice President -- General Counsel
from the law firm of Andrews & Kurth L.L.P. where she had been a partner since
1984.
Mr. Williams joined the Company in 1973 and has since held various
positions in the U.S. operations. Prior to being named Vice President -- North
American Operations in 1991, he served as Region Manager -- Western U.S. and
Canada.
Mr. Fitzgerald joined the Company as Controller in 1989 from Baker Hughes
Incorporated, an oil service company, where he was the Director of Corporate
Audit. Prior thereto, he was a Senior Manager with the certified public
accounting firm of Ernst & Whinney.
Mr. Whichard joined the Company as Tax and Treasury Manager in 1989 from
Weatherford International, an oil service company, where he was the Tax Manager.
Prior to being named Treasurer in 1992, he served in various positions including
Tax Director and Assistant Treasurer.
Mr. Wright joined the Company as Manager of Compensation and Benefits in
1985 from Global Marine Inc., an offshore drilling company, and assumed his
current position with the Company in 1987.
ITEM 2. PROPERTIES
The Company's properties consist primarily of pressure pumping and blending
units and related support equipment such as bulk storage and transport units.
The Company's pressure pumping and blending fleet is
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owned and unencumbered. The Company's tractor fleet, more than half of which are
leased, is used to transport the pumping and blending units. The Company's
domestic light duty truck fleet is also leased, whereas a majority of trucks in
the international light duty truck fleet are owned by the Company.
The Company both owns and leases regional and district facilities from
which pressure pumping services and other oilfield services are provided to
land-based and offshore customers. The Company's principal executive offices in
Houston, Texas are leased. The technology and research center located near
Houston, Texas is owned by the Company, as are blending facilities located in
Germany and Singapore. The Company operates several stimulation vessels,
including the Renaissance and the Vestfonn in the North Sea and the BJ003 and
BJ007 in Venezuela which are owned, and the Sea Hero, Tad Tide and Jan Tide in
the Gulf of Mexico on which the hulls are leased. For additional information
with respect to the Company's lease commitments, see Note 10 of the Notes to
Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
The Company, through performance of its service operations, is sometimes
named as a defendant in litigation, usually relating to claims for bodily
injuries or property damage (including claims for well or reservoir damage). The
Company maintains insurance coverage against such claims to the extent deemed
prudent by management. The Company believes that there are no existing claims of
a potentially material adverse nature for which it has not already provided
appropriate accruals.
Shortly after the public announcement in September 1994 of the proposed
acquisition of Western by the Company (the "Proposed Acquisition"), four actions
were commenced against Western and its directors in the Delaware Court of
Chancery, styled Croyden Associates v. Sheldon R. Erikson, et al., and The
Western Company of North America, C.A. No. 13740, filed September 13, 1994;
Reggie P. Judice v. Sheldon R. Erikson, et al., and The Western Company of North
America, C.A. No. 13742, filed September 14, 1994; William T. Henderson v.
Sheldon R. Erikson, et al., and The Western Company of North America, C.A. No.
13743, filed September 14, 1994, and Russ Seger v. Sheldon R. Erikson, et al.,
and The Western Company of North America, C.A. No. 13769, filed September 27,
1994. The allegations in these lawsuits, all of which were filed as alleged
class action complaints, are substantially the same and relate to the rejection
of the Proposed Acquisition by the Board of Directors of Western. The purported
class of plaintiffs on whose behalf the class action complaints were filed is
all stockholders of Western. Among the claims included in these lawsuits is the
claim that, by failing to accept the Proposed Acquisition, Western and its
directors breached their fiduciary duties to the stockholders of Western. In
their complaints, the plaintiffs sought equitable relief to compel Western and
its directors to perform their fiduciary duties, as construed by the plaintiffs,
and unspecified damages. Three former directors of Western, Michael E. Patrick,
William J. Johnson, and David A.B. Brown, are now directors of the Company. No
significant developments have occurred in any of these actions since the
consummation of the Acquisition.
As a result of the Acquisition, the Company assumed responsibility for
certain claims and proceedings made against Western in connection with its
business. Some, but not all, of such claims and proceedings will continue to be
covered under insurance policies of Western that were in place at the time of
the merger. Although the outcome of the claims and proceedings against the
Company (including Western) cannot be predicted with certainty, management
believes that there are no existing claims or proceedings that are likely to
have a materially adverse effect on the Company's financial position or results
of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted for stockholders' vote during the fourth quarter
of the fiscal year ended September 30, 1995.
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<PAGE> 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock of the Company began trading on The New York Stock
Exchange in July 1990 under the symbol "BJS" and in April 1995, Warrants to
purchase common stock ("Warrants") under the symbol "BJSW". At December 8, 1995
there were approximately 640 holders of record of the Company's Common Stock and
1,140 holders of record of the Warrants.
The following table sets forth for the periods indicated the high and low
sales prices per share for the Company's Common Stock and Warrants reported on
the NYSE composite tape.
<TABLE>
<CAPTION>
COMMON STOCK WARRANT
PRICE RANGE PRICE RANGE
--------------- ------------
HIGH LOW HIGH LOW
----- ----- ---- ---
<S> <C> <C> <C> <C>
Fiscal 1994
1st Quarter..................................... 26.50 18.00
2nd Quarter..................................... 22.50 17.50
3rd Quarter..................................... 22.38 17.38
4th Quarter..................................... 22.13 18.25
Fiscal 1995
1st Quarter..................................... 21.00 16.25
2nd Quarter..................................... 20.50 15.50
3rd Quarter..................................... 26.00 20.38 5.63 3.63
4th Quarter..................................... 27.38 22.63 6.88 4.13
Fiscal 1996
1st Quarter (through December 8, 1995).......... 27.00 20.50 6.25 3.00
</TABLE>
Since its initial public offering in 1990, BJ Services has not paid any
cash dividends to its stockholders. The Company expects that, for the
foreseeable future, any earnings will be retained for the development of the
Company's business and, accordingly, no dividends will be declared on the Common
Stock.
On August 1, 1991, the Company issued $30.0 million of 9.2% Notes Due
August 1, 1998 (the "Notes") pursuant to note agreements among the Company, the
Company's subsidiaries and the purchasers of the Notes. The principal amount of
the Notes is payable in five annual installments from August 1, 1994 through
August 1, 1998, and interest is payable quarterly.
On April 14, 1995, the company canceled its existing credit facility and
the outstanding borrowings were repaid with funds from a committed, unsecured
credit facility ("Bank Credit Facility") executed to accommodate the
Acquisition. The Bank Credit Facility consists of a five-year $175.0 million
revolver and a six-year $225.0 million term loan, providing an aggregate of
$400.0 million in available principal borrowings to the Company.
Subsequent to the execution of the Bank Credit Facility, the Notes were
amended to incorporate provisions contained in the Bank Credit Facility. The
Bank Credit Facility and the Notes contain a restriction on dividend payments
pursuant to which the Company is prohibited from declaring or paying dividends
or other distributions on, or purchasing or redeeming any shares of or rights
with respect to, the Company's capital stock (each a "Restricted Payment" and
collectively, "Restricted Payments") when the Company's debt to capitalization
ratio exceeds 35%, except that the Company may declare and make dividend
payments or other distributions payable solely in its capital stock. The Company
may make Restricted Payments if (i) there exists no default and such payment
would not result in an Event of Default, and (ii) the debt to capitalization is
equal to or less than 35% immediately prior to and after giving effect to such
payment, subject to the following limitations: (a) cash dividends paid by the
company during any fiscal quarter shall not exceed an amount equal to 50% of
Consolidated Net Income (as defined) for the preceding four fiscal quarters; and
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<PAGE> 12
(b) the aggregate dollar amount of all Restricted Payments, including cash
dividends, shall not exceed the Available Amount, defined in the Bank Credit
Facility as the amount equal to (i) 50% of Consolidated Net Income on a
cumulative basis since the Execution Date plus (ii) 50% of the aggregate net
cash proceeds from the issuance or sale after the Execution Date of shares of
the company's capital stock.
Each outstanding share of Common Stock includes one preferred share
purchase right ("Right"). Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series Two Junior Participating
Preferred Stock ("Preferred Stock"), at a price of $75 per one one-hundredth of
a share (the "Purchase Price"), subject to adjustment under certain
circumstances. Holders of Preferred Stock are entitled to receive, when, as and
if declared by the Board of Directors, (a) a dividend in an amount per share
equal to, subject to certain adjustments, 100 times the aggregate per share
amount of all cash dividends and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions (other than a
dividend payable in shares of Common Stock or other capital stock of the Company
or a distribution of rights or warrants to acquire any such share, including any
debt security convertible into or exchangeable for such share at a price less
than the current market price of such share) declared on the Common Stock and
(b) a preferential cash dividend, if any, on the tenth day of March, June,
September and December of each year commencing on the first such quarterly
dividend payment date after the first issuance of a share or fraction of a share
of Preferred Stock, in an amount equal to $1.00 per share of Preferred Stock
less the per share amount of all cash dividends declared on the Preferred Stock
pursuant to clause (a) of this sentence since the immediately preceding
quarterly dividend payment date, or, with respect to the first quarterly
dividend payment date, since the first issuance of any share or fraction of
share of Preferred Stock. The foregoing dividend amounts are subject to
adjustment in the event of any stock dividend, stock split or combination with
respect to the Common Stock. The holders of Preferred Stock are not entitled to
the payment of interest with respect to accrued but unpaid dividends. No shares
of Preferred Stock have been issued by the Company to date.
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<PAGE> 13
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain selected historical financial data
of the Company. The selected operating and financial position data as of and for
each of the five years in the period ended September 30, 1995 have been derived
from the audited consolidated financial statements of the Company. This
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and Notes thereto which are included elsewhere herein.
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------------
1995(1) 1994 1993 1992 1991
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue................................... $633,660 $434,476 $394,363 $330,028 $390,296
Operating expenses, excluding unusual
charges and goodwill amortization...... 592,905 414,493 373,934 316,305 358,475
Goodwill amortization..................... 3,266 1,298 691
Unusual charges(2)........................ 17,200 15,700
Operating income (loss)................... 20,289 18,685 19,738 (1,977) 31,821
Interest expense.......................... (15,164) (7,383) (5,414) (2,977) (3,135)
Other income -- net....................... 2,734 877 2,014 297 1,736
Income tax expense (benefit).............. (1,102) 2,006 1,593 (3,657) 5,170
Income (loss) before cumulative effect of
accounting change...................... 9,889 10,770 14,561 (1,104) 24,422
Cumulative effect of change in accounting
principle, net of tax(3)............... (10,400)
Net income (loss)......................... 9,889 370 14,561 (1,104) 24,422
Net income (loss) per share............... 0.46 0.02 0.94 (0.08) 1.88
Depreciation and amortization(4).......... 42,064 25,335 24,170 12,742 14,497
Capital expenditures(5)................... 30,966 39,345 37,350 26,197 34,588
FINANCIAL POSITION DATA (AT END OF PERIOD):
Property, net............................. $416,810 $198,844 $183,962 $171,420 $134,139
Total assets.............................. 989,683 410,066 369,531 328,799 265,686
Long-term debt, excluding current
maturities............................. 259,566 74,700 84,500 55,500 31,000
Stockholders' equity...................... 466,795 189,927 187,132 134,794 135,307
</TABLE>
- ---------------
(1) Includes the effect of the acquisition of Western by the Company since April
1, 1995, which was accounted for as a purchase in accordance with generally
accepted accounting principles. See Note 4 of the Notes to Consolidated
Financial Statements.
(2) Unusual charges for the fiscal year ended September 30, 1995 represent
nonrecurring costs associated with the acquisition of Western, including
writedown of idle facilities, severance of BJ employees and other
merger-related costs. Unusual charges for 1992 primarily represent a
provision for restructuring the Company's North American operations. See
Note 3 of the Notes to Consolidated Financial Statements.
(3) In the fiscal year ended September 30, 1994, the Company changed its method
of accounting for postretirement benefits other than pensions. See Note 9
of the Notes to Consolidated Financial Statements.
(4) In October 1991, BJ Services revised the estimated salvage values and
remaining useful lives of certain of its U.S. pumping services equipment to
more closely reflect expected remaining lives. The effect of this change in
accounting estimate resulted in a decrease of $2.9 million, or $.22 per
share, in BJ Services' net loss for 1992.
(5) Excluding acquisitions of businesses.
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<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company's operations are primarily driven by the number of oil and gas
wells being drilled, the depth and drilling conditions of such wells, the number
of well completions and the level of workover activity worldwide. Drilling
activity, in turn, is largely dependent on the price of oil and natural gas.
This is especially true in the United States, where the Company generates
approximately 60% of its revenues after giving effect to the Acquisition.
Due to weak energy prices and lower-cost sources of oil internationally,
drilling activity in the United States has declined more than 75% from its peak
in 1981. Record low drilling activity levels were experienced in 1986 and 1992.
As a result, pumping service companies have been unable to recapitalize their
aging United States fleets due to the inability, under current market
conditions, to generate adequate returns on new capital investments. The Company
believes it is important to operate with a greater "critical mass" in key U.S.
markets to improve returns in this environment. This conclusion led to the
decision to withdraw from certain low activity areas in the past several years
and to consolidate its remaining operations with those acquired in April 1995
from Western, which had a larger presence in the United States.
The rig count in the United States averaged 739 active drilling rigs during
1995, a 6% and 2% decline, compared with 1994 and 1993, respectively, and the
second lowest count on record. Most of the activity decline was the result of a
reduction in drilling for natural gas. The average rig count for rigs drilling
for natural gas was down 5% during 1995 and 8% during the most recent quarter.
It is anticipated that natural gas drilling activity will remain weak over at
least the next quarter.
While international (excluding Canada) drilling activity has historically
been less volatile than domestic drilling activity, the international active rig
count had declined in each of the last four years prior to fiscal 1995 due to
weak oil prices and economic and political instability in certain overseas
countries. The most significant declines in international drilling activity
occurred in the North Sea, Italy, Nigeria and Mexico. The activity decline has
leveled off somewhat with the active rig count for 1995 up slightly from 1994.
Management expects international drilling activity to increase in 1996 on the
strength of development work in Latin America, especially Argentina and
Venezuela, and renewed exploration programs in the U.K. North Sea.
In both the U.S. and internationally, there has been a continuing trend by
oil and gas companies toward "alliances" with the service companies. These
alliances take various forms including packaged or integrated services, single
source suppliers and turnkey agreements. During 1995, approximately $117 million
of the Company's revenues were generated under such alliances.
EXPANSIONS AND ACQUISITIONS
Management believes the primary opportunities for geographic and product
expansion remain in international markets. As a result, other than the
Acquisition, the Company's capital spending and expansion efforts have been
primarily focused outside of the U.S. The Company's expansion efforts during the
past three years have included the expansion of pumping services into several
key international markets, including Saudi Arabia, Qatar and Vietnam; expanding
tubular services and commissioning and leak detection services into geographic
regions outside the North Sea; adding additional pumping service capacity in key
Latin American markets; and the acquisitions of Norsk Bronnservice A/S ("NBS")
in April 1993, Italog S.p.A ("SIAT") in July 1993, and the remaining 50%
ownership of its joint venture in Egypt in February 1994.
On April 13, 1994, the Company completed the Acquisition for a total
purchase price of $511.4 million (including transaction costs of $7.2 million),
paid approximately half in cash and half in shares of Company common stock and
warrants to purchase common stock. The Acquisition provides the Company with a
greater "critical mass" with which to compete in U.S. and international markets
and the opportunity to realize significant consolidation benefits. The
Acquisition is expected to add revenues of up to 70-80% to the Company's
previous revenue base and has more than doubled the Company's U.S. revenue base
beginning in the June 1995 quarter. In addition, it is estimated that at least
$40 million of overhead and redundant operating costs will be eliminated
annually by combining the two companies.
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<PAGE> 15
RESULTS OF OPERATIONS
The following table sets forth selected key operating statistics reflecting
industry rig count and the Company's financial results:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Average active rigs:(1)
U.S............................................................. 739 784 755
International (excluding Canada)................................ 750 747 783
Revenue per rig (in thousands).................................... $425.6 $283.8 $256.4
Revenue per employee (in thousands)............................... $168.3 $160.4 $151.4
Percentage of gross profit to revenue(2).......................... 15.1% 13.1% 14.3%
Percentage of marketing expense to revenue........................ 4.2% 3.3% 3.3%
Percentage of general and administrative expense to revenue....... 4.5% 5.2% 5.8%
</TABLE>
- ---------------
(1) Industry estimate of average active rigs published by Baker Hughes
Incorporated.
(2) Gross profit represents Company revenue less cost of sales and services and
research and engineering expenses.
Revenue: Revenue increased by 10% in 1994 and 46% during 1995, the third
consecutive yearly increase. The increase in 1994 was driven primarily by the
Company's international expansion program and an increase in U.S. natural gas
drilling and stimulation activity. In 1995, the increase was due primarily to
continued growth of the international expansion, increased activity in Latin
America and the Acquisition.
U.S. revenues increased by 6% and 67% in 1994 and 1995, respectively. The
1994 increase was due primarily to a 12% increase in the active rig count for
gas-related drilling, partially offset by a 4% decline in the rig count for
oil-related drilling. In addition, customer alliances contributed an additional
$14.5 million in revenues during the year. During the first six months of 1995
(prior to the Acquisition), the Company's revenues increased 5% over the same
period in 1994 due primarily to the increased placement of cementing units and
the addition of a stimulation vessel in the Gulf of Mexico. With the
Acquisition, the Company's U.S. revenues over the balance of the year more than
doubled, accounting for the remainder of the 67% increase for 1995.
In the last quarter of 1995, continued weak natural gas prices caused many
of the Company's customers to significantly curtail their drilling activity.
During this period, management believes it retained most of the key customers of
both the Company and Western. However, since the former Western operations were
more heavily concentrated in the natural gas regions of the United States, the
decline in natural gas drilling activity significantly impacted the Company's
operations. While pricing for the Company's U.S. pumping services remained
relatively stable during 1995, pricing remains depressed compared to levels
realized in the past. Management expects these competitive pricing conditions to
remain until a significant increase in drilling activity occurs.
International revenues increased by 14% and 27% during 1994 and 1995,
respectively. The increases were primarily attributable to three factors: (a)
continued geographic expansion of the Company's tubular services, and
commissioning and leak detection service lines; (b) significant increase in
Latin America business; and (c) acquisitions. The tubular services and
commissioning and leak detection product lines have now been expanded into 13
countries, including parts of the Middle East, Africa, South America, Southeast
Asia and Australia. Most of the revenue growth in Latin America (up 36% and 46%
in 1994 and 1995, respectively) was a result of increased cementing and
stimulation activity with both private and national oil and gas companies in
Argentina, and the addition of a stimulation vessel in 1994 and a coiled tubing
barge in 1995 to service the Lake Maracaibo, Venezuela market. The acquisitions
which contributed to the Company's revenue growth were NBS in April 1993, SIAT
in July 1993, the former Egypt joint venture in February 1994, and Western in
April 1995, which added international operations in Indonesia, Hungary and
Nigeria. These acquisitions
15
<PAGE> 16
added approximately $14 million and $30 million in international revenue during
1994 and 1995, respectively, compared with 1993.
Operating Income: Operating income decreased by $1.1 million in 1994 and
increased by $1.6 million in 1995. In 1994, the decrease was due primarily to
lower margins on the Company's North Sea stimulation business caused by lower
activity and pricing, and a decline in U.S. pricing. In 1995, the increase was
primarily due to the revenue increases described above partially offset by a
$17.2 million unusual charge incurred in 1995. The unusual charge was taken in
conjunction with a consolidation program that is designed to improve
efficiencies and reduce costs resulting from the Acquisition. Included in the
unusual charge is an adjustment to the carrying value of duplicate operating
facilities, severance and related benefit costs, benefits due under agreements
covering the Company's executives which were triggered as a result of the
Acquisition, and legal and other costs that would not have been incurred had the
Acquisition not occurred.
The cost of sales and services as a percentage of revenue decreased to
83.0% in 1995 as compared to 84.9% and 83.4% in 1994 and 1993, respectively. The
increase from 1993 to 1994 was due primarily to a decline in U.S. pricing, which
negatively impacted margins by $5.5 million, and lower margins on the Company's
North Sea stimulation business caused by lower activity and pricing. The
reduction in 1995 was primarily as a result of cost reduction efforts
implemented after the Acquisition and the economies of scale by having a larger
U.S. operation.
Other operating expenses, excluding the unusual charge and goodwill
amortization, increased by 1% and 47% in 1994 and 1995, respectively. The 1994
increase was attributable to higher marketing expenses from international
expansion efforts and corporate marketing and alliance programs, partially
offset by lower research and engineering and general and administrative expenses
due to the Company's continued overhead reduction efforts. The 1995 increase was
primarily attributable to overhead from the former Western operations, along
with increased marketing expenses related to international expansions. Marketing
expenses are expected to increase as a percentage of sales due to the higher
concentration of Western's revenues earned in the United States, which requires
a relatively greater marketing effort. The increase in goodwill amortization
resulted from the aforementioned acquisitions, most significantly Western, which
will result in annual goodwill amortization expense of $4.4 million.
Other: Interest expense increased by $2.0 million and $7.8 million in 1994
and 1995, respectively. The 1994 increase resulted from higher interest rates
and increased borrowings to fund the Company's international expansions and
acquisitions. While interest rates continued to increase marginally during 1995,
the additional interest expense is primarily attributed to borrowings incurred
to finance the Acquisition. See "Financial Condition -- Capital Resources and
Liquidity" and Notes 4 and 5 of the Notes to Consolidated Financial Statements.
Other income was a net gain in both 1994 and 1995 due to nonrecurring gains
on asset sales and, in 1995, $1.4 million of royalty income from one of the
Company's proprietary products. Such royalty income is expected to decline in
1996 due to a reduction in use by the licensee.
Primarily as a result of profitability in international jurisdictions where
the statutory rate is below the U.S. rate and the availability of tax benefits
from the Company's reorganization pursuant to its initial public offering in
1990, the Company's effective tax rate remained below the U.S. statutory rate
during 1995. Additionally, certain nonrecurring benefits have reduced the
Company's effective tax rate, including $1.3 million in 1993 resulting from a
change in the valuation reserve for net operating losses and from changes in tax
laws in the U.S. and other countries, $1.9 million in 1994 from a change in the
valuation reserve for net operating losses and $1.5 million in 1995 from the
favorable settlement of a tax audit and from tax losses attributable to foreign
exchange fluctuations in certain international jurisdictions.
Minority interest expense declined in both 1994 and 1995, as a result of
lower profitability of the Company's Southeast Asian joint venture and losses by
the Company's Nigerian joint venture. Results in 1994 include a $16.0 million
($10.4 million after tax) charge for the cumulative effect of an accounting
change for retiree health benefits. See Note 9 of the Notes to Consolidated
Financial Statements.
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<PAGE> 17
FINANCIAL CONDITION
Capital Resources and Liquidity: Cash flows from operating activities
increased to $26.3 million in 1994 and $39.4 in 1995 as compared to cash used in
operating activities of $.3 million in 1993. The 1994 improvement resulted
primarily from a smaller increase in both receivables and other current assets
and liabilities compared with 1993. In 1995, cash flows from operating
activities increased primarily as a result of higher profitability and higher
noncash expenses during the period.
Management strives to maintain low cash balances while utilizing available
credit facilities to meet the Company's capital needs. Excess cash generated is
used to pay down outstanding borrowings. On April 14, 1995 the Company replaced
its existing credit facility with the Bank Credit Facility, executed to
accommodate the Acquisition. The Bank Credit Facility consists of a five-year
$175.0 million revolving credit facility and a six-year $225.0 million term
loan, providing an aggregate of $400.0 million in available principal borrowings
to the Company. At September 30, 1994, borrowings outstanding under the Bank
Credit Facility amounted to $275.0 million consisting of the $225.0 million term
loan and $50.0 million borrowed under the revolver.
The outstanding balance of the Company's 9.2% Notes, issued in 1991, was
$18.0 million at September 30, 1995. Principal reductions of $6.0 million are
required annually each August until maturity on August 1, 1998.
The Company's interest-bearing debt represented 38.9% of its total
capitalization at September 30, 1995, compared to 36.3% at the previous fiscal
year-end. The increase reflects borrowings used to acquire Western. The
Company's Bank Credit Facility and 9.2% Notes contain various customary
covenants, including the maintenance of certain profitability and solvency
ratios and restriction on dividend payments. Management believes that the Bank
Credit Facility, combined with other discretionary credit facilities and cash
flow from operations, will provide the Company with sufficient capital resources
and liquidity to manage its routine operations and fund projected capital
expenditures.
At September 30, 1995, the Company had approximately $512 million of U.S.
tax net operating loss carryforwards expiring between 2000 and 2010. With the
Acquisition, the Company acquired approximately $375 million of tax net
operating loss carryforwards, subject to certain limitations, expiring between
2000 and 2008. Under Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" (SFAS 109), the Company is required to record a
deferred tax asset for the future tax benefit of these tax net operating loss
carryforwards, as well as other items, if realization is "more likely than not."
As previously discussed, the Acquisition gives the Company a greater "critical
mass" with which to compete in the U.S. as it has more than doubled the
Company's U.S. revenue base. In addition, with the combination of the Company
and Western, the Company expects to realize significant consolidation benefits.
Management estimates that approximately $40 million of overhead and redundant
operating costs will be eliminated annually as a result of the combination of
the two companies. Based on the weight of the available evidence, management has
concluded that the Company's future U.S. taxable income will be sufficient over
the remaining carryforward periods to realize the tax benefits represented by
approximately $332 million of tax net operating loss carryforwards acquired with
Western and generated by the Company's operations prior to the Acquisition. The
tax benefits resulting from the Acquisition have been included in the $84
million net deferred tax asset recognized in the purchase price allocation at
the acquisition date. Valuation allowances have been established for the
benefits of the tax net operating loss carryforwards that are estimated to
expire prior to their utilization.
Requirements for Capital: Excluding acquisitions, capital expenditures
during 1995 were $31.0 million, or $8.4 million below 1994 spending. The current
year's spending relates primarily to offshore operations both in the United
States and abroad, and international growth opportunities, including geographic
expansions and expansions of services. The prior year's spending included
approximately $11 million for the construction of two offshore stimulation
vessels. Investing activities in the fiscal year ended September 30, 1995
included $5.4 million of proceeds from the sale of a duplicate facility and
other disposals of assets.
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<PAGE> 18
Capital expenditures for fiscal 1996 are projected to be approximately $45
million, excluding acquisitions, and are expected to include spending for
continued geographic expansions of all service lines, construction or upgrading
of at least two offshore vessels, additional capacity in certain high margin
locations and normal levels of replacement capital. The actual amount of fiscal
1996 capital expenditures will be primarily dependent upon the availability of
expansion opportunities and will be funded by cash flows from operating
activities and available credit facilities. Management believes cash flows from
operating activities and available lines of credit, if necessary, will be
sufficient to fund projected capital expenditures.
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<PAGE> 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT ACCOUNTANTS
Stockholders of BJ Services Company:
We have audited the accompanying consolidated statements of financial position
of BJ Services Company and its subsidiaries as of September 30, 1995 and 1994,
and the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended September 30, 1995.
Our audits also included the financial statement schedule listed at Item 14.
These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and the financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of BJ Services Company and its
subsidiaries at September 30, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended September
30, 1995 in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
As described in Note 9 to the consolidated financial statements, the Company
changed its method of accounting for postretirement benefits other than pensions
effective October 1, 1993 to conform with Statement of Financial Accounting
Standards No. 106.
DELOITTE & TOUCHE LLP
Houston, Texas
November 21, 1995
19
<PAGE> 20
BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------
1995 1994 1993
-------- -------- --------
(IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenue.................................................... $633,660 $434,476 $394,363
Operating Expenses:
Cost of sales and services............................... 525,859 368,994 329,042
Research and engineering................................. 12,299 8,621 9,098
Marketing................................................ 26,429 14,169 12,969
General and administrative............................... 28,318 22,709 22,825
Goodwill amortization.................................... 3,266 1,298 691
Unusual charge........................................... 17,200
-------- -------- --------
Total operating expenses................................. 613,371 415,791 374,625
-------- -------- --------
Operating income........................................... 20,289 18,685 19,738
Interest expense........................................... (15,164) (7,383) (5,414)
Interest income............................................ 899 729 500
Other income -- net........................................ 2,734 877 2,014
-------- -------- --------
Income before income taxes, minority interest and
cumulative effect of accounting change................... 8,758 12,908 16,838
Income tax expense (benefit)............................... (1,102) 2,006 1,593
-------- -------- --------
Income before minority interest and cumulative effect of
accounting change........................................ 9,860 10,902 15,245
Minority interest.......................................... (29) 132 684
-------- -------- --------
Income before cumulative effect of accounting change....... 9,889 10,770 14,561
Cumulative effect of change in accounting principle, net of
tax benefit of $5,600,000................................ (10,400)
-------- -------- --------
Net income....................................... $ 9,889 $ 370 $ 14,561
======== ======== ========
Net Income Per Share:
Income per share before cumulative effect of accounting
change................................................ $ .46 $ .69 $ .94
Cumulative effect of change in accounting principle, net
of tax................................................ (.67)
-------- -------- --------
Net income per share............................. $ .46 $ .02 $ .94
======== ======== ========
Weighted average shares outstanding.............. 21,376 15,665 15,456
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
20
<PAGE> 21
BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Current Assets:
Cash and cash equivalents...................................................... $ 1,842 $ 3,218
Receivables, less allowance for doubtful accounts: 1995, $7,483,000; 1994,
$2,184,000................................................................... 168,771 103,754
Inventories:
Finished goods............................................................... 46,242 30,970
Work in process.............................................................. 2,392 1,118
Raw materials................................................................ 18,217 6,591
-------- --------
Total inventories....................................................... 66,851 38,679
Deferred income taxes.......................................................... 9,370 4,478
Other current assets........................................................... 10,101 8,230
-------- --------
Total current assets.................................................... 256,935 158,359
Property:
Land........................................................................... 13,031 12,031
Buildings...................................................................... 83,205 47,042
Machinery and equipment........................................................ 634,692 446,739
-------- --------
Total property.......................................................... 730,928 505,812
Less accumulated depreciation.................................................. 314,118 306,968
-------- --------
Property -- net.............................................................. 416,810 198,844
Goodwill, net of amortization.................................................... 193,263 20,998
Deferred income taxes............................................................ 107,889 20,607
Investments and other assets..................................................... 14,786 11,258
-------- --------
$989,683 $410,066
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable -- trade...................................................... $ 85,675 $ 54,609
Short-term borrowings.......................................................... 2,000 2,250
Current portion of long-term debt.............................................. 35,600 31,200
Accrued employee compensation and benefits..................................... 24,885 10,521
Income taxes................................................................... 5,915 7,719
Taxes other than income........................................................ 5,460 2,751
Accrued insurance.............................................................. 12,867 2,637
Other accrued liabilities...................................................... 31,869 9,162
-------- --------
Total current liabilities............................................... 204,271 120,849
Long-term debt................................................................... 259,566 74,700
Deferred income taxes............................................................ 11,496 7,194
Accrued postretirement benefits.................................................. 25,146 15,834
Minority interest and other long-term liabilities................................ 22,409 1,562
Commitments and contingencies
Stockholders' Equity:
Preferred stock (authorized 5,000,000 shares)
Common stock, $.10 par value (authorized 80,000,000 shares; issued and
outstanding
1995 --27,951,784 shares, 1994 -- 15,670,903 shares)....................... 2,795 1,567
Capital in excess of par....................................................... 415,242 151,340
Retained earnings.............................................................. 53,505 43,616
Cumulative translation adjustment.............................................. (4,747) (4,133)
Unearned compensation.......................................................... (2,463)
-------- --------
Total stockholders' equity.............................................. 466,795 189,927
-------- --------
$989,683 $410,066
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
21
<PAGE> 22
BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CAPITAL CUMULATIVE
COMMON IN EXCESS UNEARNED RETAINED TRANSLATION
STOCK OF PAR COMPENSATION EARNINGS ADJUSTMENT TOTAL
------ --------- ------------ -------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance, September 30, 1992........ $1,304 $ 105,374 $ 28,685 $ (569) $134,794
Net income....................... 14,561 14,561
Issuance of stock for:
Business acquisition.......... 250 40,537 40,787
Stock options................. 3 504 507
Stock purchase plan........... 4 619 623
Stock performance awards...... 2,855 $ (2,855)
Amortization of unearned
compensation.................. 500 500
Cumulative translation
adjustment.................... (4,640) (4,640)
------ --------- -------- -------- ------- --------
Balance, September 30, 1993........ 1,561 149,889 (2,355) 43,246 (5,209) 187,132
Net income....................... 370 370
Issuance of stock for:
Stock options................. 2 294 296
Stock purchase plan........... 4 680 684
Stock performance awards...... 944 (944)
Buyback of stock rights.......... (155) (155)
Amortization of unearned
compensation.................. 524 524
Revaluation of stock performance
awards........................ (312) 312
Cumulative translation
adjustment.................... 1,076 1,076
------ --------- -------- -------- ------- --------
Balance, September 30, 1994........ 1,567 151,340 (2,463) 43,616 (4,133) 189,927
Net income....................... 9,889 9,889
Issuance of stock for:
Business acquisition.......... 1,204 262,347 263,551
Stock options................. 2 535 537
Stock purchase plan........... 5 733 738
Stock performance awards...... 17 287 1,803 2,107
Amortization of unearned
compensation.................. 660 660
Cumulative translation
adjustment.................... (614) (614)
------ --------- -------- -------- ------- --------
Balance, September 30, 1995........ $2,795 $ 415,242 $ 53,505 $(4,747) $466,795
====== ========= ======== ======== ======= ========
</TABLE>
See Notes to Consolidated Financial Statements
22
<PAGE> 23
BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------
1995 1994 1993
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................... $ 9,889 $ 370 $14,561
Adjustments to reconcile net income to cash provided from
(used for) operating activities:
Cumulative effect of accounting change................ 10,400
Depreciation and amortization......................... 42,064 25,335 24,170
Net (gain) loss on disposal of assets................. (830) (346) 62
Recognition of unearned compensation.................. 2,463 524 500
Deferred income tax benefit........................... (8,861) (4,959) (4,877)
Unusual charge (noncash).............................. 3,646
Minority interest..................................... (29) 132 684
Changes in:
Receivables........................................... (1,091) (9,235) (17,550)
Accounts payable-trade................................ 7,707 8,417 6,687
Inventories........................................... (8,078) (621) (572)
Other current assets and liabilities.................. (1,170) (1,960) (16,481)
Other, net............................................ (6,326) (1,802) (7,499)
-------- ------- -------
Net cash flows provided from (used for) operating
activities............................................... 39,384 26,255 (315)
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions......................................... (30,966) (39,345) (37,350)
Proceeds from disposal of assets........................... 5,393 2,588 3,982
Acquisitions of businesses, net of cash acquired........... (203,313) (2,000) (7,400)
-------- ------- -------
Net cash used for investing activities..................... (228,886) (38,757) (40,768)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock..................... 40,787
Proceeds from exercise of stock options and stock purchase
grants................................................... 1,275 980 1,130
Proceeds from (reduction of) borrowings-net................ 192,851 19,120 (689)
Principal payment on long-term notes....................... (6,000) (6,000)
-------- ------- -------
Net cash flows provided from financing activities.......... 188,126 14,100 41,228
Increase (decrease) in cash and cash equivalents........... (1,376) 1,598 145
Cash and cash equivalents at beginning of year............. 3,218 1,620 1,475
-------- ------- -------
Cash and cash equivalents at end of year................... $ 1,842 $ 3,218 $ 1,620
======== ======= =======
</TABLE>
See Notes to Consolidated Financial Statements
23
<PAGE> 24
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
BJ Services Company is a leading provider of pressure pumping and other
oilfield services to the petroleum industry. The consolidated financial
statements include the accounts of BJ Services Company and its majority-owned
subsidiaries (the "Company"). All significant intercompany balances and
transactions have been eliminated in consolidation.
Certain amounts for 1994 and 1993 have been reclassified in the
accompanying consolidated financial statements to conform to the current year
presentation. The amounts changed were foreign exchange gains and losses,
previously classified as other income-net and now classified in cost of sales
and services, and goodwill amortization previously classified as other
income-net and now classified as a separate component of operating expenses. Net
income was not affected by these changes.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net income per share: Net income per share has been computed by dividing
net income by the weighted average number of outstanding common shares. Common
stock equivalents had no material dilutive effect on the computation of net
income per share for each year presented.
Use of Estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from these estimates.
Cash and cash equivalents: The Company considers all highly liquid debt
instruments purchased with original maturities of three months or less to be
cash equivalents.
Inventories: Inventories, which consist principally of (a) products which
are consumed in the Company's services provided to customers, (b) spare parts
for equipment used in providing these services and c) manufactured components
and attachments for equipment used in providing services, are stated primarily
at the lower of average cost or market.
Property: Property is stated at cost less amounts provided for permanent
impairments and includes capitalized interest of $216,000, $541,000 and $167,000
for the years ended September 30, 1995, 1994 and 1993, respectively, on funds
borrowed to finance the construction of capital additions. Depreciation is
generally provided using the straight-line method over the estimated useful
lives of individual items. Leasehold improvements are amortized on a
straight-line basis over the shorter of the estimated useful life or the lease
term.
Goodwill: Goodwill represents the excess of cost over the fair value of the
net assets of companies acquired in purchase transactions. Goodwill is being
amortized on a straight-line method over periods ranging from 5 to 40 years.
Accumulated amortization at September 30, 1995 and 1994 was $5,174,000 and
$1,880,000, respectively. The Company utilizes undiscounted cash flows of
acquired operations to evaluate any possible impairment of the related goodwill.
Investments: Investments in companies in which the Company's ownership
interest ranges from 20 to 50 percent and the Company exercises significant
influence over operating and financial policies are accounted for using the
equity method. Other investments are accounted for using the cost method.
Foreign currency translation: Gains and losses resulting from financial
statement translation of foreign operations where the U.S. dollar is the
functional currency are included in the consolidated statement of operations.
Gains and losses resulting from financial statement translation of foreign
operations where a
24
<PAGE> 25
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
foreign currency is the functional currency are included as a separate component
of stockholders' equity. The Company's foreign operations primarily use the U.S.
dollar as the functional currency.
Foreign exchange contracts: From time to time, the Company enters into
forward foreign exchange contracts to hedge the impact of foreign currency
fluctuations on certain assets and liabilities denominated in foreign
currencies. Changes in market value are offset against foreign exchange gains or
losses on the related assets or liabilities and are included in cost of sales
and services. There were no foreign exchange contracts outstanding at September
30, 1995.
Environmental remediation and compliance: Environmental remediation and
compliance costs are accrued based on estimates of known environmental
exposures. Liabilities are recorded when environmental assessments and/or
remedial efforts are probable, and the cost can be reasonably estimated.
3. UNUSUAL CHARGE
During 1995, the Company recorded an unusual charge of $17.2 million ($.52
per share after-tax) for costs incurred in connection with the acquisition of
The Western Company of North America ("Western"). The components of the unusual
charge are as follows:
<TABLE>
<CAPTION>
BALANCE AT
1995 1995 SEPTEMBER 30,
PROVISION EXPENDITURES 1995
--------- ------------ -------------
<S> <C> <C> <C>
Facility closings............................... $ 5,596(1) $ (5,003)(1) $ 593
Change in control costs......................... 5,381 (4,081) 1,300
Legal and other................................. 4,047 (3,570) 477
Severance costs................................. 2,176 (1,976) 200
-------- -------- -------
Total................................. $ 17,200 $(14,630) $ 2,570
======== ======== =======
</TABLE>
- ---------------
(1) Includes $3,646 noncash impairment of facilities.
The Company and Western both operated facilities in many of the same
locations. Management has made the decision to close the duplicate facilities
previously operated by BJ Services and retain those operated by Western. A
provision was recorded to adjust the carrying value of these duplicate
facilities to estimated net realizable value and accruals were recorded for the
estimated costs associated with their closings, including maintenance of the
facilities until their ultimate sale and relocation of assets. Substantially all
of the duplicate facilities were closed as of September 30, 1995.
The consummation of the Western acquisition triggered the change in control
provision under the Company's 1990 Stock Incentive Plan. As a result, 168,547
performance units previously granted to the Company's executive officers became
fully vested and 168,547 shares of common stock were subsequently issued. The
unusual charge includes an amount for the excess of the value of the performance
units on the date of issuance over the estimated amount which otherwise was
earned had the acquisition not occurred.
The unusual charge also includes legal, severance of BJ employees and other
merger-related costs that would not have been incurred had the acquisition of
Western not occurred.
25
<PAGE> 26
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. ACQUISITIONS OF BUSINESSES
In April 1995, the Company acquired Western for total consideration,
including transaction costs, of $511.4 million in cash, Company common stock and
warrants to purchase common stock. The transaction may be summarized as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Cash................................................... $247,880
Stock issued (12,036,393 shares)....................... 239,551
Warrants issued (4,800,037 warrants)................... 24,000
--------
Total consideration............................... 511,431
Net assets acquired.................................... 335,891(1)
--------
Goodwill.......................................... $175,540
========
</TABLE>
- ---------------
(1) Includes cash acquired of $44.5 million.
This acquisition was accounted for using the purchase method of accounting.
Accordingly, the results of Western are included in the financial statements
beginning April 1, 1995. The assets and liabilities of Western have been
recorded on the Company's books at estimated fair market value on April 1, 1995
with the remaining purchase price reflected as goodwill, which is being
amortized on a straight-line basis over 40 years. The following unaudited pro
forma summary presents the consolidated results of operations, excluding
estimated consolidation savings, of the Company for the two years ended
September 30, 1995 and 1994 as if the acquisition had occurred at the beginning
of each fiscal year:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Revenue........................................................ $807,582 $763,313
Net income (loss) from continuing operations before cumulative
effect of accounting change.................................. 2,308 (15,330)
Net income (loss).............................................. 2,308 (25,730)
Net income (loss) per share from continuing operations before
cumulative effect of accounting change....................... .08 (.55)
Net income (loss) per share.................................... .08 (.92)
</TABLE>
On February 9, 1994, the Company acquired the remaining 50% ownership of
its joint venture in Egypt, Hughes Services C.I., Ltd., for $2.0 million. Prior
to the acquisition, this joint venture was accounted for using the equity method
of accounting.
On April 1, 1993, the Company completed a transaction to acquire the
assets, including existing service contracts, of Norsk Bronnservice A/S, a
subsidiary of Odfjell Drilling & Consulting A/S, for $5.4 million. These
operations provide cementing, gravel packing and completion fluids services to
the Norwegian oil and gas industry.
On July 30, 1993 the Company acquired the coiled tubing operations of
Italog, S.p.A. for $2.0 million. Italog is based in Milan, Italy and provides
coiled tubing and nitrogen pumping services in Italy and Nigeria, under the name
of SIAT. The acquisition included the assets and existing contracts of SIAT.
The 1993 and 1994 acquisitions have been accounted for as purchases and
accordingly, the acquired assets and liabilities have been recorded at their
estimated fair values at the date of acquisition. The excess of the
consideration paid over the estimated fair value of net assets acquired has been
recorded as goodwill and is being amortized over periods ranging from 5 to 40
years.
26
<PAGE> 27
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. LONG-TERM DEBT AND BANK CREDIT FACILITIES
Long-term debt at September 30, 1995 and 1994 consisted of the following:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Notes payable, banks........................................... $275,000 $ 81,900
9.2% notes due August 1998..................................... 18,000 24,000
Other.......................................................... 2,166
-------- --------
295,166 105,900
Less current maturities of long-term debt...................... 35,600 31,200
-------- --------
Long-term debt................................................. $259,566 $ 74,700
======== ========
</TABLE>
On April 15, 1995, the Company canceled its existing credit facility and
the outstanding borrowings were repaid with funds from a committed, unsecured
credit facility ("Bank Credit Facility") executed to accommodate the acquisition
of Western. The Bank Credit Facility consists of a five-year $175.0 million
revolver and a six-year $225.0 million term loan, providing an aggregate of
$400.0 million in available principal borrowings to the Company. The Company is
charged various fees in connection with this Bank Credit Facility, including a
commitment fee based on the average daily unused portion of the commitment.
Borrowings outstanding under the Bank Credit Facility at September 30, 1995
amounted to $275.0 million, which is comprised of $225.0 million under the term
loan and $50.0 million under the revolver. Interest is charged on outstanding
borrowings based on current market rates. The weighted average interest rate for
such outstanding borrowings was 6.4% at September 30, 1995.
The Bank Credit Facility incorporates a swingline facility allowing the
Company to borrow up to $20.0 million for up to seven days in minimum advances
of $1.0 million. In addition, standby letters of credit are available in an
amount not to exceed $20.0 million. No such borrowings were outstanding at
September 30, 1995.
At September 30, 1995, long-term debt was due in aggregate annual
installments of $35,600,000, $37,200,000, $49,200,000, $48,400,000 and
$98,400,000 in the years ending September 30, 1996, 1997, 1998, 1999 and 2000,
respectively, and an aggregate of $26,366,000 thereafter.
Commitment fees under the Company's credit facilities were $207,206,
$16,223 and $63,679 for 1995, 1994 and 1993, respectively.
In addition to the committed facility, the Company had $50.0 million in
various unsecured, discretionary lines of credit at September 30, 1995 which
expire at various dates in 1996. There are no requirements for commitment fees
or compensating balances in connection with these lines of credit. Interest on
borrowings is based on prevailing market rates. At September 30, 1995, there
were $2.0 million in outstanding borrowings under these lines of credit (none at
September 30, 1994).
In August 1991, the Company placed $30.0 million of unsecured notes (the
"Notes") with private investors. The Notes bear interest at a fixed rate of 9.2%
with principal payments due in five equal annual installments the first of which
was paid in August 1994. From October 1991 to May 1995, the Company entered into
interest rate swap agreements which effectively converted the Notes from fixed
rate debt with an interest rate of 9.2% to floating rate debt. The swap
agreement was liquidated in May 1995 at a loss of $679,000. The agreements
resulted in an average annual effective interest rate of 11.5% (excluding the
loss) and 9.3% on the Notes for 1995 and 1994, respectively.
27
<PAGE> 28
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
At September 30, 1995, the Company had outstanding letters of credit and
performance related bonds totaling $16.6 million and $14.8 million,
respectively. The letters of credit are issued to guarantee various trade and
insurance activities.
The Company's debt agreements contain various customary covenants including
maintenance of certain profitability and solvency ratios and restrictions on
dividend payments, as defined in the Bank Credit Facility. At September 30,
1995, the Company's debt to capitalization ratio exceeded 35%. As a result, the
Company is prohibited, under its Bank Credit Facility from making any dividend
payments until such time as the ratio drops below 35%. The Company is also
required to make mandatory prepayments from free cash flow (as defined in the
Bank Credit Facility) subject to certain ratios as calculated at the end of each
fiscal year. At September 30, 1995, an estimate of $4 million of such
prepayments has been classified as current maturities of long-term debt.
6. FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.
Cash and Cash Equivalents, Trade Receivables and Trade Payables: The
carrying amount approximates fair value because of the short maturity of those
instruments.
Long-term Debt: Based on the rates currently available to the Company for
debt with similar terms and average maturities, the fair value of the Company's
Notes is $19.1 million. Other long-term debt consists of borrowings under the
Company's Bank Credit Facility. The carrying amount of such borrowings
approximates fair value as the individual borrowings bear interest at current
market rates.
7. INCOME TAXES
The geographical sources of income (loss) before income taxes, minority
interest and cumulative effect of accounting change for the three years ended
September 30, 1995, were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
United States....................................... $(31,879) $(12,793) $(8,540)
Foreign............................................. 40,637 25,701 25,378
-------- -------- -------
Income before income taxes, minority interest and
cumulative effect of accounting change............ $ 8,758 $ 12,908 $16,838
======== ======== =======
</TABLE>
The provision (benefit) for income taxes for the three years ended
September 30, 1995 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
United States
Foreign........................................... $ 7,759 $ 6,965 $ 6,470
-------- -------- -------
Total current............................. 7,759 6,965 6,470
Deferred:
United States..................................... (8,336) (2,831) (4,414)
Foreign........................................... (525) (2,128) (463)
-------- -------- -------
Total deferred............................ (8,861) (4,959) (4,877)
-------- -------- -------
Income tax expense (benefit)........................ $ (1,102) $ 2,006 $ 1,593
======== ======== =======
</TABLE>
28
<PAGE> 29
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The consolidated effective income tax rates (as a percent of income before
income taxes, minority interest and cumulative effect of accounting change) for
the three years ended September 30, 1995 varied from the United States statutory
income tax rate for the reasons set forth below:
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Statutory rate............................................ 35.0% 35.0% 35.0%
Foreign earnings at varying tax rates..................... (79.8) (17.4) (11.9)
Amortization of excess tax basis over book basis resulting
from separation from former parent...................... (20.4) (13.8) (10.6)
Changes in valuation reserve.............................. (14.5) (3.7)
Foreign income recognized domestically.................... 37.2 25.6 4.3
Goodwill amortization..................................... 10.3 1.3 .9
Nondeductible expenses.................................... 6.1 1.0 .7
Other -- net.............................................. (1.0) (1.6) (5.2)
----- ----- -----
Effective income tax rate (benefit)....................... (12.6)% 15.6% 9.5%
</TABLE>
The income tax provisions for 1994 and 1993 included $1,867,000 and
$620,000 of deferred foreign tax benefits related to the recognition of foreign
net loss carryforwards which were reserved for in the valuation account at
September 30, 1993 and September 30, 1992, respectively.
Deferred tax assets and liabilities are recognized for the estimated future
tax effects of temporary differences between the tax basis of an asset or
liability and its reported amount in the financial statements. The measurement
of deferred tax assets and liabilities is based on enacted tax laws and rates
currently in effect in each of the jurisdictions in which the Company has
operations. Generally, deferred tax assets and liabilities are classified as
current or noncurrent according to the classification of the related asset or
liability for financial reporting. The estimated deferred tax effect of
temporary differences and carryforwards at September 30, 1995 and 1994 were as
follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred assets:
Expenses accrued for financial reporting, not yet deducted
for tax................................................... $ 45,469 $ 7,956
Net operating loss carryforwards............................. 181,400 44,621
Valuation allowance.......................................... (54,420) (11,164)
-------- --------
Total deferred tax asset....................................... 172,449 41,413
Deferred liabilities:
Differences in depreciable basis of property................. (60,520) (16,838)
Income accrued for financial reporting, not yet reported for
tax....................................................... (6,166) (6,684)
-------- --------
Total deferred tax liability................................... (66,686) (23,522)
-------- --------
Deferred tax asset -- net...................................... $105,763 $ 17,891
======== ========
</TABLE>
The net change in the deferred tax asset valuation allowance reflects
purchase accounting adjustments made to properly state the anticipated future
benefit of the combined net operating loss carryforwards of BJ and Western. The
entire deferred tax asset valuation allowance, if realized, will be recorded as
a reduction to goodwill.
At September 30, 1995, the Company had approximately $512 million of U.S.
tax net operating loss carryforwards expiring in varying amounts between 2000
and 2010. As a result of Western having experienced changes in control as
defined in Internal Revenue Code Section 382 in prior years, and in the current
year due
29
<PAGE> 30
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
to the merger with BJ, the usage of approximately $375 million of the tax net
operating loss carryforwards is subject to an annual limitation. The potential
impact that the annual limitation may have on the usage of tax net operating
loss carryforwards has been reflected in the deferred tax asset valuation
allowance.
The Company also has foreign tax net operating loss carryovers of $6.7
million as of September 30, 1995. The foreign tax net operating loss
carryforwards are not subject to an annual limitation and will carryforward
indefinitely.
The Company does not provide federal income taxes on the undistributed
earnings of its foreign subsidiaries that the Company considers to be
permanently reinvested in foreign operations. The cumulative amount of such
undistributed earnings was approximately $147 million at September 30, 1995. If
these earnings were to be remitted to the Company, any U.S. income taxes payable
would be substantially reduced by foreign tax credits generated by the
repatriation of the earnings.
8. GEOGRAPHIC INFORMATION
The Company operates exclusively in one business segment -- the oilfield
services industry. Summarized information concerning geographic areas in which
the Company operated at September 30, 1995, 1994 and 1993 and for each of the
years then ended is shown as follows:
<TABLE>
<CAPTION>
WESTERN HEMISPHERE
-------------------------- EASTERN HEMISPHERE
UNITED LATIN AMERICA --------------------
STATES AND CANADA EUROPE OTHER TOTAL
-------- ------------- -------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1995:
Revenue................ $345,922 $ 111,447 $104,840 $71,451 $633,660
Operating income
(loss).............. (13,683) 22,095 4,942 6,935 20,289
Identifiable assets.... 627,545 88,655 201,838 71,645 989,683
1994:
Revenue................ $208,279 $ 75,745 $ 95,181 $55,271 $434,476
Operating income
(loss).............. (2,634) 9,590 4,560 7,169 18,685
Identifiable assets.... 127,561 72,558 156,594 53,353 410,066
1993:
Revenue................ $196,674 $ 60,560 $ 83,553 $53,576 $394,363
Operating income....... 1,694 2,477 6,217 9,350 19,738
Identifiable assets.... 117,543 54,950 150,612 46,426 369,531
</TABLE>
Export sales totaled $2,807,000, $1,392,000 and $1,861,000 for the years
ended September 30, 1995, 1994 and 1993, respectively.
Corporate general and administrative expense, research and engineering
expense and certain other expenses related to worldwide manufacturing and other
support functions benefit both domestic and international operations. An
allocation of these expenses has been made to foreign areas based on total
revenues. The expenses allocated totaled $8,357,000, $6,847,000 and $8,390,000
for the years ended September 30, 1995, 1994 and 1993, respectively.
9. EMPLOYEE BENEFIT PLANS
The Company has a thrift plan whereby eligible employees elect to
contribute from 2% to 12% of their base salaries to an employee benefit trust.
Employee contributions are matched by the Company at the rate of $.50 per $1.00
up to 6% of the employee's base salary. In addition, the Company contributes
between 2% and 5% of each employee's base salary depending on his age as of
January 1 each year as a base contribution. Company matching contributions vest
immediately while base contributions become fully vested after five
30
<PAGE> 31
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
years of employment. The Company's U.S. employees formerly employed by Western
are covered under a thrift plan which is being merged into the Company's thrift
plan effective December 31, 1995. During the period since the acquisition, the
Company intends to match employee contributions at the same rate as the
Company's existing thrift plan. The Company's contributions to these thrift
plans amounted to $2,862,000, $2,551,000 and $2,324,000 in 1995, 1994 and 1993,
respectively.
The Company's U.S. employees formerly employed by Western with at least one
year of service are also covered under a defined benefit pension plan as a
carryover from the Western acquisition. Pension benefits are based on years of
service and average compensation for each employee's five consecutive highest
paid years during the last ten years worked. Pension benefits are fully vested
after five years of service.
Management intends to freeze benefits under this plan effective December
31, 1995 and merge all employees under the thrift plan. Management has not yet
made a decision on when to terminate the plan and therefore will fund the
amounts necessary to meet minimum funding requirements under the Employees'
Retirement Income Security Act, as amended. Because management intends to freeze
the plan effective December 31, 1995, the accrued pension liability as of the
acquisition date and the net pension expense since the acquisition date have
been reflected under that assumption. The funded status of this plan as of
September 30, 1995 was as follows (in thousands):
<TABLE>
<S> <C>
Vested benefit obligation........................................ $39,669
=======
Accumulated benefit obligation................................... $40,701
Plan assets at fair value........................................ 34,394
-------
Benefit obligation in excess of plan assets...................... 6,307
Unrecognized gain................................................ 71
-------
Net pension liability.................................. $ 6,378
=======
</TABLE>
Assumptions used in accounting for the Company's U.S. defined benefit plan
are as follows:
<TABLE>
<S> <C>
Weighted average discount rate...................................... 7.3%
Weighted average rate of increase in future compensation............ 5.0%
Weighted average expected long-term rate of return on assets........ 9.0%
</TABLE>
Costs for the period from April 1, 1995 to September 30, 1995 for the
Company's U.S. defined benefit plan were as follows (in thousands):
<TABLE>
<S> <C>
Service cost for benefits earned................................. $ 586
Interest cost on projected benefit obligation.................... 1,382
Actual return on plan assets..................................... (3,267)
Net amortization and deferral.................................... 1,916
-------
Net pension cost....................................... $ 617
=======
</TABLE>
31
<PAGE> 32
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In addition, the Company sponsors defined benefit plans for foreign
operations which cover substantially all employees in the United Kingdom and
Venezuela. Due to differences in foreign pension laws and economics, the defined
benefit plans are at least partially unfunded. The funded status of these plans
at September 30, 1995 and 1994 was as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation...................................... $ 5,357 $ 4,789
======= =======
Accumulated benefit obligation................................. $ 6,474 $ 5,292
======= =======
Projected benefit obligation..................................... 9,846 7,155
Plan assets at fair value........................................ (6,718) (5,531)
------- -------
Projected benefit obligation in excess of plan assets............ 3,128 1,624
Unrecognized gain (loss)......................................... (1,093) 248
Unrecognized transition asset, net of amortization............... 155 166
Unrecognized prior service cost.................................. (253) (281)
------- -------
Net pension liability............................................ $ 1,937 $ 1,757
======= =======
</TABLE>
Assumptions used in accounting for the Company's international defined
benefit pension plans are as follows:
<TABLE>
<S> <C>
Weighted average discount rate....................................... 6-9%
Weighted average rate of increase in future compensation............. 5-7%
Weighted average expected long-term rate of return on assets......... 9%
</TABLE>
Combined costs for the Company's international defined benefit plans for
the two years ended September 30, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ -----
<S> <C> <C>
Net periodic foreign pension cost:
Service cost for benefits earned................................. $1,090 $ 830
Interest cost on projected benefit obligation.................... 660 497
Actual return on plan assets..................................... (617) (45)
Net amortization and deferral.................................... 158 (391)
------ -----
Net pension cost................................................... $1,291 $ 891
====== =====
</TABLE>
The Company also sponsors a plan whereby certain health care and life
insurance benefits are provided for retired employees (primarily U.S.) and their
eligible dependents if the employee meets specified age and service
requirements. These plans are unfunded and the Company retains the right,
subject to existing agreements, to modify or eliminate these plans.
Effective October 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions" ("SFAS 106"). In accordance with the requirements of SFAS
106, the Company changed its accounting for postretirement benefits from a cash
basis to an accrual basis over an employee's period of service. On October 1,
1993, the Company elected to immediately recognize the cumulative effect of the
change in accounting principle of $16.0 million ($10.4 million after tax, or
$.67 per share).
Effective January 1, 1994 the Company amended its postretirement medical
benefit plan to provide credits based on years of service which could be used to
purchase coverage under the active employee plans.
32
<PAGE> 33
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
This change effectively caps the Company's health care inflation rate at a 4%
increase per year. The reduction of approximately $5.7 million in the
accumulated postretirement benefit obligation due to this amendment is being
amortized over the average period of future service to the date of full
eligibility for such postretirement benefits of the active employees.
Postretirement medical benefit costs were $946,000, $639,000 and $590,000 in
1995, 1994 and 1993, respectively.
Net periodic postretirement benefit costs for the two years ended September
30, 1995 included the following components (in thousands):
<TABLE>
<CAPTION>
1995 1994
------ -----
<S> <C> <C>
Service cost -- benefits attributed to service during the period... $ 807 $ 512
Interest cost on accumulated postretirement benefit obligation..... 1,033 798
Amortization of prior service costs................................ (894) (671)
------ -----
Net periodic postretirement benefit cost........................... $ 946 $ 639
====== =====
</TABLE>
The actuarial and recorded liabilities for these postretirement benefits
were as follows at September 30, 1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees....................................................... $ 7,680 $ 5,312
Fully eligible active plan participants........................ 3,525 1,569
Other active plan participants................................. 8,988 3,881
------- -------
20,193 10,762
Unrecognized cumulative net gain................................. 776
Unrecognized prior service cost.................................. 4,177 5,072
------- -------
Accrued postretirement benefit liability......................... $25,146 $15,834
======= =======
</TABLE>
The accumulated postretirement benefit obligation was determined using a
discount rate of 7% and a health care cost trend rate of 13%, decreasing ratably
to 5.2% in the year 2020 and thereafter. Increasing the assumed health care cost
trend rates by one percentage point in each year would not have a material
impact on the accumulated postretirement benefit obligation or the net periodic
postretirement benefit cost because these benefits are effectively "capped" by
the Company's 1994 plan amendment.
10. COMMITMENTS AND CONTINGENCIES
The Company through performance of its service operations is sometimes
named as a defendant in litigation, usually relating to claims for bodily
injuries or property damage (including claims for well or reservoir damage). The
Company maintains insurance coverage against such claims to the extent deemed
prudent by management. The Company believes that there are no existing claims of
a potentially material adverse nature for which it has not already provided
appropriate accruals.
Federal, state and local laws and regulations govern the Company's
operation of underground fuel storage tanks. Rather than incur additional costs
to restore and upgrade tanks as required by regulations, management has opted to
remove the existing tanks. The Company is in the process of removing these tanks
and has identified certain tanks with leaks which will require remedial
cleanups. In addition, the Company is conducting a number of environmental
investigations and remedial actions at current and former company locations and,
along with other companies, has been named a potentially responsible party at 10
waste disposal sites. The Company has established an accrual of $13,986,000 for
such environmental matters which management believes to be its best estimate of
the Company's portion of future costs to be incurred. The
33
<PAGE> 34
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company also maintains insurance for environmental liabilities which the Company
believes is reasonable based on its knowledge of its industry.
Lease Commitments: At September 30, 1995, the Company had long-term
operating leases covering certain facilities and equipment with varying
expiration dates. Minimum annual rental commitments for the years ended
September 30, 1996, 1997, 1998, 1999 and 2000 are $16,198,000, $12,132,000,
$10,023,000, $6,866,000 and $5,674,000, respectively, and $35,732,000 in the
aggregate thereafter.
11. SUPPLEMENTAL FINANCIAL INFORMATION
Supplemental financial information for the three years ended September 30,
1995 is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Consolidated Statement of Operations:
Research and development expense................... $ 6,801 $ 6,421 $ 6,500
Rent expense....................................... 16,759 15,580 11,020
Net foreign exchange gain (loss)................... 1,537 (762) 228
Consolidated Statement of Cash Flows:
Income taxes paid.................................. $ 5,980 $ 6,233 $ 7,168
Interest paid...................................... 12,798 10,330 5,112
Details of acquisitions:
Fair value of assets acquired................... 447,622 1,808 4,483
Liabilities assumed............................. 111,731 501
Goodwill........................................ 175,540 693 2,917
Cash paid for acquisitions, net of cash
acquired...................................... 203,313 2,000 7,400
</TABLE>
In connection with the Acquisition, the Company issued $263,551 of common
stock and warrants to Western stockholders.
Other income -- net for the three years ended September 30, 1995 is
summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Gain (loss) on sales of assets -- net................ $ 830 $ 346 $ (62)
Gain on Argentine bonds.............................. 400 800
Royalty income....................................... 1,385
Dividend income...................................... 430
Other -- net......................................... 89 131 1,276
-------- ------- -------
Other income -- net.................................. $ 2,734 $ 877 $ 2,014
======== ======= =======
</TABLE>
12. EMPLOYEE STOCK PLANS
Stock Option Plans:
The Company's 1990 Stock Incentive Plan and 1995 Incentive Plan (the
"Plans") provide for the granting of options for the purchase of the Company's
common stock ("Common Stock") and other performance based awards to officers,
key employees and nonemployee directors of the Company. Such options vest over a
three year period and are exercisable for periods ranging from one to ten years.
An aggregate of 3,000,000 shares of Common Stock have been reserved for grants,
of which 1,324,386 were available at September 30, 1995.
34
<PAGE> 35
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Stock option activity under the Company's Plans is summarized below:
<TABLE>
<CAPTION>
NUMBER OF SHARES 1995 1994 1993
---------------- ----- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Stock options outstanding, beginning of year..................... 767 621 451
Changes during the year:
Granted (per share):
1995, $16.89 to $21.62...................................... 697
1994, $19.63 to $22.75...................................... 188
1993, $16.28................................................ 195
Exercised/surrendered (per share):
1995, $16.28 to $21.62...................................... (29)
1994, $13.63 to $23.25...................................... (42)
1993, $19.38 to $23.25...................................... (25)
----- --- ---
Stock options outstanding, end of year (per share: $12.00 to
$23.25)........................................................ 1,435 767 621
===== === ===
Stock options exercisable, end of year (per share: $12.00 to
$23.25)........................................................ 630 417 250
===== === ===
</TABLE>
Pursuant to the terms of the 1990 Stock Incentive Plan, during 1993 and
1994 the Company also issued a total of 220,316 Performance Units ("Units") to
officers of the Company. Each Unit represented the right to receive from the
Company at the end of a stipulated period an unrestricted share of Common Stock,
contingent upon achievement of certain financial performance goals over the
stipulated period. Should the Company have failed to achieve the specific
financial goals as set by the Executive Compensation Committee of the Board of
Directors, the Units would have been canceled and the related shares reverted to
the Company for reissuance under the plan. The aggregate fair market value of
the underlying shares granted under this plan was considered unearned
compensation at the time of grant and was adjusted annually based on the current
market price for the Company's Common Stock. Compensation expense was determined
based on management's current estimate of the likelihood of meeting the specific
financial goals and charged ratably over the stipulated period. In connection
with the acquisition of Western, which triggered certain change of control
provisions in the Company's 1990 Stock Incentive Plan, a total of 168,547 Units
were converted into Common Stock and issued to officers, with the remaining
51,769 Units canceled. The difference between the amount accrued as of the
acquisition date and the value of the shares issued has been reflected as an
unusual charge in the accompanying financial statements (see Note 3). As of
September 30, 1995 there were no Units outstanding.
Stock Purchase Plan:
The Company's 1990 Employee Stock Purchase Plan (the "Purchase Plan") is a
plan under which all employees may purchase shares of the Company's Common Stock
at 85% of market value on the first or last business day of the twelve-month
plan period beginning each October, whichever is lower. Such purchases are
limited to 10% of the employee's regular pay. A maximum aggregate of 750,000
shares has been reserved under the Purchase Plan, 576,826 of which were
available for future purchase at September 30, 1995. In October 1995, 55,440
shares were purchased at $16.68 per share.
13. STOCKHOLDERS' EQUITY
Stockholder Rights Plan:
The Company has a Stockholder Rights Plan designed to deter coercive
takeover tactics and to prevent an acquirer from gaining control of the Company
without offering a fair price to all of the Company's stockholders. Under this
plan, each outstanding share of the Company's Common Stock includes one
35
<PAGE> 36
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
preferred share purchase right ("Right") which becomes exercisable under certain
circumstances, including when beneficial ownership of the Company's Common Stock
by any person, or group, equals or exceeds 20% of the Company's outstanding
Common Stock. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series Two Junior Participating
Preferred Stock, at a price of $75, subject to adjustment under certain
circumstances. Upon the occurrence of certain events specified in the
Stockholder Rights Plan, each holder of a Right (other than an Acquiring Person)
will have the right, upon exercise of such Right, to receive that number of
shares of common stock of the Company (or the surviving corporation) that, at
the time of such transaction, would have a market price of two times the
purchase price of the Right. No shares of Series Two Junior Participating
Preferred Stock have been issued by the Company at September 30, 1995.
In January 1994, the former Stockholder Rights Plan was triggered and the
Company redeemed all of the preferred share purchase rights issued under its
Stockholder Rights agreement to acquire Series One Junior Participating
Preferred Stock. The Rights were redeemed at a price of $.01 per Right, a total
cost to the Company of $155,000.
Stock Purchase Warrants:
In connection with the acquisition of Western (See Note 4), the Company
issued 4,800,037 stock purchase warrants ("Warrants"). The Warrants were issued
on April 14, 1995 at an initial value of $5.00 per Warrant. Each Warrant
represents the right to purchase one share of the Company's common stock at an
exercise price of $30, until the expiration date of April 13, 2000. As of
September 30, 1995, no Warrants had been exercised.
36
<PAGE> 37
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FISCAL
FIRST SECOND THIRD FOURTH YEAR
QUARTER QUARTER QUARTER QUARTER TOTAL
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Fiscal Year 1995:
Revenue............................ $119,415 $106,668 $199,542 $208,035 $633,660
Gross profit(a).................... 17,753 13,788 28,782 35,179 95,502
Net income (loss).................. 4,744 1,378 (5,848)(b) 9,615(c)(d) 9,889
Net income (loss) per share........ .30 .09 (.22)(b) .34(c)(d) .46
Fiscal Year 1994:
Revenue............................ $104,757 $ 98,451 $106,318 $124,950 $434,476
Gross profit(a).................... 15,071 10,325 13,327 18,138 56,861
Income before cumulative effect of
accounting change................ 3,572 445 2,067 4,686(e) 10,770
Cumulative effect of change in
accounting principle, net of tax
benefit of $5,600,000............ (10,400) (10,400)
Net income (loss).................. (6,828) 445 2,067 4,686(e) 370
Net income (loss) per share:
Before cumulative effect of
accounting change............. .23 .03 .13 .30(e) .69
Cumulative effect of change in
accounting principle, net of
tax........................... (.67) (.67)
Net income (loss) per share........ (.44) .03 .13 .30(e) .02
</TABLE>
- ---------------
(a) Represents revenue less cost of sales and services and research and
engineering expenses.
(b) Includes $16 million ($10.4 million after tax or $.40 per share) unusual
charge resulting from the acquisition of Western. See Note 3.
(c) Includes $1.2 million ($.8 million after tax or $.03 per share) unusual
charge resulting from the acquisition of Western. See Note 3.
(d) Includes $1.5 million ($.05 per share) of nonrecurring tax benefits.
(e) Includes $1.3 million ($.08 per share) of nonrecurring tax benefits.
37
<PAGE> 38
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company is set forth in the
section entitled "Election of Directors" in the Proxy Statement of the Company
for the Annual Meeting of Stockholders to be held January 25, 1996, which
section is incorporated herein by reference. For information regarding executive
officers of the Company, see page 12 hereof. Information concerning compliance
with Section 16(a) of the Exchange Act is set forth in the section entitled
"Compliance with Section 16(a) of the Exchange Act" in the Proxy Statement of
the Company for the Annual Meeting of Stockholders to be held January 25, 1996,
which section is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information for this item is set forth in the sections entitled "Executive
Compensation" and "Severance Agreements" in the Proxy Statement of the Company
for the Annual Meeting of Stockholders to be held January 25, 1996, which
sections are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information for this item is set forth in the sections entitled "Voting
Securities" and "Election of Directors" in the Proxy Statement of the Company
for the Annual Meeting of Stockholders to be held January 25, 1996, which
sections are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
38
<PAGE> 39
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report or incorporated herein
by reference:
(1) Financial Statements:
The following financial statements of the Registrant as set forth
under Part II, Item 8 of this report on Form 10-K on the pages
indicated.
<TABLE>
<CAPTION>
PAGE IN THIS
FORM 10-K
------------
<S> <C>
Report of Independent Accountants........................ 19
Consolidated Statement of Operations for the years ended
September 30, 1993, 1994 and 1995...................... 20
Consolidated Statement of Financial Position as of
September 30, 1994 and 1995............................ 21
Consolidated Statement of Stockholders' Equity for the
years ended September 30, 1993, 1994 and 1995.......... 22
Consolidated Statement of Cash Flows for the years ended
September 30, 1993, 1994 and 1995...................... 23
Notes to Consolidated Financial Statements............... 24
</TABLE>
(2) Financial Statement Schedule:
<TABLE>
<CAPTION>
SCHEDULE PAGE
NUMBER DESCRIPTION OF SCHEDULE NUMBER
- -------- --------------------------------------------------- ------
<S> <C> <C>
II Valuation and Qualifying Accounts.................. 43
</TABLE>
All other financial statement schedules are omitted because of the absence
of conditions under which they are required or because all material information
required to be reported is included in the consolidated financial statements and
notes thereto.
(b) The Company did not file any reports on Form 8-K during the fourth
quarter of fiscal 1995.
(3) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<S> <C>
*2.1 -- Agreement and Plan of Merger dated as of November 17, 1994 ("Merger
Agreement"), among BJ Services Company, WCNA Acquisition Corp. and
The Western Company of North America.
*2.2 -- First Amendment to Agreement and Plan of Merger dated March 7, 1995,
among BJ Services Company, WCNA Acquisition Corp. and The Western
Company of North America.
3.1 -- Certificate of Incorporation, as amended (filed as Exhibit 3.1 to the
Company's Form 8-K filed April 18, 1995, and incorporated herein by
reference).
3.2 -- Certificate of Designation of Series Two Junior Participating
Preferred Stock (filed as Exhibit 3.1 to the Company's Registration
Statement on Form 8-A dated January 12, 1994 and incorporated herein
by reference).
*3.3 -- Bylaws of the Company, as amended.
4.1 -- Specimen form of certificate for the Common Stock (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-1 (Reg. No.
33-35187) and incorporated herein by reference).
</TABLE>
39
<PAGE> 40
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<S> <C>
4.2 -- Stockholder Rights Agreement dated as of January 12, 1994, between
the Company and First Chicago Trust Company of New York, as Rights
Agent (filed as Exhibit 4.1 to the Company's Registration Statement
on Form 8-A dated January 12, 1994 and incorporated herein by
reference), as amended by the First Amendment to Stockholders Rights
Agreements dated as of June 22, 1994 (filed as Exhibit 2 to the
Company's Form 8-A/A Amendment No. 1 to Form 8-A dated August 26,
1994 and incorporated herein by reference) and by the Second
Amendment to Stockholder Rights Agreement dated as of September 22,
1994 (filed as Exhibit 3 to the Company's Form 8-A/A Amendment No. 2
to Form 8-A dated September 30, 1994 and incorporated herein by
reference).
4.3 -- Indenture between The Western Company of North America and United
States Trust Company of New York, Trustee, dated as of November 15,
1992, which includes the form of 12 7/8% Senior Note due 2002 as an
Exhibit thereto (filed as Exhibit to Registration Statement of
Western on Form S-2 (Reg. No. 33-51852), and incorporated herein by
reference).
4.4 -- First Supplemental Indenture, dated March 2, 1994, to Indenture,
dated as of November 15, 1992, between The Western Company of North
America and United States Trust Company of New York, Trustee (filed
as Exhibit to Form 10-K of Western for the year ended December 31,
1993, and incorporated herein by reference).
4.5 -- Second Supplemental Indenture, dated as of April 13, 1995, to
Indenture dated as of November 15, 1992, between The Western Company
of North America, BJ Services Company and United States Trust Company
of New York, Trustee (filed as Exhibit 10.5 to Post-Effective
Amendment No. 1 to Registration Statement on Form S-4 (Reg. No.
33-58017), and incorporated herein by reference).
*4.6 -- Warrant Agreement with respect to the Company's warrants to purchase
common stock.
10.1 -- Relationship Agreement dated as of July 20, 1990, between the Company
and Baker Hughes Incorporated (filed as Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-35187) and
incorporated herein by reference).
10.2 -- Tax Allocation Agreement dated as of July 20, 1990, between the
Company and Baker Hughes Incorporated (included as Exhibit A to
Exhibit 10.1) (filed as Exhibit 10.2 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-35187) and incorporated herein by
reference).
+10.3 -- 1990 Stock Incentive Plan, as amended and restated (filed as Exhibit
10.1 to the Company's Registration Statement on Form S-8 (Reg. No.
33-62098) and incorporated herein by reference.
+10.4 -- 1990 Employee Stock Purchase Plan (filed as Exhibit 10.4 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-35187) and
incorporated herein by reference).
+10.5 -- BJ Services Retirement Thrift Plan effective November 16, 1992 (filed
as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1992 and incorporated herein by reference).
+10.6 -- BJ Services Company 1995 Incentive Plan (filed as Exhibit 4.5 to the
Company's Registration Statement on Form S-8 (Reg. No. 33-58637) and
incorporated herein by reference).
+10.7 -- The Western Company Retirement Savings Plan, as restated, and as
amended by Amendment No. 1 and the Second Amendment thereto (filed as
Exhibits 4.5, 4.6 and 4.7, respectively, to the Company's
Registration Statement (Reg. No. 33-58639) on Form S-8 and
incorporated herein by reference).
</TABLE>
40
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
---------- ----------------------
<S> <C>
+10.8 -- Form of Severance Agreement between BJ Services Company and certain
executive officers (filed as Exhibit 10.6 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1993 and
incorporated herein by reference).
10.9 -- Note Agreement dated August 1, 1991 ("Note Agreement") by and among
the Company, BJ Services Company U.S.A., BJ Service International,
Inc., and BJ Services Company Middle East for the issuance of $30.0
million of 9.2% Senior Notes due August 1, 1998 (filed as Exhibit 4.4
to the Company's Annual Report on Form 10-K for the year ended
September 30, 1991 and incorporated herein by reference), as amended
by an Amendment to Note Agreement dated as of September 30, 1992
(filed as Exhibit 4.4 to the Company's Annual Report on Form 10-K for
the year ended September 30, 1992 and incorporated herein by
reference).
*10.10 -- Second Amendment to Note Agreement dated as of September 19, 1995.
*10.11 -- Credit Agreement dated as of April 13, 1995, among the Company, BJ
Services Company, U.S.A., BJ Service International, Inc., BJ Services
Company Middle East, Bank of America National Trust and Saving
Association, as agent, and the other financial institutions parties
thereto (the "Credit Agreement") (filed as Exhibit 10.1 to the
Company's Form 8-K/A filed May 31, 1995 and incorporated herein by
reference) as amended by an Amendment to "Credit Agreement" dated as
of April 25, 1995 (filed herewith).
10.12 -- Parent Guaranty Agreement dated as of April 13, 1995, by the Company,
in favor of the banks and the agent under the Credit Agreement (filed
as Exhibit 10.2 to the Company's Form 8-K/A filed May 31, 1995 and
incorporated herein by reference).
10.13 -- Form of Guaranty Agreement dated as of April 13, 1995, by each of BJ
Services Company, U.S.A., BJ Service International, Inc., BJ Services
Company Middle East, and Western Petroleum Services International
Company, in favor or the banks and the agent under the Credit
Agreement (filed as Exhibit 10.3 to the Company's Form 8-K/A filed
May 31, 1995 and incorporated herein by reference).
*11.1 -- Earnings per share.
*21.1 -- Subsidiaries of the Company.
*23.1 -- Consent of Deloitte & Touche LLP.
*27.1 -- Financial data schedule.
</TABLE>
- ---------------
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
41
<PAGE> 42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BJ SERVICES COMPANY
By /s/ J.W. STEWART
J.W. Stewart,
President and Chief Executive
Officer
Date: December 21, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
----------- ----- ----
<C> <S> <C>
/s/ J.W. STEWART Chairman of the Board, December 21, 1995
J.W. Stewart President, and Chief
Executive Officer,
(Principal Executive
Officer)
/s/ MICHAEL MCSHANE Vice President -- Finance, December 21, 1995
Michael McShane Chief Financial Officer
and Director
(Principal Financial
Officer)
/s/ MATTHEW D. FITZGERALD Controller December 21, 1995
Matthew D. Fitzgerald (Principal Accounting
Officer)
/s/ DAVID A.B. BROWN Director December 21, 1995
David A.B. Brown
/s/ L. WILLIAM HEILIGBRODT Director December 21, 1995
L. William Heiligbrodt
/s/ JOHN R. HUFF Director December 21, 1995
John R. Huff
/s/ WILLIAM J. JOHNSON Director December 21, 1995
William J. Johnson
/s/ DON D. JORDAN Director December 21, 1995
Don D. Jordan
/s/ R.S. LEBLANC Director December 21, 1995
R.A. LeBlanc
/s/ JAMES E. MCCORMICK Director December 21, 1995
James E. McCormick
/s/ MICHAEL E. PATRICK Director December 21, 1995
Michael E. Patrick
</TABLE>
42
<PAGE> 43
BJ SERVICES COMPANY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1993, 1994 AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
-----------------------
BALANCE AT CHARGED TO
BEGINNING CHARGED OTHER BALANCE AT
OF PERIOD TO EXPENSE ACCOUNTS DEDUCTIONS END OF PERIOD
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED September 30, 1993
Allowance for doubtful accounts
receivable............................ $2,304 $ 985 $ 937(1) $ 2,352
Reserve for inventory obsolescence and
adjustment............................ 6,782 882 1,700 845(2) 8,519
YEAR ENDED September 30, 1994
Allowance for doubtful accounts
receivable............................ $2,352 $1,177 $1,345(1) $ 2,184
Reserve for inventory obsolescence and
adjustment............................ 8,519 708 1,081(2) 8,146
YEAR ENDED September 30, 1995
Allowance for doubtful accounts
receivable............................ $2,184 $1,399 $4,105(3) $ 205(1) $ 7,483
Reserve for inventory obsolescence and
adjustment............................ 8,146 115 2,061(3) 777(2) 9,545
</TABLE>
- ---------------
(1) Deductions in the allowance for doubtful accounts principally reflect the
write-off of previously reserved accounts.
(2) Deductions in the reserve for inventory obsolescence and adjustment
principally reflect the sale or disposal of related inventory.
(3) Additions to the reserve resulting from the Acquisition.
43
<PAGE> 44
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<S> <C>
*2.1 -- Agreement and Plan of Merger dated as of November 17, 1994 ("Merger
Agreement"), among BJ Services Company, WCNA Acquisition Corp. and
The Western Company of North America.
*2.2 -- First Amendment to Agreement and Plan of Merger dated March 7, 1995,
among BJ Services Company, WCNA Acquisition Corp. and The Western
Company of North America.
3.1 -- Certificate of Incorporation, as amended (filed as Exhibit 3.1 to the
Company's Form 8-K filed April 18, 1995, and incorporated herein by
reference).
3.2 -- Certificate of Designation of Series Two Junior Participating
Preferred Stock (filed as Exhibit 3.1 to the Company's Registration
Statement on Form 8-A dated January 12, 1994 and incorporated herein
by reference).
*3.3 -- Bylaws of the Company, as amended.
4.1 -- Specimen form of certificate for the Common Stock (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-1 (Reg. No.
33-35187) and incorporated herein by reference).
4.2 -- Stockholder Rights Agreement dated as of January 12, 1994, between
the Company and First Chicago Trust Company of New York, as Rights
Agent (filed as Exhibit 4.1 to the Company's Registration Statement
on Form 8-A dated January 12, 1994 and incorporated herein by
reference), as amended by the First Amendment to Stockholders Rights
Agreements dated as of June 22, 1994 (filed as Exhibit 2 to the
Company's Form 8-A/A Amendment No. 1 to Form 8-A dated August 26,
1994 and incorporated herein by reference) and by the Second
Amendment to Stockholder Rights Agreement dated as of September 22,
1994 (filed as Exhibit 3 to the Company's Form 8-A/A Amendment No. 2
to Form 8-A dated September 30, 1994 and incorporated herein by
reference).
4.3 -- Indenture between The Western Company of North America and United
States Trust Company of New York, Trustee, dated as of November 15,
1992, which includes the form of 12 7/8% Senior Note due 2002 as an
Exhibit thereto (filed as Exhibit to Registration Statement of
Western on Form S-2 (Reg. No. 33-51852), and incorporated herein by
reference).
4.4 -- First Supplemental Indenture, dated March 2, 1994, to Indenture,
dated as of November 15, 1992, between The Western Company of North
America and United States Trust Company of New York, Trustee (filed
as Exhibit to Form 10-K of Western for the year ended December 31,
1993, and incorporated herein by reference).
4.5 -- Second Supplemental Indenture, dated as of April 13, 1995, to
Indenture dated as of November 15, 1992, between The Western Company
of North America, BJ Services Company and United States Trust Company
of New York, Trustee (filed as Exhibit 10.5 to Post-Effective
Amendment No. 1 to Registration Statement on Form S-4 (Reg. No.
33-58017), and incorporated herein by reference).
*4.6 -- Warrant Agreement with respect to the Company's warrants to purchase
common stock, including attached Form of Warrant Certificate.
</TABLE>
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------------------- ------------------------------------------------------------------------
<C> <S>
10.1 -- Relationship Agreement dated as of July 20, 1990, between the Company
and Baker Hughes Incorporated (filed as Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-35187) and
incorporated herein by reference).
10.2 -- Tax Allocation Agreement dated as of July 20, 1990, between the
Company and Baker Hughes Incorporated (included as Exhibit A to
Exhibit 10.1) (filed as Exhibit 10.2 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-35187) and incorporated herein by
reference).
+10.3 -- 1990 Stock Incentive Plan, as amended and restated (filed as Exhibit
10.1 to the Company's Registration Statement on Form S-8 (Reg. No.
33-62098) and incorporated herein by reference.
+10.4 -- 1990 Employee Stock Purchase Plan (filed as Exhibit 10.4 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-35187) and
incorporated herein by reference).
+10.5 -- BJ Services Retirement Thrift Plan effective November 16, 1992 (filed
as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1992 and incorporated herein by reference).
+10.6 -- BJ Services Company 1995 Incentive Plan (filed as Exhibit 4.5 to the
Company's Registration Statement on Form S-8 (Reg. No. 33-58637) and
incorporated herein by reference).
+10.7 -- The Western Company Retirement Savings Plan, as restated, and as
amended by Amendment No. 1 and the Second Amendment thereto (filed as
Exhibits 4.5, 4.6 and 4.7, respectively, to the Company's
Registration Statement (Reg. No. 33-58639) on Form S-8 and
incorporated herein by reference).
+10.8 -- Form of Severance Agreement between BJ Services Company and certain
executive officers (filed as Exhibit 10.6 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1993 and
incorporated herein by reference).
10.9 -- Note Agreement dated August 1, 1991 ("Note Agreement") by and among
the Company, BJ Services Company U.S.A., BJ Service International,
Inc., and BJ Services Company Middle East for the issuance of $30.0
million of 9.2% Senior Notes due August 1, 1998 (filed as Exhibit 4.4
to the Company's Annual Report on Form 10-K for the year ended
September 30, 1991 and incorporated herein by reference), as amended
by an Amendment to Note Agreement dated as of September 30, 1992
(filed as Exhibit 4.4 to the Company's Annual Report on Form 10-K for
the year ended September 30, 1992 and incorporated herein by
reference).
*10.10 -- Second Amendment to Note Agreement dated as of September 19, 1995.
*10.11 -- Credit Agreement dated as of April 13, 1995, among the Company, BJ
Services Company, U.S.A., BJ Service International, Inc., BJ Services
Company Middle East, Bank of America National Trust and Saving
Association, as agent, and the other financial institutions parties
thereto (the "Credit Agreement") (filed as Exhibit 10.1 to the
Company's Form 8-K/A filed May 31, 1995 and incorporated herein by
reference) as amended by an Amendment to "Credit Agreement" dated as
of April 25, 1995 (filed herewith).
10.12 -- Parent Guaranty Agreement dated as of April 13, 1995, by the Company,
in favor of the banks and the agent under the Credit Agreement (filed
as Exhibit 10.2 to the Company's Form 8-K/A filed May 31, 1995 and
incorporated herein by reference).
10.13 -- Form of Guaranty Agreement dated as of April 13, 1995, by each of BJ
Services Company, U.S.A., BJ Service International, Inc., BJ Services
Company Middle East, and Western Petroleum Services International
Company, in favor or the banks and the agent under the Credit
Agreement (filed as Exhibit 10.3 to the Company's Form 8-K/A filed
May 31, 1995 and incorporated herein by reference).
*11.1 -- Earnings per share.
*21.1 -- Subsidiaries of the Company.
*23.1 -- Consent of Deloitte & Touche LLP.
*27.1 -- Financial data schedule.
</TABLE>
- ---------------
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
<PAGE> 1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of November 17, 1994, among BJ
SERVICES COMPANY ("BJ"), WCNA ACQUISITION CORP., a wholly owned subsidiary of
BJ ("BJ Sub"), and THE WESTERN COMPANY OF NORTH AMERICA ("Western"), each a
Delaware corporation.
WHEREAS, the respective Boards of Directors of BJ, BJ Sub and Western
have approved the merger of Western with and into BJ Sub (the "Merger"), upon
the terms and subject to the conditions set forth herein; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises, and the
representations, warranties and covenants contained herein, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
hereof, at the Effective Time (as defined in Section 1.2) and in accordance
with the General Corporation Law of the State of Delaware (the "Delaware
Corporation Law"), Western shall be merged with and into BJ Sub, which shall be
the surviving corporation in the Merger (hereinafter sometimes referred to as
the "Surviving Corporation") whose corporate existence shall continue under the
Delaware Corporation Law. At the Effective Time the separate existence of
Western shall cease.
Section 1.2 Effective Time of the Merger. As soon as practicable
after the Closing (as defined in Section 1.3 hereof), BJ, BJ Sub and Western
shall cause this Agreement to be duly certified and acknowledged in accordance
with the Delaware Corporation Law, and as soon as practicable thereafter BJ
shall cause the Surviving Corporation to file with the Delaware Secretary of
State and the appropriate County Recorder a certificate of merger (the
"Certificate of Merger") in such form as required by, and executed in
accordance with, the Delaware Corporation Law. The Merger shall become
effective as of the time and date of the filing of the Certificate of Merger
with the Delaware Secretary of State, unless otherwise provided in the
Certificate of Merger (the "Effective Time").
Section 1.3 Closing and Closing Date. Unless this Agreement shall
have been terminated and the transactions herein contemplated shall have been
abandoned pursuant to the provisions of Section 10.1, the closing (the
"Closing") of this Agreement shall take place (a) at 10:00 a.m. (New York time)
on the fifth Trading Day (as defined in Section 3.1(b) hereof) immediately
following the date on which the waiting periods under the Hart Scott Act (as
hereinafter defined) shall have expired or otherwise been terminated and all
other conditions to the respective obligations of the parties set forth in
Article IX hereof shall have been satisfied or waived or (b) at such other time
and date as BJ and Western shall agree (such date and time on and at which the
Closing occurs being referred to herein as the "Closing Date"). The Closing
shall take place at such location as BJ and Western shall agree.
Section 1.4 Effects of the Merger. The Merger shall have the effects
set forth in the Delaware Corporation Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchises of Western and BJ Sub
<PAGE> 2
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations and duties of Western and BJ Sub shall become the debts,
liabilities, obligations and duties of the Surviving Corporation.
Section 1.5 Alternative Structure. Notwithstanding anything to the
contrary provided elsewhere in this Agreement, if BJ notifies Western in
writing prior to the Closing Date that BJ prefers to structure the Merger so
that Western merges into BJ and BJ is the Surviving Corporation after the
Effective Time, the parties hereto shall forthwith execute an appropriate
amendment to this Agreement which eliminates BJ Sub as a party hereto and
otherwise reflects the foregoing changes and any other changes required to be
made as a result thereof.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Certificate of
Incorporation of BJ Sub, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation after
the Effective Time, until amended in accordance with its terms, or as otherwise
provided by law.
Section 2.2 Bylaws. The Bylaws of BJ Sub as in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
unless and until amended in accordance with their terms or the Certificate of
Incorporation of the Surviving Corporation, or as otherwise provided by law.
Section 2.3 Officers and Directors. The officers and directors of BJ
Sub immediately prior to the Effective Time shall be the officers and directors
of the Surviving Corporation until their respective successors are duly elected
and/or appointed and qualify in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, or as otherwise provided
by law. The senior executive officers of Western, Western, BJ and BJ Sub will
enter into the Senior Executive Termination Agreements, dated the date hereof
(the "Senior Executive Termination Agreements").
ARTICLE III
CONVERSION AND EXCHANGE OF SECURITIES
Section 3.1 Conversion of Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of any of the parties hereto or
any holder of any of the following securities:
(a) Western Common Stock. Except as otherwise provided
herein and subject to Section 3.3, each share of common stock, par
value $.10 per share, of Western ("Western Common Stock") issued and
outstanding immediately prior to the Effective Time (other than
Dissenting Shares, as hereinafter defined, and shares of Western
Common Stock owned by BJ, BJ Sub or any other direct or indirect
subsidiary of BJ) shall be converted into, exchanged for and represent
the right to receive (without interest) (i) $20.00 in cash ("Cash
Consideration") and .2 warrants (the "BJ Warrants") to purchase one
share of BJ Common Stock in substantially the form annexed to the
Warrant Agreement (the "Warrant Agreement") attached hereto as Exhibit
A at an exercise price of $30 per share of BJ Common Stock (subject to
adjustment as provided in the Warrant Agreement) ("Warrant
Consideration"), or (ii) Stock Consideration (as defined in Section
3.1(b) (ii)) and Warrant Consideration, in each case as the holder
thereof shall have elected or be deemed to have elected, in accordance
with Section 3.3 (collectively, the "Merger Consideration"); provided,
however, that, in any event, if between the date of this Agreement and
the Effective Time the outstanding shares of BJ Common Stock or
Western Common Stock shall have been changed into a different number
of shares or a different class by reason of any stock dividend,
subdivision, reclassification, recapitalization, split,
2
<PAGE> 3
combination or exchange of shares, the Cash Consideration, the Warrant
Consideration and the Stock Consideration shall be correspondingly
adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares. All shares of Western Common Stock so converted or exchanged
shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each certificate previously
evidencing any such shares shall thereafter represent the right to
receive, upon the surrender of such certificate in accordance with the
provisions of Section 3.6, the applicable Merger Consideration and any
cash to be paid in lieu of fractional shares of BJ Common Stock and
associated fractional rights ("BJ Purchase Rights") to purchase one
one-hundredth of a share of Series Two Junior Preferred Stock, without
par value, of BJ ("BJ Junior Preferred Stock") pursuant to the Rights
Agreement, dated as of January 12, 1994, as amended, between BJ and
First Chicago Trust Company of New York, as rights agent, to which
such holder is entitled pursuant to Section 3.4 (without interest
thereon). The holders of such certificates previously evidencing such
shares of Western Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such
shares of Western Common Stock except as otherwise provided herein or
by law.
(b) Certain Definitions. As used in this Agreement:
(i) "Closing Price" means the average of the
midpoint of the daily high and low trading prices of BJ Common
Stock, rounded to four decimal places, as reported in The Wall
Street Journal's New York Stock Exchange Composite
Transactions Reports, for each of the first 20 consecutive
Trading Days in the period commencing 25 Trading Days prior to
the Closing Date.
(ii) "Stock Consideration" is (x) if the Closing
Price of BJ Common Stock is $17.25 or lower, 1.1594 shares of
BJ Common Stock, together with a corresponding number of BJ
Purchase Rights; (y) if the Closing Price of BJ Common Stock
is $22.25 or greater, .8989 shares of BJ Common Stock,
together with a corresponding number of BJ Purchase Rights; or
(z) if the Closing Price of the BJ Common Stock is greater
than $17.25 but less than $22.25, that portion of a share of
BJ Common Stock equal to the quotient of $20.00 divided by the
Closing Price of the BJ Common Stock, together with a
corresponding number of BJ Purchase Rights.
(iii) "Trading Day" means a day on which the New
York Stock Exchange, Inc. (the "NYSE") is open for trading.
(c) Western Common Stock Held by Western or BJ; Western
Preferred Stock. Each share of Western Common Stock held in the
treasury of Western or held by BJ, BJ Sub or any other direct or
indirect subsidiary of BJ immediately prior to the Effective Time
shall be cancelled and cease to exist, and no payment or other
consideration shall be made in respect thereof. The Western Preferred
Stock shall be cancelled, and no payment or other consideration shall
be made in respect thereof.
(d) BJ Sub Shares. Each share of common stock, par value
$0.01 per share, of BJ Sub issued and outstanding immediately prior to
the Effective Time shall remain outstanding and shall be unchanged
after the Merger and shall thereafter constitute all of the issued and
outstanding capital stock of the Surviving Corporation.
(e) Convertible Debentures. The 7 1/4% Convertible
Subordinated Debentures due January 15, 2015 of Western (the "Western
Convertible Debentures") which are outstanding at the Effective Time
shall continue to be outstanding subsequent to the Effective Time as
debt instruments of the Surviving Corporation, subject to their
respective terms and conditions and the execution and delivery of a
supplemental indenture in the form required thereby.
3
<PAGE> 4
Following the Effective Time of the Merger, each outstanding Western
Convertible Debenture will be convertible into the amount of Stock
Consideration (and cash in lieu of fractional shares of BJ Common
Stock and associated BJ Purchase Rights), Cash Consideration and
Warrant Consideration which the holder thereof would have had the
right to receive after the Effective Time of the Merger if such
Western Convertible Debenture had been converted immediately prior to
the Effective Time of the Merger and the holder thereof had made the
Stock Election (as defined in Section 3.3(b)) with respect to 50% of
such holder's Western Convertible Debentures and the Cash Election (as
defined in Section 3.3(b)) with respect to the remaining 50% of such
holder's Western Convertible Debentures.
(f) Senior Notes. The 12-7/8% Senior Notes due December
1, 2002 of Western ("Western Senior Notes") that are outstanding at
the Effective Time shall continue to be outstanding subsequent to the
Effective Time as debt instruments of the Surviving Corporation,
subject to their respective terms and conditions and the execution and
delivery of a supplemental indenture in the form required thereby.
Section 3.2 Treatment of Western Options. (a) Immediately prior to
the Effective Time, Western shall take such action as may be necessary so that
each outstanding Western Option (as defined in Section 6.2) whether or not then
exercisable, shall be cancelled by Western, and each holder of a cancelled
Western Option shall be entitled to receive, as soon as practicable after the
Effective Time, in consideration for the cancellation of such Western Option an
amount in cash equal to the product (the "Spread") of (i) the total number of
shares of Western Common Stock subject to such holder's Western Option and (ii)
the excess, if any, of (x) $20.00 plus the "Warrant Consideration Value" (as
hereinafter defined) over (y) the exercise price per share of the Western
Common Stock previously subject to such Western Option. The "Warrant
Consideration Value" shall be equal to the greater of (i) $1.00 or (ii) .2
multiplied by the "Warrant Current Market Price" (as defined below).
(b) For the purpose of any computation hereunder, the "Warrant
Current Market Price" means the average of the midpoint of the daily high and
low trading prices of BJ Warrants, rounded to four decimal places, on a
when-issued basis as reported in The Wall Street Journal's New York Stock
Exchange Composite Transactions Reports, for each of the first 20 consecutive
Trading Days in the period commencing 25 Trading Days prior to the Closing Date
or, if the BJ Warrants are not then admitted to trading on the NYSE on a
when-issued basis, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such securities are admitted to trading on a
when-issued basis or, if the BJ Warrants are not admitted to trading on any
national securities exchange on a when-issued basis, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ"), of BJ Warrants on a when-issued basis. If on any such Trading Day
or Days the BJ Warrants are not quoted on a when-issued basis by any such
organization, the 20 Trading Day period referred to above shall be reduced by
the number of such Trading Days on which the BJ Warrants are not so quoted. If
the BJ Warrants are not quoted on a when-issued basis on any Trading Day during
such 20 Trading Day period, the Warrant Current Market Price shall be deemed to
be $1.00.
Section 3.3 Allocation of Merger Consideration; Election Procedures.
(a) Allocation. Notwithstanding anything in this Agreement to the contrary,
the maximum number of shares of Western Common Stock (the "Cash Election
Number") to be converted into the right to receive Cash Consideration and
Warrant Consideration in the Merger shall be equal to (i) 50% of the number of
shares of Western Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger less (ii) the sum of (A) the number of Dissenting
Shares (as defined in Section 3.5), if any, which are not to be treated as
Non-Election Shares pursuant to Section 3.5, and (B) the number of shares of
Western Common Stock to be cancelled in accordance with Section 3.1(c). The
number of shares of Western Common Stock to be converted into the right to
receive Stock Consideration and Warrant Consideration in the Merger (the "Stock
Election Number") shall be equal to the number of
4
<PAGE> 5
shares of Western Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger less the sum of (i) the Cash Election Number, (ii)
the number of Dissenting Shares, if any, which are not to be treated as
Non-Election Shares pursuant to Section 3.5 and (iii) the number of shares of
Western Common Stock to be cancelled in accordance with Section 3.1(c).
(b) Election. Subject to allocation and proration in accordance
with the provisions of this Section 3.1, each record holder of shares of
Western Common Stock (other than Dissenting Shares, if any, which are not to be
treated as Non-Election Shares pursuant to Section 3.5 and shares to be
cancelled in accordance with Section 3.1(c)) issued and outstanding immediately
prior to the Election Deadline (as defined below) shall be entitled to elect to
receive in respect of each such share (in addition to Warrant Consideration)
(i) Cash Consideration (a "Cash Election") or (ii) Stock Consideration (a
"Stock Election") or to indicate that such record holder has no preference as
to the receipt (in addition to Warrant Consideration) of Cash Consideration or
Stock Consideration for such shares (a "Non-Election"). Shares of Western
Common Stock in respect of which a Non-Election is made (including shares in
respect of which such an election is deemed to have been made pursuant to this
Section 3.3 and Section 3.5) (collectively, "Non-Election Shares") shall be
deemed by BJ, in its sole and absolute discretion, to be shares in respect of
which Cash Elections or Stock Elections have been made.
(c) Procedure for Elections. Elections pursuant to Section 3.3(b)
shall be made on a form to be mutually agreed upon by Western and BJ (a "Form
of Election") to be provided by the Exchange Agent (as defined in Section 3.6)
for that purpose to holders of record of Western Common Stock, together with
appropriate transmittal materials, at the time of mailing to holders of record
of Western Common Stock of the Joint Proxy Statement (as defined in Section
4.3) in connection with the Stockholders Meetings referred to in Section 8.3.
Elections shall be made by mailing to the Exchange Agent a duly completed Form
of Election. To be effective, a Form of Election must be (i) properly
completed, signed and submitted to the Exchange Agent at its designated office,
by 5:00 p.m., on the business day that is two Trading Days prior to the Closing
Date (which date shall be publicly announced by BJ as soon as practicable but
in no event less than five Trading Days prior to the Closing Date) (the
"Election Deadline") and (ii) accompanied by the certificates representing the
shares of Western Common Stock as to which the election is being made (or by an
appropriate guarantee of delivery of such certificates by a commercial bank or
trust company in the United States or a member of a registered national
security exchange or of the National Association of Securities Dealers, Inc.,
provided such certificates are in fact delivered to the Exchange Agent within
eight Trading Days after the date of execution of such guarantee of delivery).
Western shall use its best efforts to make a Form of Election available to all
persons who become holders of record of Western Common Stock between the date
of mailing described in the first sentence of this Section 3.3(c) and the
Election Deadline. BJ shall determine, in its sole and absolute discretion,
which authority it may delegate in whole or in part to the Exchange Agent,
whether Forms of Election have been properly completed, signed and submitted or
revoked. The decision of BJ (or the Exchange Agent, as the case may be) in
such matters shall be conclusive and binding. Neither BJ nor the Exchange
Agent will be under any obligation to notify any person of any defect in a Form
of Election submitted to the Exchange Agent. A holder of shares of Western
Common Stock that does not submit an effective Form of Election prior to the
Election Deadline shall be deemed to have made a Non-Election.
(d) Revocation of Election; Return of Certificates. An election
may be revoked, but only by written notice received by the Exchange Agent prior
to the Election Deadline. Any certificate(s) representing shares of Western
Common Stock which have been submitted to the Exchange Agent in connection with
an election shall be returned without charge to the holder thereof in the event
such election is revoked as aforesaid and such holder requests in writing the
return of such certificate(s). Upon any such revocation, unless a duly
completed Election Form is thereafter submitted in accordance with paragraph
(c), such shares shall be Non-Election Shares. In the event that this
Agreement is terminated pursuant to the provisions hereof and any shares of
Western Common Stock
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have been transmitted to the Exchange Agent pursuant to the provisions hereof,
such shares shall promptly be returned without charge to the person submitting
the same.
(e) Proration of Cash Election Shares. In the event that the
aggregate number of shares in respect of which Cash Elections have been made
and, in the case of Non-Election Shares, are deemed to have been made
(collectively, the "Cash Election Shares") exceeds the Cash Election Number,
all shares of Western Common Stock in respect of which Stock Elections have
been made and all Non-Election Shares in respect of which Stock Elections are
deemed to have been made (collectively, the "Stock Election Shares") shall be
converted into the right to receive Stock Consideration (in addition to Warrant
Consideration), and the Cash Election Shares shall be converted into the right
to receive Stock Consideration or Cash Consideration (in addition to Warrant
Consideration) in the following manner:
(i) Cash Election Shares shall be deemed converted to
Stock Election Shares, on a pro-rata basis for each record holder of
Western Common Stock with respect to those shares of Western Common
Stock, if any, of such record holder which are Cash Election Shares,
so that the number of Cash Election Shares so converted, when added to
the other Stock Election Shares, shall equal as closely as practicable
the Stock Election Number, and all such Cash Election Shares so
converted shall be converted into the right to receive Stock
Consideration (and cash in lieu of fractional interests in accordance
with Section 3.4) (in addition to Warrant Consideration); and
(ii) any remaining Cash Election Shares shall be converted
into the right to receive Cash Consideration (in addition to Warrant
Consideration).
(f) Proration of Stock Election Shares. In the event that the
aggregate number of Stock Election Shares exceeds the Stock Election Number,
all Cash Election Shares shall be converted into the right to receive Cash
Consideration (in addition to Warrant Consideration), and all Stock Election
Shares shall be converted into the right to receive Stock Consideration or Cash
Consideration (in addition to Warrant Consideration) in the following manner:
(i) Stock Election Shares shall be deemed converted into
Cash Election Shares, on a pro-rata basis for each record holder of
Western Common Stock with respect to those shares of Western Common
Stock, if any, of such record holder which are Stock Election Shares,
so that the number of Stock Election Shares so converted, when added
to the other Cash Election Shares, shall equal as closely as
practicable the Cash Election Number, and all such shares of Western
Common Stock so converted shall be converted into the right to receive
the Cash Consideration (in addition to Warrant Consideration); and
(ii) the remaining Stock Election Shares shall be
converted into the right to receive the Stock Consideration (and cash
in lieu of fractional interests in accordance with Section 3.4) (in
addition to Warrant Consideration).
(g) No Proration. In the event that neither paragraph (e) nor
paragraph (f) of this Section 3.3 is applicable, all Cash Election Shares shall
be converted into the right to receive Cash Consideration (in addition to
Warrant Consideration) and all Stock Election Shares shall be converted into
the right to receive Stock Consideration (and cash in lieu of fractional
interests in accordance with Section 3.4) (in addition to Warrant
Consideration).
(h) Computations. The Exchange Agent, in consultation with BJ,
shall make all computations to give effect to this Section 3.3.
Section 3.4 Fractional Interests. No certificates or scrip
representing fractional shares of BJ Common Stock and associated BJ Purchase
Rights or fractions of BJ Warrants shall be issued in
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connection with the Merger, and such fractional interests will not entitle the
owner thereof to any rights of a stockholder or warrantholder of BJ. In lieu
of any such fractional securities, each holder of shares of Western Common
Stock exchanged pursuant to Section 3.1(a) who would otherwise have been
entitled to receive a fraction of a share of BJ Common Stock and associated BJ
Purchase Rights or a fraction of a BJ Warrant (after taking into account all
shares of Western Common Stock then held of record by such holder) shall
receive (a) cash (without interest) in an amount equal to the product of such
fractional part of a share of BJ Common Stock multiplied by the Closing Price,
and/or (b) cash (without interest) in an amount equal to the product of such
fraction of a BJ Warrant multiplied by the Warrant Consideration Value.
Section 3.5 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, no share of Western Common Stock, the holder of
which shall have complied with the provisions of Section 262 of the Delaware
Corporation Law as to appraisal rights (a "Dissenting Share"), shall be deemed
converted into and to represent the right to receive Merger Consideration
hereunder; and the holders of Dissenting Shares, if any, shall be entitled to
payment, solely from the Surviving Corporation, of the appraised value of such
Dissenting Shares to the extent permitted by and in accordance with the
provisions of Section 262 of the Delaware Corporation Law; provided, however,
that (i) if any holder of Dissenting Shares shall, under the circumstances
permitted by the Delaware Corporation Law, subsequently deliver a written
withdrawal of his or her demand for appraisal of such Dissenting Shares, or
(ii) if any holder fails to establish his or her entitlement to rights to
payment as provided in such Section 262, or (iii) if neither any holder of
Dissenting Shares nor the Surviving Corporation has filed a petition demanding
a determination of the value of all Dissenting Shares within the time provided
in such Section 262, such holder or holders (as the case may be) shall forfeit
such right to payment for such Dissenting Shares pursuant to such Section 262
and each such Dissenting Share shall thereupon be treated as a Non-Election
Share for purposes of Section 3.3. Western shall give BJ (i) prompt notice of
any written demands for appraisal of any Western Common Stock, attempted
withdrawals of such demands, and any other instruments served pursuant to
applicable law received by Western relating to stockholders' rights of
appraisal and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the Delaware Corporation Law.
Western shall not, except with the prior written consent of BJ, voluntarily
make any payment with respect to any demands for appraisals of Western Common
Stock, offer to settle or settle any such demands or approve any withdrawal of
any such demands.
Section 3.6 Exchange of Certificates. (a) As soon as practicable
after the execution and delivery of this Agreement and, in any event, not less
than five Trading Days prior to the mailing to holders of Western Common Stock
of the Joint Proxy Statement, BJ shall designate a bank or trust company (or
such other person or persons as shall be reasonably acceptable to BJ and
Western) to act as exchange agent (the "Exchange Agent") in effecting the
exchange of certificates (the "Certificates") that, prior to the Effective
Time, represented shares of Western Common Stock for Merger Consideration
pursuant to Section 3.1(a) hereof (and cash in lieu of fractional interests in
accordance with Section 3.4). Upon the surrender of each such Certificate
representing shares of Western Common Stock, the Exchange Agent shall pay the
holder of such Certificate the Merger Consideration multiplied by the number of
shares of Western Common Stock formerly represented by such Certificate in
exchange therefor (and cash in lieu of fractional interests in accordance with
Section 3.4), and such Certificate shall forthwith be cancelled. Until so
surrendered and exchanged, each such Certificate that prior to the Effective
Time represented shares of Western Common Stock (other than Certificates
representing Dissenting Shares which are not to be treated as Non-Election
Shares pursuant to Section 3.3 or shares of Western Common Stock to be
cancelled in accordance with Section 3.1(c)) shall represent solely the right
to receive Merger Consideration (and cash in lieu of fractional interests in
accordance with Section 3.4). No interest shall be paid or accrue on Merger
Consideration.
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(b) As of or promptly after the Effective Time, BJ shall deposit
or cause to be deposited, in trust with the Exchange Agent, for the benefit of
the holders of shares of Western Common Stock, for exchange in accordance with
this Article III, the aggregate Merger Consideration.
(c) The cash portion of the aggregate Merger Consideration shall
be invested by the Exchange Agent, as directed by and for the benefit of the
Surviving Corporation, provided that such investments shall be limited to
direct obligations of the United States of America, obligations for which the
full faith and credit of the United States of America is pledged to provide for
the payment of principal and interest, commercial paper rated of the highest
quality by Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc. ("S&P"), and certificates of
deposit issued by a commercial bank whose long-term debt obligations are rated
at least A2 by Moody's or at least A by S&P, in each case having a maturity not
in excess of one year.
(d) Promptly following the date which is six months after the
Effective Time, the Exchange Agent shall deliver to the Surviving Corporation
all cash, shares of BJ Common Stock, Certificates and other documents in its
possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a
Certificate may surrender such Certificate to the Surviving Corporation and
(subject to applicable abandoned property, escheat and similar laws and, in the
case of Dissenting Shares, subject to applicable law) receive in exchange
therefor the applicable Merger Consideration (and cash in lieu of fractional
interests in accordance with Section 3.4), without any interest or dividends or
other payments thereon.
(e) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of any shares of Western
Common Stock. If, after the Effective Time, Certificates formerly representing
shares of Western Common Stock are presented to the Surviving Corporation or
the Exchange Agent, they shall be cancelled and (subject to applicable
abandoned property, escheat and similar laws and, in the case of Dissenting
Shares, subject to applicable law) exchanged for Merger Consideration (and cash
in lieu of fractional interests in accordance with Section 3.4), as provided in
this Article III.
(f) No dividends or other distributions declared or made after the
Effective Time with respect to shares of BJ Common Stock shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of BJ Common
Stock they are entitled to receive and no cash payment in lieu of fractional
interests shall be paid pursuant to Section 3.4 until the holder of such
Certificate shall surrender such Certificate, in accordance with the provisions
of this Agreement.
Section 3.7 No Liability. Neither BJ nor the Surviving Corporation
shall be liable to any holder of shares of Western Common Stock for any Merger
Consideration in respect of such shares (or dividends or distributions with
respect thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by BJ, the posting by such person of a bond in customary form
and amount as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration (and cash in
lieu of fractional interests in accordance with Section 3.4), without any
interest or dividends or other payments thereon, upon due surrender of and
deliverable in respect of such Certificate pursuant to this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BJ
BJ represents and warrants to Western as follows, except as set forth
in the disclosure letter delivered to Western by BJ on or prior to the date
hereof(the "BJ Disclosure Memorandum"):
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Section 4.1 Organization and Qualification. BJ is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own its assets
and to carry on its business as it is now being conducted or proposed to be
conducted. BJ is duly qualified as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of its properties
owned or held under lease or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or be in
good standing is not reasonably likely, individually or in the aggregate, to
have a BJ Material Adverse Effect (as defined below).
As used in this Agreement, the term "BJ Material Adverse Effect" means
a material adverse effect on the business, properties, assets, financial
condition or results of operations of BJ and its subsidiaries taken as a whole;
provided, however, that any change or changes in, or caused by, the prices of
oil, gas or chemical products, general economic conditions or local, regional,
national or international industry conditions shall not be deemed to constitute
a BJ Material Adverse Effect, it also being understood that a BJ Material
Adverse Effect shall not include a change with respect to BJ resulting from any
change in law, rule or regulation or generally accepted accounting principles,
consistently applied, that applies to both BJ and Western.
Section 4.2 Capitalization. As of the date hereof, the authorized
capital stock of BJ consists of 40,000,000 shares of BJ Common Stock and
5,000,000 shares of preferred stock, without par value. As of November 11,
1994, 15,717,270 shares of BJ Common Stock (together with the associated BJ
Purchase Rights) were validly issued and outstanding, fully paid and
nonassessable and no other shares of BJ's capital stock were outstanding. Since
November 11, 1994, no shares of BJ's capital stock have been issued, except for
shares of BJ Common Stock issued pursuant to (i) the exercise of stock options
granted to employees under BJ's 1990 Stock Option Plan ("BJ Options") and (ii)
pursuant to other employee plans disclosed in the BJ SEC Documents (as defined
in Section 4.5 hereof) ("Other Plans"). Except for (i) BJ Options, (ii) the BJ
Purchase Rights and (iii) the Other Plans, as of the date hereof there are no
options, warrants, calls, subscriptions, rights, agreements, commitments or
other obligations outstanding obligating BJ to issue or sell shares of its
capital stock or any securities exercisable or exchangeable for or convertible
into any shares of its capital stock. There are no voting trusts or other
agreements or understandings to which BJ or any of its subsidiaries is a party
or by which BJ or any of its subsidiaries is bound with respect to the voting
of BJ Common Stock or the stock of any subsidiary of BJ. Except as disclosed
prior to the date hereof in the BJ SEC Documents (as defined in Section 4.5),
there are no agreements or other understandings to which BJ or any of its
subsidiaries is a party or by which BJ or any of its subsidiaries is bound with
respect to the repurchase, redemption or other acquisition of or payment in
respect of any shares of capital stock of BJ or any of its subsidiaries. Each
of the shares of BJ Common Stock issuable in accordance with this Agreement in
exchange for Western Common Stock at the Effective Time will be, when so
issued, duly authorized, validly issued, fully paid and nonassessable and free
of preemptive rights, and will include an associated BJ Purchase Right.
Section 4.3 BJ Subsidiaries. Each Significant Subsidiary (as defined
in Rule 12b-1 under the Exchange Act) of BJ is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to own its
assets and to carry on its business as it is now being conducted or proposed to
be conducted. Each such Significant Subsidiary of BJ is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties directly or indirectly owned
or held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified or be in such good
standing is not, individually or in the aggregate, reasonably likely to have a
BJ Material Adverse Effect. Except as disclosed in the BJ SEC Documents and
except for directors' qualifying shares, all the outstanding shares of capital
stock of each such Significant Subsidiary of BJ are directly or indirectly
owned (of record and beneficially) by BJ or a wholly owned subsidiary of BJ.
All the outstanding shares of capital stock of such Significant Subsidiaries of
BJ are
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validly issued, fully paid and nonassessable, and those shares owned by BJ or
by a subsidiary of BJ are owned free and clear of any pledges, liens, claims,
security interests or other encumbrances of any kind other than those arising
pursuant to the certificate of incorporation or bylaws or other organizational
document of such Significant Subsidiary, as required by law or pursuant to an
agreement among the equity owners of such Significant Subsidiary to which BJ,
directly or indirectly through a subsidiary, is a party. As of the date
hereof, there are no options, warrants, calls, subscriptions, rights,
agreements, commitments or other obligations of any character relating to the
issued or unissued capital stock or other securities of any of the Significant
Subsidiaries of BJ other than those arising pursuant to the certificate of
incorporation or bylaws or other organizational document of such Significant
Subsidiary, as required by law pursuant to an agreement among the equity owners
of such Significant Subsidiary to which BJ, directly or indirectly through a
subsidiary, is a party. BJ does not directly or indirectly have any investment
in any corporation, partnership, joint venture or other business association or
entity which equity investment was when initially made, or has a current market
value as of the date hereof, in excess of $750,000, except as disclosed prior
to the date of this Agreement in the BJ SEC Documents.
Section 4.4 Authority Relative to this Agreement. BJ has the
requisite corporate power and authority to enter into this Agreement and the
Warrant Agreement and to carry out its obligations hereunder and thereunder.
The execution and delivery of each of this Agreement and the Warrant Agreement
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by BJ's Board of Directors and, except for the approval of
its stockholders as contemplated in Section 8.3, no other corporate
proceedings on the part of BJ are necessary to authorize any of this Agreement,
the Warrant Agreement and the consummation of the transactions contemplated
hereby and thereby. This Agreement has been duly executed, acknowledged and
delivered by each of BJ and BJ Sub and (assuming the valid authorization,
execution and delivery of this Agreement by Western) is a valid and binding
obligation of BJ and of BJ Sub, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting creditors'
rights generally or by equitable principles. When executed and delivered by BJ
at the Closing, the Warrant Agreement will be a valid and binding obligation of
BJ, enforceable in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting creditors' rights generally or by general equitable
principles and except that indemnification for certain matters pertaining to
federal and state securities laws may not be enforceable by reason of
applicable public policy. Neither BJ nor BJ Sub is subject to or obligated
under (i) any charter or bylaw provision or (ii) any other contract, indenture,
loan document, license, franchise, permit, order, decree or instrument binding
on BJ or any of its subsidiaries which would be breached or violated by its
executing and performing this Agreement and the transactions contemplated
hereby or, with respect to BJ, the Warrant Agreement (or pursuant to which the
transactions contemplated hereby may give rise to any right of termination,
cancellation, acceleration or payment) other than, in the case of clause (ii)
only, any breaches or violations (or rights of termination, cancellation,
acceleration or payment) which will not, either singly or in the aggregate,
have a BJ Material Adverse Effect or materially impair the ability of BJ to
perform its obligations hereunder or under the Warrant Agreement. Except as
referred to herein or in connection, or in compliance, with the provisions of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "Hart Scott
Act"), the Securities Act of 1933, as amended, and the rules promulgated
thereunder (the "Securities Act"), the Securities Exchange Act of 1934, as
amended, and the rules promulgated thereunder (the "Exchange Act"), applicable
NYSE rules or rules promulgated by the National Association of Securities
Dealers, Inc. ("NASD") and the corporation, securities, takeover or blue sky
laws of the various states, no filing or registration with, or authorization,
consent or approval of, any public body or authority is necessary for the
consummation by BJ of the Merger or the other transactions contemplated by this
Agreement and the Warrant Agreement, other than such as may be required solely
because Western is a party to the Merger, except where the failure to so file
or register or to obtain such authorizations, consents or approvals is not
reasonably likely to have a BJ Material Adverse Effect.
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Section 4.5 Reports and Financial Statements. BJ has filed with the
Securities and Exchange Commission (the "Commission") all prospectuses, proxy
statements and reports (including all exhibits and schedules thereto and
documents incorporated by reference therein) which were required under the
Securities Act or the Exchange Act to be filed with the Commission by BJ since
December 31, 1991, and will file all proxy statements and reports (including
all exhibits and schedules thereto and documents incorporated by reference
therein) required to be filed after the date hereof and prior to the Effective
Time (collectively, the "BJ SEC Documents"). As of their respective dates, the
BJ SEC Documents filed with the Commission prior to the date hereof complied in
all material respects with all material requirements of the Securities Act or
the Exchange Act, as the case may be, and the BJ SEC Documents to be filed with
the Commission after the date hereof will so comply. BJ has made available to
Western copies of all BJ SEC Documents filed with the Commission prior to the
date hereof and will deliver promptly to Western after they are filed with the
Commission all BJ SEC Documents filed after the date hereof. None of the BJ
SEC Documents contained, or will contain, as of its date, any untrue statement
of a material fact or omitted or will omit, to state a material fact required
to be stated therein or necessary to make the statements made, in light of the
circumstances under which they were made, not misleading. The (i) audited
fiscal year end consolidated statements of financial position and related
consolidated statements of operations, stockholders' equity and cash flows,
including the notes thereto, together with the reports thereon of BJ's
independent public accountants, and (ii) unaudited interim consolidated
statements of financial position and the related unaudited interim consolidated
statements of operations, stockholders' equity and cash flows, which are, or
will be, included in the BJ SEC Documents or incorporated by reference therein
present, or will present, in accordance with the books and records of BJ and
its subsidiaries, fairly the financial position, results of operations, cash
flows and financial position of BJ and its subsidiaries as of the dates and for
the periods indicated and are, or will be, in conformity with generally
accepted accounting principles, except, in the case of interim financial
statements, for the lack of explanatory footnote disclosures required by
generally accepted accounting principles, and subject to normal year end audit
adjustments. BJ's consolidated balance sheet at June 30, 1994 included in the
BJ SEC Documents is hereinafter called the "Latest BJ Balance Sheet." There is
no liability or obligation of any kind, whether accrued, absolute, fixed or
contingent, of BJ or any subsidiary of BJ required by generally accepted
accounting principles to be reflected or reserved against or otherwise
disclosed in the Latest BJ Balance Sheet which is not so reflected or reserved
against of which the executive officers of BJ have knowledge, that individually
or in the aggregate is reasonably likely to have a BJ Material Adverse Effect,
except for normal year-end adjustments and other adjustments described in the
Latest BJ Balance Sheet.
Section 4.6 Absence of Certain Changes or Events. Except as
disclosed prior to the date of this Agreement in BJ SEC Documents, since
September 30, 1993, the respective businesses of BJ and its subsidiaries have
been conducted only in the ordinary course and consistent with past practice
and there has not been (i) any change in the business, assets, liabilities,
financial condition or results of operations of BJ and its subsidiaries, taken
as a whole, that is reasonably likely to (x) have a BJ Material Adverse Effect
or (y) as of the date hereof, materially impair the ability of BJ to perform
its obligations hereunder or (ii) any material change by BJ or its subsidiaries
in accounting principles or methods except insofar as required by a change in
generally accepted accounting principles or rules of the Commission.
Section 4.7 Tax Matters. Each of BJ and each of its Significant
Subsidiaries, and any consolidated, combined, unitary or aggregate group for
tax purposes of which BJ or any of its Significant Subsidiaries is or has been
a member, has timely filed all material Tax Returns (as hereinafter defined)
required to be filed by it, has paid all Taxes (as hereinafter defined) shown
thereon to be due and has provided adequate reserves in its financial
statements for any Taxes that have not been paid but are properly accruable
under generally accepted accounting principles, whether or not shown as being
due on any returns. Except to the extent that the inaccuracy of any of the
following, individually or in the aggregate, is not reasonably likely to have a
BJ Material Adverse
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Effect, no claim for unpaid Taxes has become a lien or encumbrance of any kind
against the property of BJ or any of its Significant Subsidiaries or is being
asserted against BJ or any of its Significant Subsidiaries; no audit of any Tax
Return of BJ or any of its Significant Subsidiaries is being conducted by a Tax
authority; and no extension of the statute of limitations on the assessment of
any Taxes has been granted by BJ or any of its Significant Subsidiaries and is
currently in effect. As used herein, "Taxes" shall mean any taxes of any kind,
including but not limited to those measured by or referred to as income, gross
receipts, sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, value
added, property or windfall profits or assessments of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any governmental authority, domestic or foreign. Neither BJ
nor any of its Significant Subsidiaries has made an election under Section
341(f) of the Internal Revenue Code. As used herein, "Tax Return" shall mean
any return, report or statement required to be filed with any governmental
authority with respect to Taxes.
Section 4.8 Environmental Matters. (a) Except to the extent that
the inaccuracy of any of the following, individually or in the aggregate, is
not reasonably likely to have a BJ Material Adverse Effect, to the knowledge of
the executive officers of BJ:
(i) BJ and its subsidiaries hold, and are in compliance
with and have been in compliance with for the last two years, all
Environmental Permits (as hereinafter defined), and are otherwise in
substantial compliance and have been in substantial compliance for the
last two years with, all applicable Environmental Laws (as hereinafter
defined) and there is no condition that is reasonably likely to
prevent or materially interfere in the near future with compliance by
BJ and its subsidiaries with Environmental Laws;
(ii) no modification, revocation, reissuance, alteration,
transfer or amendment of any Environmental Permit, or any review by,
or approval of, any third party of any Environmental Permit is
required in connection with the execution or delivery of this
Agreement or the consummation by BJ of the transactions contemplated
hereby or the operation of the business of BJ or any of its
subsidiaries on the Closing Date;
(iii) neither BJ nor any of its subsidiaries has received
any Environmental Claim (as hereinafter defined), nor has any
Environmental Claim been threatened against BJ or any of its
subsidiaries;
(iv) neither BJ nor any of its subsidiaries has entered
into, agreed to or is subject to any outstanding judgment, decree,
order or consent arrangement with any governmental authority under any
Environmental Laws, including without limitation those relating to
compliance with any Environmental Laws or to the investigation,
cleanup, remediation or removal of Hazardous Materials (as hereinafter
defined);
(v) there are no circumstances that are reasonably likely
to give rise to liability under any agreements with any person
pursuant to which BJ or any subsidiary of BJ would be required to
defend, indemnify, hold harmless, or otherwise be responsible for any
violation by or other liability or expense of such person, or alleged
violation by or other liability or expense of such person, arising out
of any Environmental Law; and
(vi) there are no other circumstances or conditions that
are reasonably likely to give rise to liability of BJ or any of its
subsidiaries under any Environmental Laws.
(b) For purposes of this Agreement, the terms below shall have the
following meanings:
"Environmental Claim" means any written complaint, notice,
claim, demand, action, suit or judicial, administrative or arbitral
proceeding by any person to BJ or any of its
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subsidiaries (or, for purposes of Section 6.10, Western or any of its
subsidiaries) asserting liability or potential liability (including
without limitation liability or potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resource
damages, property damage, personal injury, fines or penalties) arising
out of, relating to, based on or resulting from (i) the presence,
discharge, emission, release or threatened release of any Hazardous
Materials at any location, (ii) circumstances forming the basis of any
violation or alleged violation of any Environmental Laws or
Environmental Permits, or (iii) otherwise relating to obligations or
liabilities under any Environmental Law.
"Environmental Permits" means all permits, licenses,
registrations, exemptions and other governmental authorizations
required under Environmental Laws for BJ or any of its subsidiaries
(or, for purposes of Section 6.10, Western or any of its subsidiaries)
to conduct their operations as presently conducted.
"Environmental Laws" means all applicable foreign, federal,
state and local statutes, rules, regulations, ordinances, orders,
decrees and common law relating in any manner to pollution or
protection of the environment, to the extent and in the form that such
exist at the date hereof.
"Hazardous Materials" means all hazardous or toxic substances,
wastes, materials or chemicals, petroleum (including crude oil or any
fraction thereof) and petroleum products, asbestos and
asbestos-containing materials, pollutants, contaminants and all other
materials and substances, including but not limited to radioactive
materials regulated pursuant to any Environmental Laws or that could
result in liability under any Environmental Laws.
Section 4.9 Litigation. Except as disclosed prior to the date hereof
in BJ SEC Documents, there is no suit, action, investigation or proceeding
pending or, to the knowledge of the executive officers of BJ, threatened
against or affecting BJ or any of its subsidiaries at law or in equity before
or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind, that is reasonably likely to have a BJ
Material Adverse Effect or (with respect to such matters that are pending or
threatened as of the date hereof) materially impair the ability of BJ to
perform its obligations hereunder and there is no judgment, decree, injunction,
rule or order of any court, governmental department,commission, board, bureau,
agency, instrumentality or arbitrator outstanding against or applicable to BJ
or any of its subsidiaries that is reasonably likely to have a BJ Material
Adverse Effect or (with respect to such items that are outstanding or
applicable as of the date hereof) materially impair the ability of BJ to
perform its obligations hereunder.
Section 4.10 Governmental Licenses and Permits; Compliance with Law.
Except as disclosed prior to the date hereof in the BJ SEC Documents, since
September 30, 1993 neither BJ nor any of its Significant Subsidiaries has
received notice of any revocation or modification of any federal, state, local
or foreign governmental license, certification, tariff, permit, authorization
or approval the revocation or modification of which has had or is reasonably
likely to have a BJ Material Adverse Effect. To the knowledge of the executive
officers of BJ, the conduct of the business of each of BJ and its subsidiaries
complies with all statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees or arbitration awards applicable thereto, except for violations
or failures to comply, if any, that, individually or in the aggregate, are not
reasonably likely to have a BJ Material Adverse Effect.
Section 4.11 Required Vote of BJ Stockholders. The affirmative vote
of holders of outstanding shares of BJ Common Stock provided for in NYSE Rule
312.05 is required to approve this Agreement and the issuance of BJ Common
Stock and BJ Warrants in the Merger. No other vote of the stockholders of BJ
is required by law, the Restated Certificate of Incorporation or Bylaws of BJ
or otherwise to approve this Agreement and the transactions contemplated
hereby.
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Section 4.12 BJ Action. The Board of Directors of BJ (at a meeting
duly called and held on November 17, 1994) unanimously (a) determined that the
Merger is fair to and in the best interests of BJ and its stockholders, (b)
approved this Agreement and the issuance of BJ Common Stock and BJ Warrants in
the Merger, (c) resolved to recommend approval by BJ's stockholders of this
Agreement and the issuance of BJ Common Stock and BJ Warrants in the Merger and
(d) directed that this Agreement be submitted to BJ's stockholders for their
approval, including approval of the Stock Consideration and Warrant
Consideration to be issued pursuant to this Agreement.
Section 4.13 Opinion of Financial Advisor. On the date hereof, BJ
has received the opinion of Merrill Lynch & Co. to the effect that the Merger
is fair to BJ's stockholders.
Section 4.14 Brokers and Finders. Except for Merrill Lynch & Co, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with this Agreement or the Merger based
upon arrangements made by or on behalf of BJ or BJ Sub. Except as expressly
set forth in this Agreement, no valid claim against BJ or BJ Sub or, to the
knowledge of the executive officers of BJ, against Western exists for payment
of any fee or other compensation as a result of any of the transactions
contemplated hereby.
Section 4.15 Available Funds. BJ will have available to it at the
Effective Time all funds necessary to satisfy all of its obligations hereunder
and in connection with the transactions contemplated herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING BJ SUB
BJ and BJ Sub jointly and severally represent and warrant to Western
as follows:
Section 5.1 Organization. BJ Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
BJ Sub has not engaged in any business since it was incorporated, except in
connection with the Merger and the other transactions contemplated hereby.
Section 5.2 Capitalization. The authorized capital stock of BJ Sub
consists of 1,000 shares of common stock, par value $0.01 per share, 100 shares
of which are validly issued and outstanding, fully paid and nonassessable and
are owned by BJ free and clear of all liens, claims and encumbrances.
Section 5.3 Authority Relative to this Agreement. BJ Sub has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by BJ Sub's Board of Directors and its sole stockholder
and no other corporate proceedings on the part of BJ Sub are necessary to
authorize this Agreement and the consummation of the transactions contemplated
hereby. Except as referred to herein or in connection, or in compliance, with
the provisions of the Act, the Securities Act, the Exchange Act, applicable
NYSE rules and the corporation, securities, takeover or blue sky laws of the
various states, no filing or registration with, or authorization, consent or
approval of, any public body or authority is necessary for the consummation by
BJ Sub of the Merger or the other transactions contemplated by this Agreement,
other than such as may be required solely because Western is a party to the
Merger.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF WESTERN
Western represents and warrants to BJ and BJ Sub, except as set forth
in the disclosure letter delivered to BJ by Western on or prior to the date
hereof (the "Western Disclosure Memorandum") as follows:
Section 6.1 Organization and Qualification. Western is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to own
its assets and to carry on its business as it is now being conducted or
proposed to be conducted. Western is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be
so qualified or be in such good standing is not reasonably likely to,
individually or in the aggregate, have a Western Material Adverse Effect (as
defined below).
As used in this Agreement, the term "Western Material Adverse Effect"
means a material adverse effect on the business, properties, assets, financial
condition or results of operations of Western and its subsidiaries taken as a
whole; provided, however, that any change or changes in, or caused by, the
prices of oil, gas or chemical products, general economic conditions or local,
regional, national or international industry conditions shall not be deemed to
constitute a Western Material Adverse Effect, it also being understood that a
Western Material Adverse Effect shall not include a change with respect to
Western resulting from any change in law, rule or regulation or generally
accepted accounting principles, consistently applied, that applies to both BJ
and Western.
Section 6.2 Capitalization. The authorized capital stock of Western
consists of 50,000,000 shares of Western Common Stock and 6,000,000 shares of
preferred stock, without par value ("Western Preferred Stock"). As of November
11, 1994, 18,243,238 shares of Western Common Stock were validly issued and
outstanding, fully paid and nonassessable and no other shares of Western's
capital stock were outstanding. As of November 9, 1994, Western had
outstanding options to purchase, in the aggregate, 1,018,714 shares of Western
Common Stock granted under the Western Plans (as defined in Section 6.7), which
includes options to purchase 268,750 shares of Western Common Stock granted
under an agreement, dated May 12, 1989, with an executive officer of Western,
options to purchase 37,500 shares of Western Common Stock granted under
Western's Non-Employee Directors' Plan and options to purchase 712,464 shares
of Western Common Stock granted under Western's Long-Term Performance Incentive
Plan (collectively, the "Western Options"). As of October 31, 1994, there was
outstanding $88,746,000 principal amount of Western Convertible Debentures
convertible into 5,220,352 shares of Western Common Stock. Since November 11,
1994, no shares of Western's capital stock have been issued. Except for
Western Options, Western Convertible Debentures and the preferred stock
purchase rights (the "Western Rights") issued pursuant to Western's
Stockholders Protection Rights Agreement dated as of March 5, 1990, as amended
(the "Western Rights Agreement"), there are no options, warrants, calls,
subscriptions, rights, agreements, commitments or other obligations outstanding
obligating Western to issue or sell any shares of its capital stock or any
securities exercisable or exchangeable for or convertible into any shares of
its capital stock. There are no voting trusts or other agreements or
understandings to which Western or any of its subsidiaries is a party or by
which Western or any of its subsidiaries is bound with respect to the voting of
Western Common Stock or the stock of any subsidiary of Western. Western has
provided to BJ true and correct lists of the record holders as of November 9,
1994 of all Western Options. Except as disclosed prior to the date hereof in
the Western SEC Documents (as defined in Section 6.5), there are no agreements
or other understandings to which Western or any of its subsidiaries is a party
or by which Western or any of its subsidiaries is bound with respect to the
repurchase, redemption or other acquisition of or payment in respect of any
shares of capital stock of Western or any of its subsidiaries.
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Section 6.3 Western Subsidiaries. Each Significant Subsidiary (as
defined in Rule 12b-1 under the Exchange Act) of Western is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has the requisite corporate power and
authority to own its assets and to carry on its business as it is now being
conducted or proposed to be conducted. Each such Significant Subsidiary of
Western is duly qualified as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of its properties
directly or indirectly owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be
so qualified or be in such good standing is not, individually or in the
aggregate, reasonably likely to have a Western Material Adverse Effect. Except
as disclosed in the Western SEC Documents all the outstanding shares of capital
stock of each such Significant Subsidiary of Western are directly or indirectly
owned (of record and beneficially) by Western or a wholly owned subsidiary of
Western. All the outstanding shares of capital stock of such Significant
Subsidiaries of Western are validly issued, fully paid and nonassessable, and
those shares owned by Western or by a subsidiary of Western are owned free and
clear of any pledges, liens, claims, security interests or other encumbrances
of any kind other than those arising pursuant to the certificate of
incorporation or bylaws or other organizational document of such Significant
Subsidiary, as required by law or pursuant to an agreement among the equity
owners of such Significant Subsidiary to which Western, directly or indirectly
through a subsidiary, is a party. As of the date hereof, there are no options,
warrants, calls, subscriptions, rights, agreements, commitments or other
obligations of any character relating to the issued or unissued capital stock
or other securities of any of the Significant Subsidiaries of Western other
than those arising pursuant to the certificate of incorporation or bylaws or
other organizational document of such Significant Subsidiary, as required by
law or pursuant to an agreement among the equity owners of such Significant
Subsidiary to which Western, directly or indirectly through a subsidiary, is a
party. Western does not directly or indirectly have any equity investment in
any corporation, partnership, joint venture or other business association or
entity which equity investment was when initially made, or has a current market
value as of the date hereof, in excess of $750,000, except as disclosed prior
to the date of this Agreement in the Western SEC Documents.
Section 6.4 Authority Relative to this Agreement. Subject to the
approval of this Agreement by the holders of at least two-thirds of the
outstanding shares of Western Common Stock, Western has the requisite corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by Western's Board of Directors and, except for the approval of its
stockholders as contemplated in Section 8.3, no other corporate proceedings on
the part of Western are necessary to authorize this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed, acknowledged and delivered by Western and (assuming the valid
authorization, execution and delivery of this Agreement and the transactions
contemplated hereby by each of BJ and BJ Sub) is a valid and binding obligation
of Western, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights generally
or by equitable principles and except that indemnification for certain matters
pertaining to federal and state securities laws may not be enforceable by
reason of applicable public policy. Western is not subject to or obligated
under (i) any charter or bylaw provision or (ii) any other contract, indenture,
loan document, license, franchise, permit, order, decree or instrument (except
for master service contracts which are terminable upon no more than 90 days'
notice) binding on Western or any of its subsidiaries which would be breached
or violated by its executing and performing this Agreement and the transactions
contemplated hereby (or pursuant to which the transactions contemplated hereby
may give rise to any right of termination, cancellation, acceleration or
payment) other than, in the case of clause (ii) only, any breaches or
violations (or rights of termination, cancellation, acceleration or payment)
which will not, either singly or in the aggregate, have a Western Material
Adverse Effect or materially impair the ability of Western to perform its
obligations hereunder. Except as referred to herein or in connection, or in
compliance, with the provisions of the Hart Scott Act, the Securities Act, the
Exchange Act, applicable NYSE rules and the
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corporation, securities, takeover or blue sky laws of the various states, no
filing or registration with, or authorization, consent or approval of, any
public body or authority is necessary for the consummation by Western of the
Merger or the other transactions contemplated by this Agreement, other than
such as may be required solely because BJ or BJ Sub is a party to the Merger,
except where the failure to so file or register or to obtain such
authorizations, consents or approvals is not reasonably likely to have a
Western Material Adverse Effect.
Section 6.5 Reports and Financial Statements. Western has filed with
the Commission all prospectuses, proxy statements and reports (including all
exhibits and schedules thereto and documents incorporated by reference therein)
which were required under the Securities Act or the Exchange Act to be filed
with the Commission by Western since December 31, 1991, and will file all proxy
statements and reports (including all exhibits and schedules thereto and
documents incorporated by reference therein) required to be filed after the
date hereof and prior to the Effective Time (collectively, the "Western SEC
Documents"). As of their respective dates, the Western SEC Documents filed with
the Commission prior to the date hereof complied in all material respects with
all material requirements of the Securities Act or the Exchange Act, as the
case may be, and the Western SEC Documents to be filed with the Commission
after the date hereof will so comply. Western has made available to BJ copies
of all Western SEC Documents filed with the Commission prior to the date hereof
and will deliver promptly to BJ after they are filed with the Commission all
Western SEC Documents filed after the date hereof. None of the Western SEC
Documents contained, or will contain, as of its date, any untrue statement of a
material fact or omitted, or will omit, to state a material fact required to be
stated therein or necessary to make the statements made, in light of the
circumstances under which they were made, not misleading. The (i) audited
fiscal year end consolidated balance sheets and related consolidated statements
of operations, stockholders' equity and cash flows, including the notes
thereto, together with the reports thereon of Western's independent public
accountants, and (ii) unaudited interim consolidated balance sheets and the
related unaudited interim consolidated statements of operations, stockholders'
equity and cash flows, which are, or will be, included in Western SEC Documents
or incorporated by reference therein, present, or will present, in accordance
with the books and records of Western and its subsidiaries, fairly the
financial position, results of income, cash flows and financial position of
Western and its subsidiaries as of the dates and for the periods indicated and
are, or will be, in conformity with generally accepted accounting principles,
except, in the case of interim financial statements, for the lack of
explanatory footnote disclosures required by generally accepted accounting
principles, and subject to normal year end audit adjustments. Western's
consolidated balance sheet at September 30, 1994 included in the Western SEC
Documents is hereinafter called the "Latest Western Balance Sheet." There is
no liability or obligation of any kind, whether accrued, absolute, fixed or
contingent, of Western or any subsidiary of Western required by generally
accepted accounting principles to be reflected or reserved against or otherwise
disclosed in the Latest Western Balance Sheet which is not so reflected or
reserved against of which the executive officers of Western have knowledge,
that individually or in the aggregate is reasonably likely to have a Western
Material Adverse Effect, except for normal year-end adjustments and other
adjustments described in the Latest Western Balance Sheet.
Section 6.6 Absence of Certain Changes or Events. Except as
disclosed prior to the date of this Agreement in the Western SEC Documents,
since December 31, 1993, (a) the respective businesses of Western and its
subsidiaries have been conducted only in the ordinary course and consistent
with past practice, (b) there has not been any change in the business, assets,
properties, financial condition or results of operations of Western and its
subsidiaries, taken as a whole, that is reasonably likely to (x) have a Western
Material Adverse Effect (it being acknowledged by BJ that the public
announcement on September 13, 1994 by BJ of its proposal to acquire Western and
subsequent events related thereto, including, without limitation, entering into
this Agreement and the transactions contemplated hereby, could have a negative
impact on operating results prior to the Effective Time) or (y) as of the date
hereof, materially impair the ability of Western to perform its obligations
hereunder and (c) there has not been:
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(i) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of capital
stock of Western, or any repurchase, redemption or other acquisition
by Western of any outstanding shares of capital stock or other equity
securities of Western or any options, warrants or rights of any kind
to acquire any, or any securities exercisable or exchangeable for or
convertible into shares of, capital stock or other equity securities
of Western (other than the extinguishment of options upon the exercise
of Western Options and other than purchases of Western Common Stock by
the trustee under the Western Retirement Savings Plan);
(ii) any change in any method of accounting or accounting
practice by Western, except for any such change required to be
implemented pursuant to generally accepted accounting principles or
rules of the Commission; or
(iii) any (A) grant of any severance or termination pay to
any director, officer or employee of Western or any of its
subsidiaries (other than settlement arrangements with employees other
than officers in accordance with past practice and pursuant to which
Western or its subsidiaries obtain certain waivers of rights), (B)
entering into of any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement)
with any director, officer or employee of Western or any subsidiary
thereof, (C) any increase in benefits payable under any existing
severance or termination pay policies or employment agreements, or (D)
any increase in compensation, bonus or other benefits payable to
directors, officers or employees of Western or any subsidiary thereof,
other than in the ordinary course (including normal individual
periodic performance reviews and related compensation and benefit
increases and bonus payments and awards under existing plans).
Section 6.7 Benefit Plans. (a) Section 6.7(a) of the Western
Disclosure Memorandum contains a complete list of each "employee benefit plan"
(within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")), and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including, without limitation, multiemployer plans within the meaning of
ERISA section 3(37), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, bonus, incentive or deferred compensation
plans) under which any employee or director or former employee or director of
Western, including any beneficiary thereof, has any present or future right to
benefits or under which Western has any present or future liability (other than
payments by insurance companies under terminated insurance contracts). All
such plans, agreements, programs, policies and arrangements shall be
collectively referred to as the "Western Plans".
(b) With respect to each Western Plan, Western has delivered or,
in the case of clauses (i), (ii) and (iv) below, made available to BJ a
current, accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable: (i) any related
trust agreement, annuity contract or other funding instrument; (ii) the most
recent Internal Revenue Service determination letter; (iii) any summary plan
description and other written communications by Western to its employees which
are materially inconsistent with any summary plan description; and (iv) the
most recent (I) Form 5500 and attached schedules; (II) audited financial
statements; (III) actuarial valuation reports; and (IV) attorney's response to
an auditor's request for information.
(c) (i) Each Western Plan has been established and administered in
accordance with its terms, and in substantial compliance with the applicable
provisions of ERISA, the Internal Revenue Code of 1986, as amended (the "Code")
and other applicable laws, rules and regulations; (ii) each Western Plan which
is intended to be qualified within the meaning of Code section 401(a) is so
qualified and has received a favorable determination letter as to its
qualification and nothing has occurred to the knowledge of the executive
officers of Western, whether by action or failure to act, which would cause the
loss of such qualification; and (iii) with respect to any Western Plan, no
actions,
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suits or claims (other than routine claims for benefits in the ordinary course)
are pending or, to the knowledge of the executive officers of Western,
threatened. Western will promptly notify BJ in writing of any pending or
threatened claims arising between the date hereof and the Closing Date (other
than routine claims for benefits in the ordinary course). No event has
occurred and no condition exists with respect to or relating to any Western
Plan that is reasonably likely to subject Western, either directly or by reason
of its affiliation with any member of its Controlled Group (defined as any
organization which is a member of a controlled group of organizations within
the meaning of Code sections 414(b), (c), (m) or (o)), to any material tax,fine
or penalty or other liability imposed by ERISA, the Code or other applicable
laws.
(d) (i) No Western Plan has incurred any "accumulated funding
deficiency" as such term is defined in ERISA section 302 and Code section 412
(whether or not waived); (ii) to the knowledge of the executive officers of
Western, no event or condition exists which could be deemed a reportable event
within the meaning of ERISA section 4043 with respect to any Western Plan that
is subject to Title IV of ERISA where the present value of accrued benefits
exceeds the fair market value of assets available for such benefits by a
material amount; (iii) Western and each member of its Controlled Group have
made all required premium payments when due to the PBGC; (iv) neither Western
nor any member of its Controlled Group is subject to any liability to the PBGC
for any plan termination; (v) no amendment has occurred which has required or
could require Western or any member of its Controlled Group to provide security
pursuant to Code section 401(a)(29); and (vi) neither Western nor any member of
its Controlled Group has engaged in a transaction which is reasonably likely to
subject it to liability under ERISA section 4069.
(e) Section 6.7(e) of the Western Disclosure Memorandum sets
forth, on a plan by plan basis, the present value of benefits payable presently
or in the future to present or former employees of Western under each unfunded
Western Plan which is a pension plan within the meaning of Section 3(2) of
ERISA.
(f) No Western Plan is a multiemployer plan (within the meaning of
Section 3(37) of ERISA) and neither Western nor any member of its Controlled
Group has incurred or is likely to incur any liability to any multiemployer
plan nor is engaged in a transaction which could subject Western to liability
under ERISA section 4212(c).
(g) (i) No Western Plan, by its terms, provides for an increase in
the rate of accrual or the amount of benefits thereunder on or after the
Closing Date (other than increases due to ordinary accruals or contributions
under the plan), (ii) each Western Plan may be amended or terminated under the
terms of such Western Plan without material obligation or liability (other than
those obligations and liabilities for which specific assets have been set aside
in a trust or other funding vehicle or reserved for on Western's balance
sheet); and (iii) except as specifically contemplated by this Agreement, no
Western Plan exists which could result in the payment to any Western employee
of any money or other property or rights or accelerate or provide any other
rights or benefits to any Western employee as a result of the transaction
contemplated by this Agreement, whether or not such payment would constitute a
parachute payment within the meaning of Code section 280G.
Section 6.8 Labor Matters. (i) Neither Western nor any of its
Significant Subsidiaries is party to any collective bargaining agreement or
other material contract or agreement with any labor organization or other
representative of employees nor is any such contract being negotiated; (ii)
there is no material unfair labor practice charge or complaint pending nor, to
the knowledge of the executive officers of Western, threatened, with regard to
employees of Western or any Significant Subsidiary; (iii) there is no labor
strike, material slowdown, material work stoppage or other material labor
controversy in effect, or, to the knowledge of the executive officers of
Western, threatened against Western or any of its Significant Subsidiaries;
(iv) as of the date hereof, no representation question exists, nor to the
knowledge of the executive officers of Western are there any campaigns being
conducted to solicit cards from the employees of Western or any Significant
Subsidiary of Western to
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authorize representation by any labor organization; (v) neither Western nor any
Significant Subsidiary of Western is party to, or is otherwise bound by, any
consent decree with any governmental authority relating to employees or
employment practices of Western or any Significant Subsidiary of Western; and
(vi) Western and each Significant Subsidiary of Western are in compliance with
all applicable agreements, contracts and policies relating to employment,
employment practices, wages, hours and terms and conditions of employment of
the employees except where failure to be in compliance with each such
agreement, contract and policy is not, either singly or in the aggregate,
reasonably likely to have a Western Material Adverse Effect.
Section 6.9 Tax Matters. Each of Western and each of its Significant
Subsidiaries, and any consolidated, combined, unitary or aggregate group for
tax purposes of which Western or any of its subsidiaries is or has been a
member, has timely filed all material Tax Returns required to be filed by it,
has paid all Taxes shown thereon to be due and has provided adequate reserves
in its financial statements for any Taxes that have not been paid but are
properly accruable under generally accepted accounting principles, whether or
not shown as being due on any returns. Except to the extent that the inaccuracy
of any of the following, individually or in the aggregate, is not reasonably
likely to have a Western Material Adverse Effect, no claim for unpaid Taxes has
become a lien or encumbrance of any kind against the property of Western or any
of its Significant Subsidiaries or is being asserted against Western or any of
its Significant Subsidiaries; no audit of any Tax Return of Western or any of
its Significant Subsidiaries is being conducted by a Tax authority; and no
extension of the statute of limitations on the assessment of any Taxes has been
granted by Western or any of its Significant Subsidiaries and is currently in
effect. Neither Western nor any of its Significant Subsidiaries has made an
election under Section 341(f) of the Internal Revenue Code.
Section 6.10 Environmental Matters. Except to the extent that the
inaccuracy of any of the following, individually or in the aggregate, is not
reasonably likely to have a Western Material Adverse Effect, to the knowledge
of the executive officers of Western:
(i) Western and its subsidiaries hold, and are in
compliance with and have been in compliance with for the last two
years, all Environmental Permits, and are otherwise in substantial
compliance and have been in substantial compliance for the last two
years with, all applicable Environmental Laws and there is no
condition that is reasonably likely to prevent or materially interfere
prior to the Effective Time with compliance by Western and its
subsidiaries with Environmental Laws;
(ii) no modification, revocation, reissuance, alteration,
transfer or amendment of any Environmental Permit, or any review by,
or approval of, any third party of any Environmental Permit is
required in connection with the execution or delivery of this
Agreement or the consummation by Western of the transactions
contemplated hereby or the operation of the business of Western or any
of its subsidiaries on the Closing Date;
(iii) neither Western nor any of its subsidiaries has
received any Environmental Claim, nor has any Environmental Claim been
threatened against Western or any of its subsidiaries;
(iv) neither Western nor any of its subsidiaries has
entered into, agreed to or is subject to any outstanding judgment,
decree, order or consent arrangement with any governmental authority
under any Environmental Laws, including without limitation those
relating to compliance with any Environmental Laws or to the
investigation, cleanup, remediation or removal of Hazardous Materials;
(v) there are no circumstances that are reasonably likely
to give rise to liability under any agreements with any person
pursuant to which Western or any subsidiary of Western would be
required to defend, indemnify, hold harmless, or otherwise be
responsible for any
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violation by or other liability or expense of such person, or alleged
violation by or other liability or expense of such person, arising out
of any Environmental Law; and
(vi) there are no other circumstances or conditions that
are reasonably likely to give rise to liability of Western or any of
its subsidiaries under any Environmental Laws.
Section 6.11 Litigation. Except as disclosed prior to the date
hereof in Western SEC Documents, there is no suit, action, investigation or
proceeding pending or, to the knowledge of the executive officers of Western,
threatened against Western or any of its subsidiaries at law or in equity
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind, that is reasonably likely to have a Western
Material Adverse Effect or, with respect to such matters that are pending or
threatened as of the date hereof, materially impair the ability of Western to
perform its obligations hereunder and there is no judgment, decree, injunction,
rule or order of any court, governmental department, commission, board, bureau,
agency, instrumentality or arbitrator to which Western or any of its
subsidiaries is subject that is reasonably likely to have a Western Material
Adverse Effect or, with respect to such items that are outstanding and
applicable as of the date hereof, materially impair the ability of Western to
perform its obligations hereunder.
Section 6.12 Governmental Licenses and Permits; Compliance with Law.
Except as disclosed prior to the date hereof in the Western SEC Documents,
since December 31, 1993 neither Western nor any of its Significant Subsidiaries
has received notice of any revocation or modification of any federal, state,
local or foreign governmental license, certification, tariff, permit,
authorization or approval the revocation or modification of which has had or is
reasonably likely to have a Western Material Adverse Effect. To the knowledge
of the executive officers of Western, the conduct of the business of each of
Western and its subsidiaries complies with all statutes, laws, regulations,
ordinances, rules, judgments, orders, decrees or arbitration awards applicable
thereto, except for violations or failures to comply, if any, that,
individually or in the aggregate, are not reasonably likely to have a Western
Material Adverse Effect.
Section 6.13 Amendment to Western Rights Agreement. (a) The Board
of Directors of Western has taken all necessary action to amend the Western
Rights Agreement so that none of the execution and delivery of this Agreement,
the conversion of shares of Western Common Stock into the right to receive
Merger Consideration in accordance with Article III of this Agreement, and the
consummation of the Merger or any other transaction contemplated hereby will
cause (i) the Western Rights issued pursuant to the Western Rights Agreement to
become exercisable under the Western Rights Agreement, (ii) BJ or any of BJ's
direct or indirect subsidiaries to be deemed an "Acquiring Person" (as defined
in the Western Rights Agreement), (iii) any such event to be deemed a
"Flip-over Transaction or Event" (as defined in the Western Rights Agreement)
or (iv) the "Stock Acquisition Date" (as defined in the Western Rights
Agreement) to occur upon any such event.
(b) The "Expiration Time" (as defined in the Western Rights
Agreement) of the Western Rights will occur immediately prior to the Effective
Time.
(c) The "Separation Time" (as defined in the Western Rights
Agreement) has not occurred.
Section 6.14 Required Vote of Western Stockholders. The affirmative
vote of the holders of not less than 66-2/3% of the outstanding shares of
Western Common Stock is required to adopt this Agreement and approve the Merger
and the other transactions contemplated hereby. No other vote of the
stockholders of Western is required by law, the Restated Certificate of
Incorporation or Bylaws of Western or otherwise to adopt this Agreement and
approve the Merger and the other transactions contemplated hereby.
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Section 6.15 Western Action. The Board of Directors of Western (at a
meeting duly called and held on November 17, 1994) unanimously (a) determined
that the Merger is fair to and in the best interests of Western and its
stockholders, (b) approved this Agreement and the Merger in accordance with the
Delaware Corporation Law, (c) resolved to recommend approval and adoption of
this Agreement and Merger by Western's stockholders and (d) directed that this
Agreement be submitted to Western's stockholders.
Section 6.16 Opinion of Financial Advisor. On the date hereof,
Western has received the opinion of Goldman, Sachs & Co. to the effect that
the consideration to be received in the Merger by Western's stockholders is
fair to such stockholders.
Section 6.17 Brokers and Finders. Except for Goldman, Sachs & Co.
and Alexander Corporate Financial Consulting, Inc., no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with this Agreement or the Merger based upon
arrangements made by or on behalf of Western. Except as expressly set forth in
this Agreement, no valid claim against Western or, to the knowledge of the
executive officers of Western, against BJ or BJ Sub exists for payment of any
fee or other compensation as a result of any of the transactions contemplated
hereby.
Section 6.18 Intellectual Property. Western and each of its
subsidiaries owns, or is licensed to use (in each case, clear of any material
liens or other encumbrances) all patents, trademarks, trade names, copyrights,
technology, know-how and processes used in or necessary for the conduct of its
business as currently conducted which are material to the business of Western.
To the knowledge of the executive officers of Western, the use of such patents,
trademarks, trade names, copyrights, technology, know-how and processes by
Western and its subsidiaries does not infringe on the rights of any person,
subject to such claims and infringements as do not, in the aggregate, give rise
to any liability that is reasonably likely to have a Western Material Adverse
Effect.
ARTICLE VII
CONDUCT OF BUSINESS PENDING THE MERGER
Section 7.1 Conduct of Business by Western Pending the Merger. Prior
to the Effective Time, unless BJ shall otherwise consent in writing (it being
understood that BJ must act in good faith whenever it withholds such consent),
Western shall, and shall cause its subsidiaries to, carry on their respective
businesses only in the ordinary course and consistent with past practice and,
to the extent consistent therewith and with the specific terms of this
Agreement, use all commercially reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
employees and preserve their relationships with customers, suppliers and others
having business dealings with them. Without limiting the generality of the
foregoing, prior to the Effective Time, except as expressly contemplated by
this Agreement or unless BJ shall otherwise agree in writing, Western shall
not, and shall cause each of its subsidiaries not to:
(i) (A) sell or pledge or otherwise encumber or agree to
sell or pledge any stock owned by it in any direct or indirect
subsidiary of Western; (B) redeem, purchase or otherwise acquire any
shares of, or any options, warrants or rights of any kind to acquire
any shares of or any securities exercisable or exchangeable for or
convertible into shares of, the capital stock of Western or any of its
subsidiaries, other than the extinguishment of options outstanding as
of the date hereof upon the exercise of such options and other than
purchases of Western Common Stock by the trustee under the Western
Retirement Savings Plan; (C) amend the Restated Certificate of
Incorporation or Bylaws of Western or the certificate of incorporation
or bylaws or other governing documents of any of Western's
subsidiaries; (D) split, combine or reclassify any of Western's
capital stock or the capital stock of any of Western's subsidiaries;
or (E) declare, set aside or pay any dividend on, or make any other
distributions in respect of, any of Western's
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capital stock or the capital stock of any of Western's subsidiaries,
other than dividends and distributions by a direct or indirect
subsidiary of Western to its stockholder or stockholders;
(ii) (A) issue, authorize the issuance of or agree to
issue any shares of, or any options, warrants or rights of any kind to
acquire any shares of, or any securities exercisable or exchangeable
for or convertible into shares of, Western's capital stock or the
capital stock of any of Western's subsidiaries (except to issue shares
of Western Common Stock (including associated Western Rights) upon the
due exercise of Western Options, or the due conversion of Western
Convertible Debentures, outstanding on the date hereof or the due
exercise of outstanding Western Rights) or issue or agree to issue any
other equity securities; (B) acquire or dispose of any business or
line of business or any assets, other than in the ordinary course of
business and consistent with past practice (or pursuant to the
agreement dated November 1, 1994 with respect to the sale of the
Alaskan Star Rig), or engage in any negotiations with any person or
entity concerning any such transaction (other than negotiations with
respect to the possible sale of offshore drilling rigs); (C) make any
(1) capital expenditures which have not been expressly provided for in
the list of currently authorized financial expenditures as of October
31, 1994 (a copy of which has been delivered to BJ), or (2) capital
expenditures in excess of $3,000,000 in the fourth calendar quarter of
1994 or in any calendar quarter of 1995, in addition to those
permitted by clause (1) above; (D) enter into any other transaction
not in the ordinary course of business and consistent with past
practice; (E) amend or modify any of the terms of any Western Option
or grant any stock option, stock appreciation rights or stock bonuses;
(F) amend or modify the Western Rights Agreement or redeem any Western
Rights; or (G) merge or consolidate with another corporation, other
than the merger of a wholly-owned subsidiary of Western with and into
Western or another wholly-owned subsidiary;
(iii) (A) lease, license, mortgage or otherwise encumber or
subject to any consensual lien any material assets other than in the
ordinary course of business and consistent with past practice; (B)
incur any indebtedness for borrowed money (other than letters of
credit entered into, or short-term borrowings for working capital
purposes incurred, in each case in the ordinary course of business and
consistent with past practice) or guarantee any such indebtedness of
another person or entity; or (C) make any loans, advances or capital
contributions to, or investments in, any other person or entity, other
than to Western or any direct or indirect subsidiary of Western, other
than as required under existing agreements with third parties and
other than in connection with the relocation of employees under
existing Western policies and consistent with past practice;
(iv) (A) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except for the payment, discharge or
satisfaction of its liabilities or its obligations in the ordinary
course of business or in accordance with their terms as in effect on
the date hereof; (B) adopt a plan of complete or partial liquidation
or resolutions providing for or authorizing such a liquidation or a
dissolution, restructuring, recapitalization or reorganization, other
than a plan or resolution authorizing the dissolution of a subsidiary
of Western with less than $100,000 in assets; (C) enter into any
collective bargaining agreement, successor collective bargaining
agreement or amended collective bargaining agreement; (D) change any
accounting principle used by it, except for such changes required to
be implemented prior to the Effective Time pursuant to generally
accepted accounting principles or rules of the Commission; or (E)
settle or compromise any litigation brought against it other than
settlements or compromises of any litigation where the amount paid in
settlement or compromise (including without limitation the cost to
Western and its subsidiaries of complying with any provision of such
settlement or compromise other than cash payments) does not exceed
$500,000, exclusive of amounts covered by insurance;
(v) (A) enter into any new, or amend any existing,
severance agreement or arrangement (other than settlement arrangements
with employees other than officers in
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accordance with past practice and pursuant to which Western obtains
certain waivers of rights from such employees), deferred compensation
arrangement or employment agreement with any current officer, director
or employee, (B) adopt any new, or amend any existing, incentive,
retirement or welfare benefit arrangements, plans or programs for the
benefit of current, former or retired employees of Western and its
subsidiaries and their respective predecessors that would increase the
cost of aggregate benefits available by more than 1% (other than
amendments required by law or to maintain the tax qualified status of
such plans under the Code), or (C) grant any increases in employee
compensation, other than in the ordinary course or pursuant to
promotions, in each case consistent with past practice (which shall
include normal individual periodic performance reviews and related
compensation and benefit increases and bonus payments and awards under
existing plans and forgiveness of employee indebtedness incurred in
connection with relocation loans made under existing Western
policies); or
(vi) authorize or enter into any agreement to do any of
the foregoing.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1 Access and Information. Subject to the Confidentiality
Agreements (as defined in Section 10.2), upon reasonable notice, Western and BJ
shall each afford to the other and to the other's accountants, counsel and
other authorized representatives reasonable access during normal business hours
throughout the period prior to the Effective Time to all of its properties,
books, contracts, commitments and records (including but not limited to tax
returns) and, during such period, each shall furnish promptly to the other (i)
a copy of each report and other document filed by it pursuant to the
requirements of federal or state securities laws and (ii) all other information
concerning its business, properties and personnel as such other party may
reasonably request, provided that the foregoing shall not require Western or BJ
to permit any inspection, or to disclose any information, that in the
reasonable judgment of Western or BJ, as the case may be, would result in the
disclosure of any trade secrets of third parties or violate any obligation of
Western or BJ, as the case may be, with respect to confidentiality if Western
or BJ, as the case may be, shall have used reasonable efforts to obtain the
consent of such third party to such inspection or disclosure. All requests for
information made pursuant to this Section 8.1 shall be directed to an executive
officer of Western or BJ or such person as may be designated by either of their
respective officers, as the case may be. No investigation pursuant to this
Section 8.1 shall affect any representation or warranty in this Agreement of
any party hereto or any condition to the obligations of the parties hereto.
Section 8.2 Stock Exchange Listing. BJ shall use its best efforts to
list on the NYSE, prior to the Effective Time, subject to official notice of
issuance, (a) the BJ Common Stock (including associated BJ Purchase Rights) and
the BJ Common Stock issuable upon exercise of the BJ Warrants to be issued
pursuant to the Merger, and (b) the BJ Warrants to be issued pursuant to the
Merger. If the BJ Warrants are not so listed on the NYSE, BJ shall use its
best efforts to have the BJ Warrants listed on NASDAQ.
Section 8.3 Stockholders' Approval. Each of BJ and Western shall
take, in accordance with applicable law and their respective certificates of
incorporation and bylaws, all action necessary to convene a meeting of its
stockholders (collectively, the "Stockholders Meetings") as promptly as
practicable after the registration statement on Form S-4 to be filed with the
Commission by BJ in connection with the issuance of shares of BJ Common Stock
(including associated BJ Purchase Rights) and BJ Warrants (including shares of
BJ Common Stock issuable upon the exercise thereof) in the Merger (the "S-4")
is declared effective for the purpose of voting, in the case of Western, to
adopt this Agreement and approve the Merger and the other transactions
contemplated hereby and, in the case of BJ, to approve this Agreement and the
issuance of BJ Common Stock and BJ Warrants in the
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Merger and, in each case, such other matters as may be appropriate at such
meetings and are consented to in writing by BJ and Western (which consent shall
not be unreasonably withheld), provided that no proxy statement for use in
connection with the stockholders' meeting of each of BJ and Western referred to
in Section 8.3 hereof (the "Joint Proxy Statement") shall be mailed by Western
or BJ without the prior approval of the other party hereto. Each of BJ and
Western will use its best efforts to hold such meetings no later than April 30,
1995, unless otherwise agreed by the parties hereto, and will use its best
efforts to hold such meetings on the same day. Unless otherwise required by
applicable law because of the fiduciary duties of the directors of Western to
its stockholders as determined by such directors in good faith after
consultation with and based upon the advice of Sullivan & Cromwell, as legal
counsel to Western, the Board of Directors of Western shall recommend to its
stockholders approval of the transactions contemplated by this Agreement,
Western shall use its best efforts to solicit from its stockholders proxies in
favor of the adoption of this Agreement and the approval of the Merger and the
other transactions contemplated hereby, and Western shall not take any actions
that are inconsistent with such best efforts obligation. BJ shall recommend to
its stockholders approval of the transactions contemplated by this Agreement,
shall use its best efforts to solicit from its stockholders proxies in favor of
the approval of this Agreement and the issuance of the Stock Consideration and
Warrant Consideration in the Merger as required by NYSE Rule 312.05, and shall
not take any actions that are inconsistent with such best efforts obligation.
Each of Western and BJ shall take all other action necessary or advisable to
secure the vote or consent of its stockholders required by Delaware Corporation
Law or NYSE rules, as the case may be, to obtain such approvals. Western will
cause its transfer agent to make stock transfer records relating to Western
available to the extent reasonably necessary to effectuate the intent of this
Agreement.
Section 8.4 No Solicitation. (a) Except with respect to BJ and its
affiliates, on or after the date hereof, Western shall not, and shall cause its
subsidiaries and its and its subsidiaries' officers, directors, affiliates,
agents and representatives (including without limitation any investment banker,
attorney or accountant retained by Western or any of its subsidiaries), and
shall use its best efforts to cause its and its subsidiaries' employees not to,
initiate, solicit or encourage, directly or indirectly, any inquiries or the
making of any proposal with respect to an Alternative Transaction (as
hereinafter defined), participate in any negotiations concerning, or provide to
any other person any information or data relating to Western or its
subsidiaries for the purpose of, or have any substantive discussions with, any
person relating to, or otherwise cooperate with or assist or participate in, or
facilitate, any inquiries or the making of any proposal which constitutes, or
would reasonably be expected to lead to, any effort or attempt by any other
person to seek to effect an Alternative Transaction, or agree to or endorse any
Alternative Transaction; provided, however, that nothing contained in this
Section 8.4 shall prohibit Western or its Board of Directors from taking and
disclosing to the stockholders of Western a position with respect to any such
Alternative Transaction that, in the judgment of the Board of Directors of
Western, as determined in good faith by such directors after consultation with
and based upon the advice of Sullivan & Cromwell, as counsel to Western, is
required by applicable law; and provided, further, that (x) the Board of
Directors of Western may (i) upon the unsolicited request of a third party
which executes a confidentiality agreement with Western in customary form,
furnish information or data (including without limitation confidential
information or data relating to Western or its subsidiaries) in order to allow
such third party to consider making a proposal with respect to, or entering
into, an Alternative Transaction involving such third party and Western, (ii)
participate in negotiations or have substantive discussions with a third party
who makes an unsolicited, bona fide proposal regarding an Alternative
Transaction, and (iii) in connection therewith, cooperate with or assist or
facilitate such third party in its attempt to effect such Alternative
Transaction, and (y) following receipt of an unsolicited, bona fide proposal
from a third party regarding an Alternative Transaction, the Board of Directors
of Western may withdraw or modify its recommendation referred to in Section
8.3, in each case to the extent that the Board of Directors of Western
determines in good faith, after consultation with and based upon the advice of
Sullivan & Cromwell, as counsel to Western, that such action may be required in
order for the Board of Directors to act in a manner that is consistent with its
fiduciary obligations under applicable law.
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Western shall promptly advise BJ of any such request or proposal that Western
may receive. Prior to taking any such action, if Western intends to participate
in any such discussions or negotiations or provide any such information to any
such third party, Western shall give reasonable prior notice to BJ of each such
action. Nothing in this Section 8.4 shall (A) permit Western to terminate this
Agreement or (B) permit Western to enter into any written agreement with
respect to an Alternative Transaction during the term of this Agreement (it
being agreed that during the term of this Agreement Western shall not enter
into any written agreement with any person that provides for, or in any way
facilitates, an Alternative Transaction, other than a confidentiality agreement
in the form referred to above), it being understood that Section 10.1(f) sets
forth the rights of Western to terminate this Agreement in the circumstances
specified in clause (y) above.
(b) Western will immediately, and will cause its subsidiaries and
its and its subsidiaries' officers, directors, agents and representatives
(including without limitation any investment banker, attorney or accountant
retained by Western or any of its subsidiaries), and will use its best efforts
to cause its and its subsidiaries' employees, to immediately, cease and cause
to be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any possible Alternative
Transactions.
(c) Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the first sentence of Section 8.4(a)
by any officer or director or authorized employee, agent or representative of
Western or any of its subsidiaries (including, without limitation, any
investment banker, attorney or accountant retained by Western or any of its
subsidiaries), or otherwise shall be deemed to be a breach of Section 8.4(a) by
Western.
(d) As used herein, "Alternative Transaction" means (i) any
merger, consolidation or other business combination transaction involving
Western in which another corporation, partnership, person, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act) would acquire
beneficial ownership of at least 20% of the aggregate voting power of all
voting securities of Western or the Surviving Corporation, as the case may be;
(ii) any tender offer or exchange offer for any securities of Western which, if
consummated, would result in another corporation, partnership, person, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act) becoming
the beneficial owner of at least 20% or more of the aggregate voting power of
all voting securities of Western; (iii) any sale or other disposition of assets
of Western or any of its subsidiaries (excluding the offshore drilling rigs) in
a single transaction or in a series of related transactions if the fair market
value of such assets exceeds 20% of the aggregate fair market value of the
assets of Western and its subsidiaries taken as a whole before giving effect to
such sale or other disposition; (iv) the adoption by Western of a plan of
liquidation, the declaration or payment by Western of an extraordinary dividend
on any of its shares of capital stock or the effectuation by Western of a
recapitalization or other type of transaction which would involve either a
change in Western's outstanding capital stock or a distribution of assets of
any kind to the holders of such capital stock; or (v) the repurchase by Western
or any of its subsidiaries of shares of Western Common Stock representing at
least 20% or more of the aggregate voting power of all voting securities of
Western.
Section 8.5 Antitrust Filing and Divestitures. (a) Within two
Trading Days after the date hereof, Western and BJ shall file notification and
report forms under the Hart Scott Act with the Federal Trade Commission (the
"FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") and shall promptly make all other necessary, proper or advisable
filings with the applicable federal, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), related to the transactions
contemplated by this Agreement and shall use their best efforts to respond as
promptly as practicable to all inquiries received from the FTC or the Antitrust
Division or such other Governmental Entities for additional information or
documentation. Each of the parties hereto agrees to furnish the others with
copies of all correspondence, filings and communications (and memoranda setting
forth the substance thereof) between it and its affiliates and their respective
representatives,
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on the one hand, and the FTC the Antitrust Division or any other Governmental
Entity or members of their respective staffs, on the other hand, with respect
to this Agreement and the transactions contemplated hereby. Each party hereto
agrees to furnish the others with such necessary information and reasonable
assistance as such other parties and their respective affiliates may reasonably
request in connection with their preparation of necessary filings,
registrations or submissions of information to any Governmental Entities,
including without limitation any filings necessary under the provisions of the
Hart Scott Act.
(b) Without limiting the generality of the undertakings pursuant
to this Section 8.5 and Section 8.14, BJ shall promptly take or cause to be
taken all actions as it may determine to be reasonably appropriate in order to
avoid the commencement of a proceeding by any Governmental Entity to restrain,
enjoin or to otherwise prohibit consummation of the Merger so as to permit
consummation of the Merger on a schedule as close as possible to that
contemplated by this Agreement.
Section 8.6 Indemnification and Insurance. (a) From and after the
Effective Time, BJ agrees that it or the Surviving Corporation will indemnify
and hold harmless each present and former director and officer of Western and
its subsidiaries (the "Indemnified Parties") against any and all costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent allowed by law (and BJ or the Surviving Corporation will also advance
expenses as incurred to the fullest extent permitted under applicable law
provided the person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification).
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 8.6, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify BJ and the Surviving
Corporation thereof, but the failure to so notify shall not relieve BJ or the
Surviving Corporation of any liability it may have to such Indemnified Party
except to the extent that such failure materially prejudices the indemnifying
party. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) BJ or
the Surviving Corporation shall have the right to assume the defense thereof
(which it shall, in cooperation with the Indemnified Parties, vigorously
defend) and neither BJ nor the Surviving Corporation shall be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if neither BJ nor the Surviving Corporation
elects to assume such defense or there is a conflict of interest between BJ or
the Surviving Corporation, on the one hand, and the Indemnified Parties,
including situations in which there are one or more legal defenses available to
the Indemnified Party that are different from or additional to those available
to BJ or the Surviving Corporation, the Indemnified Parties may retain counsel
satisfactory to them, and BJ or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that neither
BJ nor the Surviving Corporation shall, in connection with any one such action
or proceeding or separate but substantially similar actions or proceedings
arising out of the same general allegations, be liable for the fees and
expenses of more than one separate firm of attorneys at any time for all
Indemnified Parties except to the extent that local counsel, in addition to
such parties' regular counsel, is required in order to effectively defend
against such action or proceeding, (ii) the Indemnified Parties will cooperate
in the defense of any such matter and (iii) neither BJ nor the Surviving
Corporation shall be liable for any settlement effected without its prior
written consent, and provided, further, that neither BJ nor the Surviving
Corporation shall have any obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become
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final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(c) For a period of three years after the Effective Time, the
Surviving Corporation shall use its best efforts to maintain in effect the
current policies of directors' and officers' liability insurance maintained by
Western (the "Current D&O Policy") (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous ("Substitute
Coverage") and will, to the extent available, provide such Substitute Coverage
if the Current D&O Policy is not available) with respect to claims arising from
facts or events occurring at or prior to the Effective Time; provided, however,
if the Current D&O Policy expires, is terminated or cancelled during such three
year period and Substitute Coverage cannot be obtained, the Surviving
Corporation shall use its best efforts to obtain as much insurance as can be
obtained for the remainder of such period up to a maximum of the coverage
amount of the Current D&O Policy; provided further, that in no event shall the
Surviving Corporation be required to expend for insurance premiums pursuant to
this Section 8.6(b) more than 150% of the current annual premiums paid by
Western for such insurance (which premiums Western represents and warrants to
be $421,000 in the aggregate).
(d) If the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation or
entity and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or substantially all of
its properties and assets to any individual, corporation or other entity, then
and in each such case, proper provisions shall be made so that the successors
and assigns of the Surviving Corporation shall assume all of the obligations of
the Surviving Corporation set forth in this Section 8.6.
(e) The provisions of this Section 8.6 are intended to be for the
benefit of, and shall be enforceable by, each of the directors and officers of
Western who are the beneficiaries of the indemnification arrangements specified
herein and their heirs and their representatives.
Section 8.7 Amendment of Western Plans. Western shall take such
action as is necessary to amend, as of the Effective Time, each Western Plan
providing for the issuance of, or related to, the securities of Western or the
Surviving Corporation to provide that on and after the Effective Time, no
option or other right shall be outstanding to acquire any security of Western
or the Surviving Corporation.
Section 8.8 Employee Arrangements. (a) The Surviving Corporation
agrees that, during the period commencing at the Effective Time and ending on
the first anniversary thereof, the employees of Western will continue to be
provided with benefits under employee benefit plans that are no less favorable
in the aggregate than those currently provided by Western to such employees;
provided, however, that nothing herein shall (i) prevent the amendment or
termination of any Western Plan, (ii) require the Surviving Corporation to
provide or permit investment in the securities of BJ, BJ Sub, Western or the
Surviving Corporation, or (iii) limit or restrict the ability of BJ,Western or
the Surviving Corporation to terminate the employment of any officer or
employee.
(b) Notwithstanding anything to the contrary in Section 8.8(a), BJ
will, and will cause the Surviving Corporation to honor all employee benefit
obligations to current and former employees and directors under the Western
Plans, under the Retirement Plan for Non-Employee Directors and, to the extent
set forth in Western SEC Documents or the Western Disclosure Memorandum, the
Special Severance Policy in existence on the date hereof and all employment or
severance agreements or indemnification agreements entered into by Western or
adopted by the Board of Directors of Western prior to the date hereof;
provided, however, that nothing shall prevent BJ or the Surviving Corporation
from taking any action with respect to such plans, obligations or agreements or
refraining from taking any such action which is permitted or provided for under
the terms thereof.
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(c) Employees of the Surviving Corporation shall be given credit
for all service with Western and its subsidiaries under all employee benefit
plans, programs and policies of the Surviving Corporation or BJ in which they
become participants for all purposes thereunder; provided, however, that
employees of the Surviving Corporation who become participants in a defined
benefit pension plan sponsored by BJ or in a defined benefit pension plan
sponsored by the Surviving Corporation which is adopted on or after the
Effective Time shall not be given credit for benefit accrual purposes to the
extent such credit would result in a duplication of benefits under more than
one defined benefit pension plan.
(d) A special committee of the Board of Directors of BJ shall be
established (the "Special Committee") consisting of two current outside
directors of BJ and two current outside directors of Western who will become
directors of BJ after the Closing Date as specified in Section 8.16. Except as
otherwise specified in the last sentence of this Section 8.8(d), the provisions
of this Section 8.8 shall be enforceable exclusively by the Special Committee
for the benefit of the officers and employees of the Surviving Corporation and
its subsidiaries who were officers and employees of Western and its
subsidiaries prior to the Effective Time. If any such officer or employee has
any claim that the provisions of this Section 8.8 have not been complied with,
such officer or employee shall be required to submit such claim to the Special
Committee, and any decision rendered by a majority of the members of the
Special Committee shall be binding upon such officer or employee and shall be
dispositive of such claim for all purposes whatsoever. If (and only if) the
Special Committee is unable to reach a majority decision with respect to the
disposition of such claim, such officer or employee may pursue his claim in any
other appropriate manner.
Section 8.9 Publicity. Except with respect to matters concerning an
Alternative Transaction, the parties hereto shall consult with each other
concerning any proposed press release or public announcement pertaining to the
transactions contemplated by this Agreement and shall use their best efforts to
agree upon the text of any such press release or the making of such public
announcement prior to the public dissemination thereof and prior to making any
filings with any Governmental Entity or national securities exchange with
respect thereto, except as may be required by law or by obligations pursuant to
any listing agreement with or rules of any national securities exchange.
Section 8.10 Fees and Expenses. (a) Except as provided in Sections
8.10(b) through Section 8.10(g), whether or not the Merger is consummated, all
costs and expenses incurred in connection with the Merger, this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
cost or expense.
(b) If (i) Western terminates this Agreement pursuant to Section
10.1(f); (ii) BJ terminates this Agreement pursuant to Section 10.1(e)(i); or
(iii) either Western or BJ terminates this Agreement pursuant to Section
10.1(h) and, prior to such failure of Western stockholders to adopt this
Agreement and approve the Merger, another party shall have made a proposal to
effectuate an Alternative Transaction and such proposal shall have been
publicly announced, then in any such event Western shall pay to BJ, in
immediately available funds, (A) on the date on which such Alternative
Transaction is consummated, $16,000,000 (the "Topping Fee") and (B) within one
Trading Day after requested by BJ (accompanied by reasonably detailed
documentation) from time to time, all of BJ's Expenses up to a maximum payment
pursuant to this clause (B) of $3,500,000. The term "BJ's Expenses" shall
include all out-of-pocket expenses and fees (including without limitation fees
and expenses payable to all banks, investment banking firms and other financial
institutions and their respective agents and counsel for arranging or
providing, or agreeing to arrange or provide, financing for, or financing
advice with respect to, the Merger and all fees of counsel, accountants,
experts and consultants to BJ or BJ Sub) actually incurred by BJ and BJ Sub or
on their behalf in connection with the consummation of all transactions
contemplated by this Agreement, including the Merger.
(c) If the provisions of Section 8.10(b) are not applicable and BJ
terminates this Agreement pursuant to Section 10.1(e) (ii), then Western shall
pay to BJ, within one Trading Day after requested
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by BJ (accompanied by reasonably detailed documentation) from time to time, all
of BJ's Expenses up to a maximum payment pursuant to this Section 8.10(c) of
$3,500,000.
(d) If Western terminates this Agreement pursuant to Section
10.1(g) and if (and only if) such termination occurs on or after the date of
consummation of the BJ Alternative Transaction which gave rise to such right of
termination under Section 10.1(g) then in such event BJ shall pay to Western,
in immediately available funds, (i) on the date of such termination,
$16,000,000 and (ii) within one Trading Day after requested by Western
(accompanied by reasonably detailed documentation) from time to time, all of
Western's Expenses up to a maximum payment pursuant to this clause (ii) of
$3,500,000. The term "Western's Expenses" shall include all out-of-pocket
expenses and fees (including without limitation fees and expenses payable to
all investment banking firms, counsel, accountants, experts and consultants to
Western) actually incurred by Western or on its behalf in connection with the
consummation of the transactions contemplated by this Agreement, including the
Merger.
(e) If either BJ or Western terminates this Agreement pursuant to
Section 10.1(j), then BJ shall pay to Western, within one Trading Day after
requested by Western (accompanied by reasonably detailed documentation) from
time to time, all of Western's Expenses up to a maximum payment pursuant to
this Section 8.10(e) of $3,500,000; provided, however, that BJ shall pay to
Western a termination fee of $20,000,000 and shall not make any additional
payment to Western in reimbursement of Western's Expenses, if either BJ or
Western terminates this Agreement pursuant to Section 10.1(j) and both of the
following conditions shall have been satisfied: (i) the meeting of BJ
stockholders shall have been held subsequent to the receipt of the first
Antitrust Termination Notice (as defined in Section 8.10(f)) sent by Western at
the end of the 100-day period referred to in Section 10.1(l) (the "Antitrust
Approval Period") (without regard to any extensions thereof) and (ii) BJ shall
have elected to extend the Antitrust Approval Period pursuant to clause (i) of
Section 8.10(f) rather than pursuant to clause (ii) of Section 8.10(f).
(f) If either BJ or Western terminates this Agreement pursuant to
Sections 10.1(i) or 10.1(l) (but only if, in the case of a termination pursuant
to Section 10.1(i), the action giving rise to an order or injunction sought to
enjoin or otherwise prohibit the Merger for alleged violations of the federal
or state antitrust laws), then BJ shall pay to Western a termination fee of
$20,000,000 within five Trading Days after written notice of termination under
Sections 10.1(i) or 10.1(l) (the "Antitrust Termination Notice") is received by
BJ from Western or received by Western from BJ; provided, however, that BJ
shall have the option to require Western to rescind any such Antitrust
Termination Notice sent by Western under Section 10.1(l) if either of the
conditions set forth below shall have been satisfied, in which event such
Antitrust Termination Notice shall be rescinded and the Antitrust Approval
Period shall be deemed to have been changed to 130 days:
(i) if at the time such Antitrust Termination Notice is
received, BJ has been engaged in active and continuous negotiations
with the Antitrust Division or the FTC with respect to the Consent
Decree Final Agreement (as defined in Section 10.1(l)), provided that
prior to the tenth day after receipt by BJ of the Western Compliance
Certificates (as defined in Section 10.1(l)), BJ and its outside
counsel each delivered to Western certificates that to the best of
their knowledge BJ is in "substantial compliance" with the Antitrust
Division's or FTC's "second request" for information from BJ under the
Act, or
(ii) if the foregoing clause (i) is not applicable, if BJ
shall have paid a fee of $2,500,000 to Western on or prior to the
fifth Trading Day after BJ's receipt of such Antitrust Termination
Notice;
provided, further, that at the end of such extended Antitrust Approval Period
BJ shall have the option to extend the Antitrust Approval Period for a second
30-day period by (x) paying a fee of $5,000,000 to Western if the Antitrust
Approval Period was extended pursuant to clause (i) above, or (y) paying an
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additional fee of $2,500,000 to Western if the Antitrust Approval Period was
extended pursuant to clause (ii) above, in which event upon such payment the
Antitrust Approval Period shall be deemed to have been changed to 160 days.
(g) If either BJ or Western terminates this Agreement pursuant to
Section 10.1(m), then BJ shall pay to Western a termination fee of $20,000,000;
provided, however, that if Western's stockholders shall fail to have approved
the Merger or BJ's stockholders shall fail to have approved the issuance of BJ
Common Stock and BJ Warrants in the Merger and this Agreement at a meeting of
stockholders held to vote thereon and BJ is not in breach of its obligations
contained in this Agreement, BJ shall have no obligation to pay any termination
fee to Western pursuant to this Section 8.10(g).
Section 8.11 Preparation of Form S-4 and Joint Proxy Statement. As
promptly as practicable following the date of this Agreement, Western and BJ
shall prepare and file with the Commission the Joint Proxy Statement, and BJ
shall prepare and file with the Commission the S-4, in which the Joint Proxy
Statement will be included. Each of Western and BJ shall use its best efforts
to have the S-4 declared effective under the Securities Act as promptly as
practicable after such filing. Western will use its best efforts to cause the
Joint Proxy Statement to be mailed to Western's stockholders, and BJ will use
its best efforts to cause the Joint Proxy Statement to be mailed to BJ's
stockholders, in each case as promptly as practicable after the S-4 is declared
effective under the Securities Act. BJ shall also take any action required to
be taken under any applicable state securities laws in connection with the
issuance of BJ Common Stock (including associated BJ Purchase Rights) and BJ
Warrants (including the BJ Common Stock issuable upon exercise thereof) in the
Merger, and Western shall furnish all information concerning Western and the
holders of Western Common Stock as may be reasonably requested in connection
with any such action. BJ, BJ Sub and Western each covenant and agree that the
information provided and to be provided by such party for inclusion or
incorporation by reference in the S-4 shall not, at the time the S-4 becomes
effective and on the date of each Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Western, BJ
and BJ Sub each agree to correct promptly any information provided by it for
use in the S-4 which shall have become false or misleading prior to the times
referred to above.
Section 8.12 Affiliates. Prior to the Closing Date, Western shall
deliver to BJ a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders of Western,
"affiliates" of Western for purposes of Rule 145 under the Securities Act.
Western shall use its reasonable best efforts to cause each such person to
deliver to BJ on or prior to the Closing Date an affiliates' agreement
substantially in the form attached hereto as Exhibit B.
Section 8.13 Conveyance Taxes. BJ and Western shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereby that are required or
permitted to be filed on or before the Effective Time. Any liability with
respect to the transfer of the property of Western arising out of the New York
State Real Property Transfer Gains Tax, the New York State Real Estate Transfer
Tax or the New York City Real Property Transfer Tax shall be borne by BJ and
expressly shall not be the liability of the stockholders of Western.
Section 8.14 Additional Agreements. Subject to the terms and
conditions set forth herein, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all action and to use its best efforts
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations and to otherwise use its best efforts to
consummate and make effective the transactions contemplated by this Agreement,
including using its best efforts to satisfy the conditions
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precedent to the obligations of any of the parties hereto, to obtain all
necessary waivers, consents and approvals, to obtain waivers or consents from
holders of, or to arrange to pay or for the prepayment of, indebtedness which
would be the subject of an event of default as a result of the Merger, to
effect all necessary registrations and filings (including but not limited to
filings under the Hart Scott Act), and to cause to be lifted any injunction or
other legal bar to the Merger (and, in such case, to proceed with the Closing
and the Merger as expeditiously as possible), subject, however, to the
requisite vote of the stockholders of Western and BJ.
Section 8.15 Dividends. BJ shall not declare, set aside or pay any
dividend payable in cash, stock or property with respect to any capital stock
prior to the Effective Time.
Section 8.16 Election to BJ's Board of Directors. At the Effective
Time of the Merger, BJ shall promptly increase the size of its board of
directors in order to enable the three current outside directors of Western
listed on Exhibit C hereto (the "Western Representatives") to be appointed to
BJ's Board of Directors and for at least one year after the next annual meeting
of stockholders of BJ, subject to fiduciary obligations under applicable law,
shall use its best efforts to cause the Western Representatives to be elected
to BJ's Board of Directors by the stockholders of BJ.
Section 8.17 BJ Vote. BJ will vote (or consent with respect to) or
cause to be voted (or a consent to be given with respect to) any Western Common
Stock and any shares of common stock of BJ Sub beneficially owned by it or any
of its subsidiaries or with respect to which it or any of its subsidiaries has
the power (by agreement, proxy or otherwise) to cause to be voted (or to
provide a consent), in favor of the adoption and approval of this Agreement at
any meeting of stockholders of Western or BJ Sub, respectively, at which this
Agreement shall be submitted for adoption and approval and at all adjournments
or postponements thereof (or, if applicable, by any action of stockholders of
either Western or BJ Sub by consent in lieu of a meeting).
Section 8.18 Warrant Agreement; Reservation of BJ Common Stock.
Prior to the Effective Time, BJ shall execute and deliver to Western the
Warrant Agreement and shall reserve for issuance such number of shares of BJ
Common Stock to be issued upon conversion of the Western Convertible
Debentures.
Section 8.19 Supplemental Indentures. BJ Sub will use its best
efforts to execute and deliver to Western supplemental indentures with respect
to each of the Western Senior Notes and the Western Convertible Debentures.
Section 8.20 BJ Standstill. If this Agreement is terminated (a)
under the circumstances specified in Section 8.10(f) and BJ is thereby
obligated to pay to Western the $20 million fee specified in Section 8.10(f),
(b) pursuant to Section 10.1(j), or (c) pursuant to Section 10.1(k), then for
five years after the date of such termination in the case of a termination
under the circumstances specified in Section 8.10(f) or pursuant to Section
10.1(j), and for two years after the date of such termination in the case of a
termination pursuant to Section 10.1(k), BJ and each of its successors will
not, and will cause its affiliates not to:
(i) acquire, offer or propose to acquire, or agree to
acquire, directly or indirectly, by merger, purchase or otherwise,
beneficial ownership of any assets or voting securities of Western or
its affiliates or any direct rights or options to acquire (through
purchase, exchange, conversion or otherwise) any assets or voting
securities of Western or its affiliates;
(ii) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are defined
in Rule 14a-1 of Regulation 14A promulgated by the Commission,
disregarding clause (iv) of Rule 14a-1(1)(2), but including any
solicitation exempted pursuant to Rule 14a-2(b)(1)) to vote (including
by the execution of actions by written
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consent), or seek to advise, encourage or influence any person or
entity with respect to the voting of, any voting securities of
Western;
(iii) call, or in any way participate in a call for, any
meeting of stockholders of Western (or take any action with respect to
stockholders acting by written consent);
(iv) form, join or in any way participate in a "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any voting securities of Western; or
(v) otherwise act to control or influence, or seek to
control or influence, Western or the management, Board of Directors,
policies or affairs of Western, including, without limitation, (A)
making any offer or proposal to acquire any securities or assets of
Western or any of its affiliates or soliciting or proposing to effect
or negotiate any form of business combination, restructuring,
recapitalization or other extraordinary transaction involving Western,
its affiliates or any of their respective securities or assets, (B)
seeking Board representation or the removal of any directors or a
change in the composition or size of the Board of Directors of
Western, (C) making any request to amend or waive any provision of
this Section 8.20, (D) disclosing any intent, purpose, plan or
proposal with respect to this Section 8.20 or Western, its affiliates
or the boards of directors, management, policies or affairs or
securities or assets of Western or its affiliates that is inconsistent
with this Section 8.20, including an intent, purpose, plan or proposal
that is conditioned on, or would require, waiver, amendment,
nullification or invalidation of any provision of this Section 8.20,
or take any action that could require Western or any of its affiliates
to make any public disclosure relating to any such intent, purpose,
plan, proposal or condition, or (E) assisting, advising or encouraging
any person with respect to, or seeking to do, any of the foregoing.
Section 8.21 Western Standstill. If this Agreement is terminated
under the circumstances specified in Section 8.10(f) and BJ pays to Western the
$20 million fee specified in Section 8.10(f), then for five years after the
date of such termination Western and each of its successors will not, and will
cause its affiliates not to:
(i) acquire, offer or propose to acquire, or agree to
acquire, directly or indirectly, by merger, purchase or otherwise,
beneficial ownership of any assets or voting securities of BJ or its
affiliates or any direct rights or options to acquire (through
purchase, exchange, conversion or otherwise) any assets or voting
securities of BJ or its affiliates;
(ii) make, or in any way participate in, directly or
indirectly, any "solicitation" of "proxies" (as such terms are defined
in Rule 14a-1 of Regulation 14A promulgated by the Commission,
disregarding clause (iv) of Rule 14a-1(1)(2), but including any
solicitation exempted pursuant to Rule 14a-2(b)(1)) to vote (including
by the execution of actions by written consent), or seek to advise,
encourage or influence any person or entity with respect to the voting
of, any voting securities of BJ;
(iii) call, or in any way participate in a call for, any
meeting of stockholders of BJ (or take any action with respect to
stockholders acting by written consent);
(iv) form, join or in any way participate in a "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) with
respect to any voting securities of BJ; or
(v) otherwise act to control or influence, or seek to
control or influence, BJ or the management, Board of Directors,
policies or affairs of BJ, including, without limitation, (A) making
any offer or proposal to acquire any securities or assets of BJ or any
of its affiliates or soliciting or proposing to effect or negotiate
any form of business combination, restructuring, recapitalization or
other extraordinary transaction involving BJ, its affiliates or any of
their
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respective securities or assets, (B) seeking Board representation or
the removal of any directors or a change in the composition or size of
the Board of Directors of BJ, (C) making any request to amend or waive
any provision of this Section 8.21, (D) disclosing any intent,
purpose, plan or proposal with respect to this Section 8.21 or BJ, its
affiliates or the boards of directors, management, policies or affairs
or securities or assets of BJ or its affiliates that is inconsistent
with this Section 8.21, including an intent, purpose, plan or proposal
that is conditioned on, or would require, waiver, amendment,
nullification or invalidation of any provision of this Section 8.21,
or take any action that could require BJ or any of its affiliates to
make any public disclosure relating to any such intent, purpose, plan,
proposal or condition, or (E) assisting, advising or encouraging any
person with respect to, or seeking to do, any of the foregoing.
ARTICLE IX
CONDITIONS PRECEDENT
Section 9.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) This Agreement and the Merger and the other
transactions contemplated hereby shall have been adopted and approved
by the requisite vote of the holders of Western Common Stock.
(b) The waiting periods applicable to the consummation of
the Merger under the Hart Scott Act shall have expired or been earlier
terminated.
(c) No preliminary or permanent injunction or other
order, decree or ruling by any United States federal or state court of
competent jurisdiction or by any United States federal or state
governmental, regulatory or administrative agency or authority which
prevents the consummation of the Merger shall have been issued and
remain in effect.
(d) No statute, rule or regulation shall have been
enacted by any United States federal or state governmental, regulatory
or administrative agency or authority that makes the consummation of
the Merger illegal or would otherwise prevent the consummation of the
Merger.
(e) The S-4 shall have become effective, and any required
post-effective amendment shall have become effective, under the
Securities Act and shall not be the subject of any stop order or
proceedings seeking a stop order, and any material "blue sky" and
other state securities laws applicable to the registration of the BJ
Common Stock (including associated BJ Purchase Rights) and BJ Warrants
(including the BJ Common Stock issuable upon exercise thereof) to be
exchanged for Western Common Stock shall have been complied with.
(f) The shares of BJ Common Stock (including associated
BJ Purchase Rights) issuable to Western's stockholders pursuant to
this Agreement shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(g) The issuance of BJ Common Stock and BJ Warrants in
the Merger and this Agreement shall have been approved by the
affirmative vote of holders of BJ Common Stock required by NYSE Rule
312.05.
Section 9.2 Condition to Obligations of Western to Effect the Merger.
The obligations of Western to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following additional
conditions:
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(a) BJ and BJ Sub shall have performed or complied with
in all material respects their agreements and covenants contained in
this Agreement and the Senior Executive Termination Agreements
required to be performed or complied with at or prior to the Closing
Date, and the representations and warranties of BJ and BJ Sub
contained in this Agreement shall be true in all respects when made
and on and as of the Closing Date with the same force and effect as if
made on and as of such date, except as expressly contemplated or
otherwise expressly permitted by this Agreement and except that any
representation and warranty not modified by reference to a BJ Material
Adverse Effect that is not true in all respects shall nevertheless be
deemed, for purposes of this Section 9.2(a), to be true in all
respects unless the failure of such representation or warranty to be
so true has had, or is reasonably likely to have, a BJ Material
Adverse Effect.
(b) The Warrant Agreement shall have been executed and
delivered by BJ.
Section 9.3 Conditions to Obligations of BJ and BJ Sub to Effect the
Merger. The obligations of BJ and BJ Sub to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following additional
conditions:
(a) Western shall have performed or complied with in all
material respects its agreements and covenants contained in this
Agreement required to be performed or complied with at or prior to the
Closing Date, and the representations and warranties of Western
contained in this Agreement shall be true in all respects when made
and on and as of the Closing Date with the same force and effect as if
made on and as of such date, except as expressly contemplated or
otherwise expressly permitted by this Agreement and except that any
representation and warranty not modified by reference to a Western
Material Adverse Effect that is not true in all respects shall
nevertheless be deemed, for purposes of this Section 9.3(a), to be
true in all respects unless the failure of such representation or
warranty to be so true has had, or is reasonably likely to have, a
Western Material Adverse Effect.
(b) The amendment to the Western Rights Agreement
referred to in Section 6.13(a) shall be in full force and effect and
shall be binding, valid and enforceable.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
Section 10.1 Termination. Except as provided in the concluding
sentence of this Section 10.1, this Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of Western:
(a) by mutual written consent of the Board of Directors
of BJ and the Board of Directors of the Western;
(b) by either BJ or Western, if the Merger shall not have
been consummated on or before August 31, 1995, which date may be
extended by the mutual written consent of the Board of Directors of BJ
and the Board of Directors of Western; provided, however, that such
right to terminate this Agreement shall not be available to any party
that has breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the
failure of the Merger to occur on or before such date; provided,
further, that BJ shall have no right to terminate this Agreement
pursuant to this Section 10.1(b) if BJ shall have exercised its rights
under Sections 8.10(f) or 10.1(m) to extend either the Antitrust
Approval Period or the Section 10.1(m) Period (as defined below) until
after the Antitrust Approval Period and the Section 10.1(m) Period
shall have expired;
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(c) by Western, if any of the conditions specified in
Sections 9.1(d) and 9.2 have not been met or waived by Western, but
only at and after such time as such condition can no longer be
satisfied;
(d) by BJ, if any of the conditions specified in Sections
9.1(d) and 9.3 have not been met or waived by BJ, but only at and
after such time as such condition can no longer be satisfied;
(e) by BJ, if (i) the Board of Directors of Western shall
have (A) withdrawn or modified, in any manner which is adverse to BJ
or BJ Sub, its recommendation or approval of the Merger or this
Agreement and the transactions contemplated hereby and (B) recommended
to stockholders of Western any proposal involving an Alternative
Transaction, or shall have resolved to do both of the foregoing, (ii)
the Board of Directors of Western shall have withdrawn or modified, in
any manner which is adverse to BJ or BJ Sub, its recommendation or
approval of the Merger or this Agreement and the transactions
contemplated hereby under any circumstances other than those specified
in clause (i) above, or (iii) any corporation, partnership, person,
other entity or group (as defined in Section 13(d)(3) of the Exchange
Act) other than BJ or any of its subsidiaries (collectively, "Third
Persons") shall have become an "Acquiring Person" (as defined in the
Western Rights Agreement);
(f) by Western, if it shall exercise the right specified
in clause (y) of Section 8.4(a), provided that Western may not effect
such termination pursuant to this Section 10.1(f) unless and until it
gives BJ at least three Trading Days' prior notice of its intention to
effect such termination pursuant to this Section 10.1(f);
(g) by Western, if BJ shall have entered into an
agreement to effectuate a BJ Alternative Transaction;
(h) by either BJ or Western, if the stockholders of
Western shall have failed to adopt this Agreement and approve the
Merger at the meeting of Western's stockholders referred to in Section
8.3;
(i) by either BJ or Western, if either is prohibited by a
final and nonappealable order or injunction of a United States federal
or state court of competent jurisdiction from consummating the Merger;
(j) by either BJ or Western, if the stockholders of BJ
shall have failed to approve the issuance of the Stock Consideration
and Warrant Consideration in the Merger at the meeting of BJ's
stockholders referred to in Section 8.3;
(k) by Western, if the Closing Price is below $14.00,
provided that Western may not effect such termination pursuant to this
Section 10.1(k) if BJ should offer to amend Section 3.1(b)(ii) so that
"Stock Consideration" will be defined so that each share of Western
Common Stock which is the subject of a Stock Election will be
converted into, exchangeable for and represent the right to receive,
together with a corresponding number of BJ Purchase Rights, a number
of shares of BJ Common Stock having the same aggregate value based on
the actual Closing Price as the aggregate value of the number of
shares of BJ Common Stock into which such share of Western Common
Stock would have been converted if the Closing Price had been $14.00;
(l) by either BJ or Western, if the final terms of a
consent decree between BJ and the Antitrust Division or the FTC (the
"Consenting Parties") with respect to the Merger (the "Consent Decree
Final Agreement") have not been agreed to by the Consenting Parties
(as confirmed by Western), or an order of a Federal District Court
adjudging that the Merger does
36
<PAGE> 37
not violate the Federal antitrust laws shall not have been issued
(such Consent Decree Final Agreement or court order being collectively
referred to as the "Antitrust Disposition Action"), by 100 days after
Western and its outside counsel have each certified to BJ (the
"Western Compliance Certificates") that to the best of their knowledge
Western has "substantially complied" with the Antitrust Division's or
FTC's "second request" for information from Western under the Hart
Scott Act, provided that such 100-day period may be extended for two
successive 30-day periods in the manner specified in Section 8.10(f)
(but in no event longer than a total of 160 days);
(m) by either BJ or Western, if the Merger shall not have
occurred by the thirtieth day after the later of (i) the date of the
Antitrust Disposition Action, (ii) the date on which Western's
stockholders shall have approved the Merger, or (iii) the date on
which BJ's stockholders shall have approved the Merger (provided the
meeting of BJ's stockholders shall have initially been scheduled to be
held prior to the thirtieth day after the date of the Antitrust
Disposition Action and adjourned for good reason to no later than the
Final Adjournment Date (as defined below)); provided, however, that BJ
and Western shall not have the right to terminate this Agreement
pursuant to this Section 10.1(m) if the Merger shall not have occurred
by such thirtieth day due to the existence of a preliminary or
permanent injunction or other order, decree or ruling by any United
States federal or state court of competent jurisdiction or by any
United States federal or state governmental, regulatory or
administrative agency or authority which prevents the consummation of
the Merger (unless the action giving rise to such injunction, order,
decree or ruling sought to enjoin or otherwise prohibit the Merger for
alleged violations of the federal or state antitrust laws or such
action was initiated by BJ); provided, further, that in the event any
such injunction, order, decree or ruling shall cause the 30-day period
referred to at the beginning of this Section 10.1(m) (the "Section
10.1(m) Period") to be delayed, the parties hereto shall use their
best efforts to cause such injunction, order, decree or ruling to be
lifted at the earliest practicable date; provided, further, that BJ
shall have the option to extend the Section 10.1(m) Period for a
period of 30 additional days (but in no event later than the Final
Adjournment Date) if either of the following conditions shall have
been satisfied:
(A) if the Antitrust Approval Period was not
extended pursuant to Section 8.10(f), by the delivery of
written notice of such extension by BJ to Western; or
(B) if the Antitrust Approval Period was not
extended for more than 30 days pursuant to Section 8.10(f), by
(i) paying a fee of $5,000,000 to Western if the Antitrust
Approval Period was extended pursuant to clause (i) of the
first sentence of Section 8.10(f), or (ii) by paying a fee of
$2,500,000 to Western if the Antitrust Approval Period was
extended pursuant to clause (ii) of the first sentence of
Section 8.10(f).
If the Antitrust Approval Period was not extended pursuant to Section 8.10(f),
the date of BJ's stockholders' meeting may not be adjourned for more than 60
days after the Antitrust Disposition Action (the "Final Adjournment Date"). If
the Antitrust Approval Period was extended for 30 days pursuant to Section
8.10(f), the Final Adjournment Date may not be more than 30 days after the
Antitrust Disposition Action; provided, however, that BJ may extend the Final
Adjournment Date for up to 60 days after the date of the Antitrust Disposition
Action by (x) paying a fee of $5,000,000 to Western if the Antitrust Approval
Period was extended pursuant to clause (i) of the first sentence of Section
8.10(f), or (y) by paying a fee of $2,500,000 to Western if the Antitrust
Approval Period was extended pursuant to clause (ii) of the first sentence of
Section 8.10(f). If the Antitrust Approval Period was extended for 60 days
pursuant to Section 8.10(f), the Final Adjournment Date may not be more than 30
days after the Antitrust Disposition Action. Notwithstanding anything to the
contrary provided elsewhere in this Section 10.1, BJ may not terminate this
Agreement pursuant to Sections 10.1(d) or 10.1(e)(iii) after the 100-day
Antitrust Approval Period.
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<PAGE> 38
Section 10.2 Effect of Termination. In the event of termination of
this Agreement by either BJ or Western, as provided above, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of either Western or BJ or BJ Sub or their respective officers or directors
(except for this Section 10.2 and Sections 8.10, 8.20 and 8.21, which shall
survive termination of this Agreement and except as set forth in the
confidentiality agreements between BJ and Western dated October 7, 1994
(collectively with the confidentiality agreements among Collier, Shannon, Rill
& Scott, Sullivan & Cromwell and Simpson Thacher & Bartlett, the
"Confidentiality Agreements"), each of which Confidentiality Agreements shall
survive such termination) and except that nothing herein shall relieve any
party from liability for any breach of this Agreement; provided, however, that
the payment of any fees and expense reimbursements specified in Sections
8.10(b),(d) or (f) upon the termination of this Agreement under any of the
circumstances specified in Sections 8.10(b),(d) or (f) shall constitute the
parties' sole remedy for any breach of this Agreement which may have occurred
prior to such termination.
Section 10.3 Amendment. This Agreement may be amended by the parties
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after approval hereof by the stockholders of Western but,
after any such approval, no amendment shall be made which changes the way in
which the Merger Consideration is calculated under Article III or which in any
way alters or changes any of the other terms or conditions of this Agreement if
such alteration or change would materially adversely affect the rights of such
stockholders, without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed and
acknowledged on behalf of each of the parties hereto.
Section 10.4 Waiver. At any time prior to the Closing Date, each of
the parties hereto may (i) extend the time of the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, (iii) waive compliance with any of the
agreements or conditions contained herein which may legally be waived and (iv)
grant any consents hereunder. Any agreement on the part of any party hereto to
any such extension or waiver shall be valid if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Notice of Breach. Each party will promptly give written
notice to each other party upon becoming aware of the occurrence of any breach
of any of its representations, warranties and covenants contained in this
Agreement and will use its best efforts to prevent or promptly remedy the same.
Section 11.2 Survival of Representations and Warranties. The
covenants of Western, BJ and BJ Sub contained in Sections 3.6, 8.6, 8.8, 8.10,
8.13 and 8.16 shall survive the consummation of the Merger. None of the
representations and warranties in this Agreement shall survive the Merger.
Section 11.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given (i) on the date delivered, if
delivered personally, (ii) on the first Trading Day following the deposit
thereof with Federal Express, if sent by Federal Express, and (iii) on the
fourth Trading Day following the mailing thereof with postage prepaid, if
mailed by registered or certified mail (return receipt requested), in each case
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
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<PAGE> 39
(a) If to BJ or BJ Sub, to:
BJ Services Company
5500 Northwest Central Drive
Houston, Texas 77092
Attention: Mr. J.W. Stewart
Chairman and President
with copies to:
Andrews & Kurth
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: G. Michael O'Leary, Esq.
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert L. Friedman, Esq.
(b) if to Western, to:
The Western Company of North America
515 Post Oak Boulevard
Houston, Texas 77027
Attention: Mr. Sheldon R. Erikson
Chairman and Chief Executive Officer
with a copy to:
Graham L. Adelman, Senior Vice
President, General Counsel and Secretary
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: James C. Morphy, Esq.
Section 11.4 Definitions. (a) For purposes of this Agreement, (i)
when a reference is made in this Agreement to subsidiaries of BJ or Western,
the term "subsidiaries" means any domestic or foreign corporation more than 50%
of whose outstanding voting securities are directly or indirectly owned by BJ
or Western, as the case may be, and (ii) the term "affiliate" shall have the
meaning set forth in Rule 12b-2 under the Exchange Act. The headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
(b) As used herein, "BJ Alternative Transaction" means (i) any
merger, consolidation or other business combination transaction involving BJ in
which another corporation, partnership, person, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act) would acquire beneficial
ownership of at least 50% of the aggregate voting power of all voting
securities of BJ or the
39
<PAGE> 40
Surviving Corporation, as the case may be; (ii) any tender offer or exchange
offer for any securities of BJ which, if consummated, would result in another
corporation, partnership, person, other entity or group (as defined in Section
13(d)(3) of the Exchange Act) becoming the beneficial power of at least 50% or
more of the aggregate voting power of all voting securities of BJ; (iii) any
sale or other disposition of assets of BJ or any of its subsidiaries in a
single transaction or in a series of related transactions if the fair market
value of such assets exceeds 50% of the aggregate fair market value of the
assets of BJ and its subsidiaries taken as a whole before giving effect to such
sale or other disposition; (iv) the adoption by BJ of a plan of liquidation; or
(v) the repurchase by BJ or any of its subsidiaries of shares of BJ Common
Stock representing at least 50% or more of the aggregate voting power of all
voting securities of BJ.
Section 11.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
Section 11.6 Entire Agreement; Assignment. This Agreement, together
with the Senior Executive Termination Agreements, the Warrant Agreement and the
Confidentiality Agreements, constitutes the entire agreement among the parties
with respect to the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof (except for the Senior Executive
Termination Agreements, the Warrant Agreement and the Confidentiality
Agreements). This Agreement shall not be assigned by operation of law or
otherwise, except that BJ and BJ Sub may assign all or any of their respective
rights and obligations hereunder to any direct or indirect wholly owned
subsidiary or subsidiaries of BJ, provided that no such assignment shall
relieve the assigning party of its obligations hereunder if such assignee does
not perform such obligations.
Section 11.7 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement, except as provided in Section 8.6(e) and, to the
limited extent provided for therein, Section 8.8(d).
Section 11.8 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 11.9 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 11.10 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
40
<PAGE> 41
IN WITNESS WHEREOF, BJ, BJ Sub and Western have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BJ SERVICES COMPANY
By: /s/ J.W. STEWART
__________________________________
Name: J.W. Stewart
Title: Chairman and President
WCNA ACQUISITION CORP.
By: /s/ J.W. STEWART
__________________________________
Name: J.W. Stewart
Title: President
THE WESTERN COMPANY
OF NORTH AMERICA
By: /s/ SHELDON R. ERICKSON
__________________________________
Name: Sheldon R. Erickson
Title: Chairman and
Chief Executive Officer
41
<PAGE> 42
EXHIBIT A
WARRANT AGREEMENT
FOR THE FORM OF AMENDED
WARRANT AGREEMENT,
SEE ANNEX I
TO EXHIBIT 2.2
42
<PAGE> 43
Exhibit B
AFFILIATES' AGREEMENT
WHEREAS, BJ Services Company ("BJ"), Western Acquisition Corp. ("BJ
Sub") and The Western Company of North America ("Western") have entered into an
Agreement and Plan Merger dated as of November __, 1994 (the "Merger
Agreement"), pursuant to which, among other things, Western will be merged (the
"Merger") into BJ Sub (all capitalized terms used and not defined herein shall
have the meanings ascribed to them in the Merger Agreement); and
WHEREAS, upon the effectiveness of the Merger, each outstanding share
of Western common stock will be converted into the right to receive (without
interest) Warrant Consideration and either (i) Cash Consideration or (ii) Stock
Consideration, in each case as the holder thereof shall have elected or be
deemed to have elected in accordance with Section 3.3 of the Merger Agreement,
and certain outstanding stock options and stock appreciation rights of Western
will be assumed by BJ and each assumed option will become exercisable for
shares of BJ common stock; and
WHEREAS, a registration statement covering the shares of BJ common
stock and warrants to purchase BJ common stock to be issued in connection with
the Merger has been filed with the Securities and Exchange Commission as
required by the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder (the "Securities Act"); and
WHEREAS, the issuance of BJ common stock and warrants to purchase BJ
common stock pursuant to the Merger Agreement constitutes a transaction subject
to Rule 145 under the Securities Act; and
WHEREAS, the undersigned may be considered to be an "affiliate" of
Western for the purpose of Rule 145 in connection with the Merger (an
"Affiliate"), and may be subject to restrictions in connection with the sale or
other disposition of the BJ common stock and warrants to purchase BJ common
stock which may be issued to the undersigned pursuant to the Merger Agreement
in exchange for the shares of Western common stock which the undersigned then
owns.
NOW, THEREFORE, the undersigned hereby agrees for the benefit of BJ,
BJ Sub and Western that: (i) the undersigned will not offer to sell, sell,
transfer or otherwise dispose of any of the BJ common stock and warrants to
purchase BJ common stock which may be issued to the undersigned in the Merger
other than (a) pursuant to an effective registration statement under the
Securities Act covering such sale, transfer or other disposition by the
undersigned of such BJ securities or (b) in compliance with Rule 145 under the
Securities Act or another exemption from the registration requirements of the
Securities Act; (ii) the undersigned will not offer to sell, sell, transfer or
otherwise dispose of any of the BJ common stock and warrants to purchase BJ
common stock which may be issued to the undersigned in the Merger (other than
pursuant to an effective registration statement under the Securities Act)
without prior written notice to BJ specifying the manner of compliance with
this Agreement (including, in the case of a sale pursuant to Rule 145, a
statement to the effect that such sale of such securities is to be made
pursuant to a "brokers' transaction" as defined in Rule 144 under the
Securities Act); provided, however, that if two years shall have elapsed from
the date the undersigned acquired the above-mentioned BJ securities and the
two-year limitation of Rule 145(d)(2) is then available to the undersigned, no
such notice shall be required; (iii) BJ is under no obligation to register the
sale, transfer or other disposition of the BJ securities received by the
undersigned as a result of the Merger or to take any other action necessary for
the purpose of making an exemption from registration available; provided,
however, that in order to permit the undersigned to effect sales pursuant to
Rule 145, BJ will use its best efforts to make available adequate current
public information with respect to BJ within the meaning of paragraph (c) of
Rule 144; and (iv) the undersigned will not offer to sell, sell, transfer or
otherwise dispose of any of the BJ securities which may be issued to the
undersigned in the Merger prior to BJ publishing consolidated financial
statements which reflect at least thirty days of post-merger combined
operations of BJ and Western.
43
<PAGE> 44
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
executed as of this ____ day of_______________, 1995.
________________________________
44
<PAGE> 45
Exhibit C
WESTERN REPRESENTATIVES ON BJ BOARD
David A. B. Brown
William J. Johnson
Michael E. Patrick
<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT TO AGREEMENT
AND PLAN OF MERGER
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER, dated as of March 7,
1995, among BJ SERVICES COMPANY ("BJ"), WCNA ACQUISITION CORP., a wholly owned
subsidiary of BJ ("BJ Sub"), and THE WESTERN COMPANY OF NORTH AMERICA
("Western"), each a Delaware corporation.
WHEREAS, BJ, BJ Sub and Western have entered into an Agreement and
Plan of Merger, dated as of November 17, 1994 (the "Merger Agreement"); and
WHEREAS, pursuant to Section 1.5 of the Merger Agreement, BJ hereby
notifies Western of its desire to structure the Merger so that Western merges
into BJ and BJ is the Surviving Corporation after the Effective Time;
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the parties hereto agree as follows:
ARTICLE I
AMENDMENTS
1.1 As of the date hereof, BJ Sub shall cease to be a party to the
Merger Agreement and shall henceforth have no rights or obligations thereunder.
1.2 Sections 1.1, 1.4, 2.1, 2.2, and 8.19 of the Merger Agreement
are hereby amended by deleting each reference to "BJ Sub" therein and inserting
"BJ" in place thereof.
1.3 Section 1.2 of the Merger Agreement is hereby amended by
deleting the words ", BJ Sub" and "cause the Surviving Corporation to" in the
first sentence of such section.
1.4 Section 2.3 of the Merger Agreement is hereby amended by (i)
deleting the word "The" in the first sentence of such section and inserting the
words "Subject to Section 8.16, the" in place thereof and (ii) deleting the
reference to "BJ Sub" in the same sentence and inserting "BJ" in place thereof.
1.5 Sections 3.1(a) and 3.1(c) of the Merger Agreement are hereby
amended by deleting the references to ", BJ Sub" therein.
1.6 Section 3.1(d) of the Merger Agreement is hereby deleted in
its entirety, and the following is inserted in place thereof:
"(d) BJ Shares. Each share of common stock, par value
$0.10 per share, of BJ ("BJ Common Stock") issued and outstanding
immediately prior to the Effective Time shall remain outstanding after
the Merger and, together with BJ Common Stock issued pursuant to the
Merger, thereafter shall constitute all of the common stock of the
Surviving Corporation issued and outstanding immediately after the
Effective Time."
1.7 Section 3.2(b) of the Merger Agreement is hereby amended by
deleting the reference to "$1.00" at the end thereof and inserting in place
thereof "$5.00".
<PAGE> 2
1.8 Section 3.4 of the Merger Agreement is hereby amended by
deleting the words "Warrant Consideration Value" and inserting in place thereof
the words "Warrant Current Market Price".
1.9 Section 3.7 of the Merger Agreement is hereby amended by (i)
deleting from the first sentence thereof the words "Neither BJ nor" and
capitalizing the first letter of the following word and (ii) inserting the word
"not" between the words "shall be" in the same sentence.
1.10 Section 4.2 of the Merger Agreement is hereby amended by
deleting from the first sentence thereof the word "without" and inserting the
words "$1 per share" after the words "par value" in the same sentence.
1.11 Section 4.4 of the Merger Agreement is hereby amended by (i)
deleting from the third sentence thereof the words "each of", "and BJ Sub" and
"and of BJ Sub", (ii) deleting from the fifth sentence thereof the words
"Neither", "nor BJ Sub" and ", with respect to BJ," and (iii) inserting the
word "not" between the words "is subject" in the fifth sentence thereof.
1.12 Section 4.11 of the Merger Agreement is hereby amended by
deleting the first sentence of such section and inserting the following in
place thereof: "The affirmative vote of the holders of a majority of the
outstanding shares of BJ Common Stock entitled to vote thereon is required to
approve this Agreement and the issuance of BJ Common Stock and BJ Warrants in
the Merger."
1.13 Sections 4.14, 10.1(e), 10.2, and 11.3(a) of the Merger
Agreement are hereby amended by deleting the words "or BJ Sub" in each such
section.
1.14 Article V of the Merger Agreement is hereby deleted in its
entirety.
1.15 Article VI of the Merger Agreement is hereby amended by
deleting from the first line thereof the words "and BJ Sub".
1.16 Section 6.4 of the Merger Agreement is hereby amended by (i)
deleting from the third sentence thereof the words "each of" and "and BJ Sub"
and (ii) deleting from the fifth sentence thereof the words "or BJ Sub".
1.17 Section 8.3 of the Merger Agreement is hereby amended by (i)
deleting from the fourth sentence thereof the words "NYSE Rule 312.05" and
inserting in place thereof the words "applicable Delaware Corporation Law" and
(ii) deleting from the penultimate sentence thereof the words "or NYSE rules,
as the case may be,".
1.18 Section 8.6(a) of the Merger Agreement is hereby amended by
(i) deleting the words "BJ agrees that it or" and (ii) deleting from the
parenthetical at the end of such section the words "BJ or".
1.19 Section 8.6(b) of the Merger Agreement is hereby deleted in
its entirety and the following is inserted in place thereof:
"(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.6, upon learning
of any such claim, action, suit, proceeding or investigation, shall
promptly notify the Surviving Corporation thereof, but the failure to
so notify shall not relieve the Surviving Corporation of any liability
it may have to such Indemnified Party except to the extent that such
failure materially prejudices the Surviving Corporation. In the event
of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Surviving
Corporation shall have the right to assume the defense thereof (which
it shall, in cooperation with the Indemnified Parties, vigorously
defend)
2
<PAGE> 3
and the Surviving Corporation shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Surviving Corporation elects
not to assume such defense or there is a conflict of interest between
the Surviving Corporation and the Indemnified Parties, including
situations in which there are one or more legal defenses available to
the Indemnified Party that are different from or additional to those
available to the Surviving Corporation, the Indemnified Parties may
retain counsel satisfactory to them, and the Surviving Corporation
shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received;
provided, however, that the Surviving Corporation shall not, in
connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same
general allegations, be liable for the fees and expenses of more than
one separate firm of attorneys at any time for all Indemnified Parties
except to the extent that local counsel, in addition to such parties'
regular counsel, is required in order to effectively defend against
such action or proceeding, (ii) the Indemnified Parties will cooperate
in the defense of any such matter and (iii) the Surviving Corporation
shall not be liable for any settlement effected without its prior
written consent, and provided, further, that the Surviving Corporation
shall not have any obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law."
1.20 Section 8.8(a) of the Merger Agreement is hereby amended by
(i) deleting from clause (ii) of such section the words "BJ, BJ Sub, Western
or" and (ii) deleting from clause (iii) of such section the words "BJ, Western
or".
1.21 Section 8.8(b) of the Merger Agreement is hereby amended by
(i) deleting the words ", and will cause the Surviving Corporation to" and (ii)
deleting from the proviso thereof the words "or the Surviving Corporation".
1.22 Section 8.8(c) of the Merger Agreement is hereby amended by
(i) deleting the words "or BJ" and (ii) deleting the proviso in such section
and inserting the following in place thereof: "provided, however, that
employees of the Surviving Corporation who become participants in a defined
benefit pension plan that was sponsored by BJ prior to the Effective Time or in
a defined benefit pension plan sponsored by the Surviving Corporation which is
adopted on or after the Effective Time shall not be given credit for benefit
accrual purposes to the extent such credit would result in a duplication of
benefits under more than one defined benefit pension plan."
1.23 Section 8.10(b) of the Merger Agreement is hereby amended by
deleting the words "or BJ Sub" and "and BJ Sub".
1.24 Section 8.11 of the Merger Agreement is hereby amended by (i)
deleting from the fifth sentence of such section the reference to ", BJ Sub"
and (ii) deleting from the last sentence of such section the words ", BJ and BJ
Sub" and inserting the words "and BJ" in place thereof.
1.25 Section 8.17 of the Merger Agreement is hereby amended by (i)
deleting the words "and any shares of common stock of BJ Sub" and "or BJ Sub,
respectively," and (ii) deleting the words "either Western or BJ Sub" and
inserting the word "Western" in place thereof.
1.26 Section 9.1(g) of the Merger Agreement is hereby amended by
(i) deleting the word "affirmative" and inserting in place thereof the word
"requisite" and (ii) deleting the words "required by NYSE Rule 312.05".
3
<PAGE> 4
1.27 Section 9.2(a) of the Merger Agreement is hereby amended by
(i) deleting the words "and BJ Sub" where it appears in two places and (ii)
deleting the word "their" and inserting the word "its" in place thereof.
1.28 Section 9.3 of the Merger Agreement is hereby amended by
deleting the words "and BJ Sub" from the heading (with a corresponding change
to the index) and the first line thereof.
1.29 Section 10.1(j) of the Merger Agreement is hereby amended by
inserting between the words "approve the" the words "this Agreement and".
1.30 Section 11.2 of the Merger Agreement is hereby amended by
deleting from the first sentence of such section the words ", BJ and BJ Sub"
and inserting the words "and BJ" in place thereof.
1.31 Section 11.4(b) of the Merger Agreement is hereby amended by
deleting from clause (i) thereof the words "or the Surviving Corporation, as
the case may be".
1.32 Section 11.6 of the Merger Agreement is hereby amended by (i)
deleting the words "and BJ Sub" and (ii) deleting the words "their respective"
and inserting the word "its" in place thereof.
1.33 The form of Warrant Agreement attached as Exhibit A to the
Merger Agreement shall be deleted and replaced in its entirety with Amended
Exhibit A which is attached as Annex I to this First Amendment.
ARTICLE II
MISCELLANEOUS
2.1 Terms used in this First Amendment without definition shall
have the meanings ascribed to such terms in the Merger Agreement.
2.2 This First Amendment may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
2.3 Except as expressly amended and modified by the terms of this
First Amendment, the terms and provisions of the Merger Agreement shall remain
in full force and effect.
2.4 This First Amendment shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
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<PAGE> 5
IN WITNESS WHEREOF, BJ, BJ Sub and Western have caused this First
Amendment to be executed as of the date first written above by their respective
officers thereunto duly authorized.
BJ SERVICES COMPANY
By: /s/ J. W. STEWART
____________________________________
Name: J. W. Stewart
Title: President and
Chief Executive Officer
WCNA ACQUISITION CORP.
By: /s/ J. W. STEWART
____________________________________
Name: J. W. Stewart
Title: President
THE WESTERN COMPANY OF
NORTH AMERICA
By: /s/ GRAHAM L. ADELMAN
____________________________________
Name: Graham L. Adelman
Title: Senior Vice President
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<PAGE> 6
ANNEX I
_______________________________________________________________________________
[FORM OF WARRANT AGREEMENT]
BJ SERVICES COMPANY
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
Warrant Agent
_______________________________________________________________________________
Warrant Agreement
Dated as of , 1995 [the Closing Date]
_______________________________________________________________________________
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Table of Contents
<TABLE>
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Section 1. Certain Definitions . . . . . . . . . . . . . . . . . .
Section 2. Appointment of Warrant Agent . . . . . . . . . . . . .
Section 3. Form of Warrant Certificates . . . . . . . . . . . . .
Section 4. Countersignature and Registration . . . . . . . . . . .
Section 5. Transfer, Split Up, Combination and Exchange of
Warrant Certificates; Mutilated, Destroyed, Lost
or Stolen Warrant Certificates . . . . . . . . . . . .
Section 6. Exercise of BJ Warrants; Exercise Price;
Expiration Date of BJ Warrants . . . . . . . . . . . .
Section 7. Cancellation and Destruction of Warrant Certificates . .
Section 8. Reservation and Availability of Shares of BJ
Common Stock or Cash . . . . . . . . . . . . . . . . .
Section 9. BJ Common Stock Record Date . . . . . . . . . . . . . .
Section 10. Adjustment of Exercise Price, Number of Shares
of BJ Common Stock or Number of BJ Warrants . . . . . .
Section 11. Certification of Adjusted Exercise Price or
Number of Shares of BJ Common Stock . . . . . . . . . .
Section 12. Reclassification, Consolidation, Merger, Combination,
Sale or Conveyance . . . . . . . . . . . . . . . . . .
Section 13. Fractional BJ Warrants and Fractional Shares
of BJ Common Stock . . . . . . . . . . . . . . . . . .
Section 14. Right of Action . . . . . . . . . . . . . . . . . . . .
Section 15. Agreement of Warrant Certificate Holders . . . . . . .
Section 16. Warrant Certificate Holder Not Deemed a Stockholder . .
Section 17. Concerning the Warrant Agent . . . . . . . . . . . . .
Section 18. Merger or Consolidation or Change of Name
of Warrant Agent . . . . . . . . . . . . . . . . . . .
Section 19. Duties of Warrant Agent . . . . . . . . . . . . . . . .
Section 20. Change of Warrant Agent . . . . . . . . . . . . . . . .
</TABLE>
7
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<TABLE>
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Section 21. Issuance of New Warrant Certificates . . . . . . . . . .
Section 22. Purchase of BJ Warrants by BJ . . . . . . . . . . . . . .
Section 23. Notice of Proposed Actions . . . . . . . . . . . . . . .
Section 24. Notices . . . . . . . . . . . . . . . . . . . . . . . . .
Section 25. Supplements and Amendments . . . . . . . . . . . . . . .
Section 26. Successors . . . . . . . . . . . . . . . . . . . . . . .
Section 27. Benefits of this Agreement . . . . . . . . . . . . . . .
Section 28. Governing Law . . . . . . . . . . . . . . . . . . . . . .
Section 29. Counterparts . . . . . . . . . . . . . . . . . . . . . .
Section 30. Captions . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
8
<PAGE> 9
WARRANT AGREEMENT
This Agreement, dated as of ________ __, 1995 [the Closing Date],
between BJ SERVICES COMPANY, a Delaware corporation ("BJ"), and FIRST CHICAGO
TRUST COMPANY OF NEW YORK, a New York limited purpose trust company (the
"Warrant Agent").
W I T N E S S E T H
WHEREAS, BJ has entered into an Agreement and Plan of Merger,
dated as of November 17, 1994, as amended (the "Merger Agreement"), with The
Western Company of North America, a Delaware corporation ("Western"), providing
for the merger of Western into BJ (the "Merger") pursuant to the terms of the
Merger Agreement; and
WHEREAS, the Merger Agreement provides that all of the
outstanding shares of common stock, par value $.10 per share, of Western,
except as provided in the Merger Agreement, shall be converted into, exchanged
for and represent the right to receive consideration specified in the Merger
Agreement, which consideration is to include warrants (the "BJ Warrants") to
purchase BJ Common Stock (as hereinafter defined) upon the terms and subject to
the conditions hereinafter set forth; and
WHEREAS, BJ wishes the Warrant Agent to act on behalf of BJ, and
the Warrant Agent is willing so to act, in connection with the issuance,
transfer, exchange and exercise of BJ Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "BJ Common Stock" shall mean the Common Stock, par value
$.10 per share, of BJ.
(b) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in New York are
authorized or obligated by law or executive order to close.
(c) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York City
time, on the next succeeding Business Day.
(d) "Closing Date" shall have the meaning ascribed to it in
the Merger Agreement.
(e) "Person" shall mean an individual, corporation,
association, partnership, joint venture, trust, unincorporated
organization, government or political subdivision thereof or
governmental agency or other entity.
Section 2. Appointment of Warrant Agent. BJ hereby appoints
the Warrant Agent to act as agent for BJ in accordance with the terms and
conditions hereof, and the Warrant Agent hereby accepts such appointment.
BJ may from time to time appoint such Co-Warrant Agents as it may, in its sole
discretion, deem necessary or desirable.
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<PAGE> 10
Section 3. Form of Warrant Certificates. The Warrant
Certificates (together with the form of election to purchase Common Stock and
the form of assignment to be printed on the reverse thereof) shall be
substantially in the form of Exhibit 1 hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as BJ may deem appropriate and as are not inconsistent with the
provisions of this Agreement and the Merger Agreement or as may be required to
comply with any law or with any rule or regulation made pursuant thereto, or to
conform to usage. Subject to the provisions of Section 21 hereof, the Warrant
Certificates, whenever issued, shall be dated the Closing Date and on their
face shall entitle the holders thereof to purchase such number of shares of
Common Stock as shall be set forth therein at $30 per share (the "Exercise
Price"), but the number of such shares and the Exercise Price shall be subject
to the adjustments as provided herein.
Section 4. Countersignature and Registration. The Warrant
Certificates shall be executed on behalf of BJ by its Chairman, its President
or a Vice President, either manually or by facsimile signature, and have
affixed thereto BJ's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of BJ, either manually or by facsimile
signature. The Warrant Certificate shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of BJ who shall have signed any of the Warrant Certificates
shall cease to be such officer of BJ before countersignature by the Warrant
Agent and issuance and delivery by BJ, such Warrant Certificates, nevertheless,
may be countersigned by the Warrant Agent, issued and delivered with the same
force and effect as though the person who signed such Warrant Certificate had
not ceased to be such officer of BJ; and any Warrant Certificate may be signed
on behalf of BJ by any person who, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of BJ to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement
any such person was not such an officer.
The Warrant Agent will keep or cause to be kept, at one of its
offices in New York City, books for registration and transfer of the Warrant
Certificates issued hereunder. Such books shall show the names and addresses
of the respective holders of the Warrant Certificates, the number of BJ
Warrants evidenced on its face by each of the Warrant Certificates and the date
of each of the Warrant Certificates.
Section 5. Transfer, Split Up, Combination and Exchange of
Warrant Certificates; Mutilated, Destroyed, Lost or Stolen Warrant
Certificates. Subject to the provisions of Section 13 hereof, at any time
after the close of business on the date hereof, and at or prior to the close of
business on the Expiration Date (as such term is hereinafter defined), any
Warrant Certificate or Warrant Certificates may be transferred, split up,
combined or exchanged for another Warrant Certificate or Warrant Certificates,
entitling the registered holder to purchase a like number of shares of BJ
Common Stock as the Warrant Certificate or Warrant Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Warrant Certificate shall make such
request in writing delivered to the Warrant Agent, and shall surrender the
Warrant Certificate or Warrant Certificates to be transferred, split up,
combined or exchanged at the principal office of the Warrant Agent. Thereupon
the Warrant Agent shall countersign and deliver to the person entitled thereto
a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. BJ may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Warrant Certificates, together with
reimbursement to BJ and the Warrant Agent of all reasonable expenses incidental
thereto.
Upon receipt by BJ and the Warrant Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security in customary form and amount, and reimbursement to BJ and the Warrant
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Warrant
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<PAGE> 11
Agent and cancellation of the Warrant Certificate if mutilated, BJ will make
and deliver a new Warrant Certificate of like tenor to the Warrant Agent for
delivery to the registered holder in lieu of the Warrant Certificate so lost,
stolen, destroyed or mutilated.
Section 6. Exercise of BJ Warrants; Exercise Price; Expiration
Date of BJ Warrants. (a) Subject to Section 6(c) below, the registered holder
of any Warrant Certificate may exercise the BJ Warrants evidenced thereby in
whole or in part upon surrender of the Warrant Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Warrant
Agent at the principal office of the Warrant Agent in New York City, together
with payment of the Exercise Price in immediately available funds for each
share of BJ Common Stock as to which the BJ Warrants are exercised, at any time
prior to the close of business on , 2000 [fifth
anniversary of Closing Date] (the "Expiration Date").
(b) The Exercise Price for each share of BJ Common Stock
pursuant to the exercise of BJ Warrants shall initially be $30, subject to
adjustment from time to time as provided in Section 10 hereof. The Exercise
Price shall be payable in lawful money of the United States of America.
(c) Upon receipt of a Warrant Certificate, with the form of
election to purchase duly executed, accompanied by payment of the Exercise
Price for the shares to be purchased and an amount equal to any applicable tax
or governmental charge referred to in Section 8 in cash, or by certified check
or bank draft payable to the order of BJ, the Warrant Agent shall thereupon
promptly (i) requisition from any transfer agent of the BJ Common Stock
certificates for the number of whole shares of BJ Common Stock to be purchased,
and BJ hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) when appropriate, requisition from BJ the amount of cash to be
paid in lieu of the issuance of fractional shares and (iii) after receipt of
such certificates, cause the same to be delivered to or upon the order of the
registered holder of such Warrant Certificate, registered in such name or names
as may be designated by such holder, and, when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of
such Warrant Certificate. Upon receipt by BJ of a Warrant Certificate at the
principal office of the Warrant Agent, in proper form for exercise, and payment
of the applicable Exercise Price as required hereby, the holder of such Warrant
Certificate shall be deemed to be the holder of record of the shares of BJ
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of BJ shall then be closed or that certificates representing
such shares of BJ Common Stock shall not then be actually delivered to the
holder of such Warrant Certificate.
(d) In case the registered holder of any Warrant Certificate
shall exercise less than all BJ Warrants evidenced thereby, a new Warrant
Certificate evidencing BJ Warrants equivalent to the BJ Warrants remaining
unexercised shall be issued by the Warrant Agent to the registered holder of
such Warrant Certificate or to his duly authorized assigns, subject to the
provisions of Section 13 hereof.
Section 7. Cancellation and Destruction of Warrant Certificates.
All Warrant Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to BJ or to any or its
agents, be delivered to the Warrant Agent for cancellation or in cancelled
form, or, if surrendered to the Warrant Agent, shall be cancelled by it, and no
Warrant Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Warrant Agreement. BJ shall deliver
to the Warrant Agent for cancellation and retirement, and the Warrant Agent
shall so cancel and retire, any other Warrant Certificate purchased or acquired
by BJ otherwise then upon the exercise thereof. The Warrant Agent shall
deliver all cancelled Warrant Certificates to BJ, or shall, at the written
request of BJ, destroy such cancelled Warrant Certificates, and in such case
shall deliver a certificate of destruction thereof to BJ.
Section 8. Reservation and Availability of Shares of BJ Common
Stock or Cash. BJ covenants and agrees that it will cause to be reserved and
kept available out of its authorized and
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<PAGE> 12
unissued shares of Common Stock or its authorized and issued shares of Common
Stock held in its treasury, free from preemptive rights, the number of shares
of BJ Common Stock that will be sufficient to permit the exercise in full of
all outstanding BJ Warrants or keep sufficient cash available for payment in
lieu of BJ Common Stock.
BJ covenants and agrees that it will use its best efforts to
cause the BJ Common Stock issuable upon the exercise of the BJ Warrants to be
listed on the NYSE (as defined below). In addition, BJ covenants and agrees to
use its best efforts to cause the BJ Warrants to be listed on the NYSE. To the
extent that the BJ Warrants cannot be listed on the NYSE, BJ shall use its best
efforts to cause the BJ Warrants to be listed on the NASDAQ (as defined below).
BJ covenants and agrees that it will take all such actions as may
be necessary to insure that all shares of BJ Common Stock delivered upon
exercise of BJ Warrants shall, at the time of delivery of the certificates for
such shares (subject to payment of the Exercise Price as contemplated by
Section 6(c)), be duly authorized, validly issued, fully paid and
nonassessable.
BJ further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the original issuance or delivery of the Warrant
Certificates or certificates evidencing BJ Common Stock upon exercise of the
Warrant Certificate. BJ shall not, however, be required to pay any tax or
governmental charge which may be payable in respect of any transfer involved in
the transfer or delivery of Warrant Certificates or the issuance or delivery of
certificates for BJ Common Stock in a name other than that of the registered
holder of the Warrant Certificate evidencing BJ Warrants surrendered for
exercise or to issue or deliver any certificate for shares of BJ Common Stock
upon the exercise of any BJ Warrants until any such tax or governmental charge
shall have been paid (any such tax or governmental charge being payable by the
holder of such Warrant Certificate at the time of surrender) or until it has
been established to BJ's satisfaction that no such tax or governmental charge
is due.
Section 9. BJ Common Stock Record Date. Each person in whose
name any certificate for shares of BJ Common Stock is issued upon the exercise
of BJ Warrants shall for all purposes be deemed to have become the holder of
record for the BJ Common Stock represented thereby on, and such certificate
shall be dated, the date upon which the Warrant Certificate evidencing such BJ
Warrants was duly surrendered and payment of the Exercise Price (and any
applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the BJ Common Stock transfer
books of BJ are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding business day on which the BJ Common Stock transfer books of BJ are
open.
Section 10. Adjustment of Exercise Price, Number of Shares of BJ
Common Stock or Number of BJ Warrants. The Exercise Price, the number of
shares covered by such BJ Warrant and the number of BJ Warrants outstanding are
subject to adjustment from time to time as provided in this Section 10.
(a) In the event BJ shall at any time after the date of this
Agreement (i) declare a dividend on shares of BJ Common Stock payable in shares
of any class of capital stock of BJ, (ii) subdivide the outstanding shares of
BJ Common Stock into a greater number of shares of BJ Common Stock, (iii)
combine the outstanding shares of BJ Common Stock into a smaller number of
shares, or (iv) issue any shares of capital stock in a reclassification of
shares of the BJ Common Stock (including any such reclassification in
connection with a consolidation or merger in which BJ is the continuing
corporation), the Exercise Price in effect at the time of the record date for
such dividend or distribution or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any BJ Warrant exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock which, if such BJ
Warrant had been exercised immediately prior to such date
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<PAGE> 13
and at a time when the BJ Common Stock transfer books of BJ were open, such
holder would have owned upon such exercise and been entitled to receive by
virtue of such dividend, subdivision, combination or reclassification.
(b) In case BJ shall fix a record date for the issuance of
rights, options or warrants to all holders of BJ Common Stock (such rights,
options or warrants not being available to holders of BJ Warrants) entitling
them (for a period expiring within 45 calendar days after such date of issue)
to subscribe for or purchase BJ Common Stock (or securities convertible into or
exercisable or exchangeable for BJ Common Stock), other than Permitted
Issuances (as defined below), at a price per share of BJ Common Stock (or
having a conversion, exercise or exchange price per share of BJ Common Stock,
in the case of a security convertible into or exercisable or exchangeable for
BJ Common Stock) less than the Current Market Price (as defined in Section
10(f)) per share of BJ Common Stock on such record date, the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction of
which the numerator shall be the number of shares of BJ Common Stock
outstanding on such record date plus the number of shares of BJ Common Stock
which the aggregate offering price of the total number of shares of BJ Common
Stock so to be offered (or the aggregate initial conversion, exercise or
exchange price of the convertible, exercisable or exchangeable securities so to
be offered) would purchase at such Current Market Price and of which the
denominator shall be the number of shares of BJ Common Stock outstanding on
such record date plus the number of additional shares of BJ Common Stock to be
offered for subscription or purchase (or into which the convertible,
exercisable or exchangeable securities so to be offered are initially
convertible, exercisable or exchangeable). In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of BJ, whose determination shall be described in a
statement filed with the Warrant Agent. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such
rights or warrants are not so issued the Exercise Price shall be adjusted to be
the Exercise Price which would then be in effect if such record date had not
been fixed. For purposes of this paragraph (b), "Permitted Issuances" shall
mean any and all issuances of shares of BJ Common Stock or rights, options or
warrants entitling the holders thereof to subscribe for or purchase BJ Common
Stock (or securities convertible into or exercisable or exchangeable for BJ
Common Stock) pursuant to any stock option, stock purchase or other employee or
director benefit plan of BJ or any of its subsidiaries approved by
stockholders.
(c) In case BJ shall fix a record date for the making of a
dividend or distribution (other than aggregate cash dividends and distributions
not in excess of $.25 per share of BJ Common Stock for the fiscal year ended
September 30, 1995, and then $1.50 for each 12-month period thereafter, payable
out of retained earnings or earned surplus) to all holders of BJ Common Stock
(including any distribution made in connection with a consolidation or merger
in which BJ is the continuing corporation) or evidences of indebtedness or
assets or subscription rights or warrants (excluding those referred to in
Section 10(b)), the Exercise Price to be in effect after such record date shall
be determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the Current
Market Price (as defined in Section 10(f)) per share of BJ Common Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of BJ, whose determination shall be described in a statement
filed with the Warrant Agent) of such distribution applicable to one share of
BJ Common Stock, and of which the denominator shall be such Current Market
Price per share of BJ Common Stock. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such distribution
is not so made the Exercise Price shall again be adjusted to be the Exercise
Price which would then be in effect if such record date had not been fixed.
(d) In case a tender offer (a "Tender Offer") made by BJ or
any of its subsidiaries for all or any portion of the BJ Common Stock shall
expire (the "Expiration Time") and the Tender Offer (as amended upon the
expiration thereof) shall require the payment to stockholders based on the
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<PAGE> 14
acceptance (up to any maximum specified in the terms of the Tender Offer) of
Purchased Shares (as defined below) of an aggregate of the cash plus other
consideration having a fair market value (as determined by the Board of
Directors) as of the Expiration Time of such Tender Offer that combined with
the aggregate of the cash plus the fair market value (as determined by the
Board of Directors) of consideration payable in respect of any other tender
offer (determined as of the Expiration Time of such other tender offer) by BJ
or any of its subsidiaries for all or any portion of the BJ Common Stock
expiring within the 12 months preceding the expiration of the Tender Offer and
in respect of which no adjustment pursuant to this clause (d) has been made
exceeds 12.5% of the product of the Current Market Price per share of the BJ
Common Stock as of the Expiration Time of the Tender Offer multiplied by the
number of shares of BJ Common Stock outstanding (including any tendered shares)
at the Expiration Time of the Tender Offer, then, and in each such case,
immediately prior to the opening of business on the next Trading Day after the
date of the Expiration Time of the Tender Offer, the Exercise Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Exercise Price immediately prior to close of business on the date of the
Expiration Time of the Tender Offer by a fraction (A) the numerator of which
shall be equal to (x) the product of (i) the Current Market Price per share of
the BJ Common Stock as of the Expiration Time of the Tender Offer and (ii) the
number of shares of BJ Common Stock outstanding (including any tendered shares)
at the Expiration Time of the Tender Offer less (y) the amount of cash plus the
fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum specified in
the terms of the Tender Offer) of Purchased Shares (as defined below), and (B)
the denominator of which shall be equal to the product of (x) the Current
Market Price per share of the BJ Common Stock as of the Expiration Time of the
Tender Offer and (y) the number of shares of BJ Common Stock outstanding
(including any tendered shares) as of the Expiration Time of the Tender Offer
less the number of all shares validly tendered and not withdrawn as of the
Expiration Time of the Tender Offer, and accepted for purchase up to any
maximum. For purposes of this Section 10, the term "Purchased Shares" shall
mean such shares as are deemed so accepted up to any such maximum.
(e) If the rights (the "BJ Rights") outstanding under the
Stockholder Rights Agreement, dated as of January 12, 1994, as amended, between
BJ and First Chicago Trust Company of New York, as amended (the "Rights
Agreement"), shall become exercisable for shares of Series Two Junior
Participating Preferred Stock, par value $1.00 per share, of BJ ("BJ Preferred
Stock") or other property, the Exercise Price and the number of and kind of
securities or other property issuable upon exercise of each BJ Warrant shall be
appropriately adjusted so that the holder of any BJ Warrant exercised after
such time shall be entitled to receive the aggregate number and kind of shares
of BJ Preferred Stock or other property which would have been issuable under
the BJ Rights that would have been attached to the shares of BJ Common Stock
for which such BJ Warrant was exercisable immediately prior to the BJ Rights
having become exercisable, upon payment of the same consideration, if any,
payable under such BJ Rights for such shares or other property.
(f) For the purpose of any computation hereunder, the "Current
Market Price" per share of BJ Common Stock (or per BJ Warrant, for purposes of
Section 13(a) hereof) on any date shall be deemed to be the average of the
daily Closing Prices per share of such BJ Common Stock (or BJ Warrant, as the
case may be) for the 20 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date. The "Closing Price" for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange, Inc. ("NYSE") or, if such securities are not listed or admitted to
trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such securities are listed or admitted to trading
or, if such securities are not listed or admitted to trading on any national
securities exchange, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"). If on any such Trading
Day or Days such securities are not quoted by any such organization, such
Trading Day or Days shall be replaced for purposes of
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the foregoing calculation by the requisite Trading Day or Days preceding the
commencement of such 20 Trading Day period on which such securities are so
quoted. The term "Trading Day" shall mean a day on which the principal
national securities exchange on which such securities are listed or admitted to
trading is open for the transaction of business or, if such securities are not
listed or admitted to trading on any national securities exchange, a Monday,
Tuesday, Wednesday, Thursday or Friday on which banking institutions in the
State of New York are not authorized or obligated by law or executive order to
close. If the BJ Common Stock (or BJ Warrant, as the case may be) is not so
listed or traded, the "Current Market Price" per share shall be deemed to be
the fair value per share as determined in good faith by the Board of Directors
of BJ, whose determination shall be described in a statement filed with the
Warrant Agent. For the purpose of any computation hereunder, the "Warrant
Merger Price" means the average of the midpoint of the daily high and low
trading prices of BJ Warrants, rounded to four decimal places, on a when-issued
basis as reported in The Wall Street Journal's New York Stock Exchange
Composite Transactions Reports, for each of the first 20 consecutive Trading
Days in the period commencing 25 Trading Days prior to the Closing Date or, if
the BJ Warrants are not then admitted to trading on the NYSE on a when-issued
basis, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such securities are admitted to trading on a when-issued basis or, if
the BJ Warrants are not admitted to trading on any national securities exchange
on a when-issued basis, the average of the high bid and low asked prices in
the over-the-counter market, as reported by the NASDAQ, of BJ Warrants on a
when-issued basis. If on any such Trading Day or Days the BJ Warrants are not
quoted on a when-issued basis by any such organization, the 20 Trading Day
period referred to above shall be reduced by the number of such Trading Days on
which the BJ Warrants are not so quoted. If the BJ Warrants are not quoted on
a when-issued basis on any Trading Day during such 20 Trading Day period, the
Warrant Merger Price shall be deemed to be $5.00.
(g) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
Section 10(g) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
10 shall be made to the nearest cent or the nearest ten-thousandth of a share,
as the case may be. Notwithstanding the first sentence of this Section 10(g),
any adjustment required by this Section 10 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates such
adjustment or (ii) the date of the expiration of the right to exercise any BJ
Warrant.
(h) In the event that at any time, as a result of an
adjustment made pursuant to Section 10(a), the holder of any BJ Warrant
thereafter exercised shall become entitled to receive any shares of capital
stock of BJ other than shares of BJ Common Stock, thereafter the number of such
other shares so receivable upon exercise of any BJ Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in Section
10(a) through (d) inclusive, and the provisions of Sections 6, 8, 9 and 12 with
respect to the shares of BJ Common Stock shall apply on like terms to any such
other shares.
(i) All BJ Warrants originally issued by BJ subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of shares of BJ Common
Stock purchasable from time to time hereunder upon exercise of the BJ Warrants,
all subject to further adjustment as provided herein.
(j) Unless BJ shall have exercised its election as provided in
Section 10(k), upon each adjustment of the Exercise Price as a result of the
calculations made in Section 10(b), each BJ Warrant outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of shares (calculated to
the nearest ten-thousandth) obtained by (i) multiplying (x) the number of
shares covered by a BJ Warrant immediately prior to such adjustment by (y) the
Exercise Price in effect immediately prior to such
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adjustment of the Exercise Price and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
(k) BJ may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of BJ Warrants, in substitution for any
adjustment in the number of shares of BJ Common Stock purchasable upon the
exercise of a BJ Warrant. Each of the BJ Warrants outstanding after such
adjustment of the number of BJ Warrants shall be exercisable for one share of
BJ Common Stock. Each BJ Warrant held of record prior to such adjustment of
the number of BJ Warrants shall become that number of BJ Warrants (calculated
to the nearest ten-thousandth) obtained by dividing the Exercise Price in
effect prior to adjustment of the Exercise Price by the Exercise Price in
effect after adjustment of the Exercise Price. BJ shall notify each of the
record holders of BJ Warrants of its election to adjust the number of BJ
Warrants, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. Such record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but shall
be at least 10 days later than the date of the public announcement. Upon each
adjustment of the number of BJ Warrants pursuant to this Section 10(k), BJ
shall, as promptly as practicable, cause to be distributed to holders of record
of Warrant Certificates on such record date Warrant Certificates evidencing,
subject to Section 13, the additional BJ Warrants to which such holders shall
be entitled as a result of such adjustment, or, at the option of BJ, shall
cause to be distributed to such holders of record in substitution and
replacement for the Warrant Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by BJ, new Warrant
Certificates evidencing all the BJ Warrants to which such holders shall be
entitled after such adjustment. Warrant Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of BJ, the adjusted Exercise Price) and shall be
registered in the names of the holders of record of Warrant Certificates on the
record date specified in the public announcement.
(l) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of BJ Common Stock issuable upon the exercise of
the BJ Warrants, the Warrant Certificates theretofore and thereafter issued may
continue to express the Exercise Price per share and the number of shares which
were expressed upon the initial Warrant Certificates issued hereunder.
(m) BJ agrees that it will not, by amendment of its
Certificate of Incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by BJ. Before taking any
action that would cause an adjustment reducing the Exercise Price below the
then par value, if any, of the shares of BJ Common Stock issuable upon exercise
of the BJ Warrants, BJ shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that BJ may, at the option of BJ
in its sole discretion, either (i) validly and legally issue fully paid and
nonassessable shares of such BJ Common Stock or (ii) pay the equivalent amount
of cash, at such adjusted Exercise Price.
(n) In any case in which this Section 10 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, BJ may elect to defer until the occurrence of such event the
issuance to the holder of any BJ Warrant exercised after such record date of
the shares of BJ Common Stock and other capital stock of BJ issuable upon such
exercise over and above the shares of BJ Common Stock and other capital stock
of BJ, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that BJ shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(o) Anything in this Section 10 to the contrary
notwithstanding, BJ shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this Section 10,
as and to the extent that it in its sole discretion shall determine to be
advisable in
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order that any event treated for federal income tax purposes as a distribution
of stock or stock rights shall not be taxable to the recipients.
Section 11. Certification of Adjusted Exercise Price or Number
of Shares of BJ Common Stock. Whenever the Exercise Price or the number of
shares of BJ Common Stock issuable upon the exercise of each BJ Warrant is
adjusted as provided in Sections 10 or 12, BJ shall (a) promptly prepare a
certificate setting forth the Exercise Price as so adjusted and/or the number
of shares of BJ Common Stock issuable upon exercise of each BJ Warrant as so
adjusted, and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Warrant Agent and with each transfer agent for the
BJ Common Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Warrant Certificate in accordance with Section 23.
Section 12. Reclassification, Consolidation, Merger,
Combination, Sale or Conveyance. In case any of the following shall occur
while any BJ Warrants are outstanding: (i) any reclassification or change of
the outstanding shares of BJ Common Stock (other than a change in par value, or
from par value to no par value, or as covered by Section 10(a)), or (ii) any
consolidation, merger or combination of BJ with or into another corporation as
a result of which holders of BJ Common Stock shall be entitled to receive
stock, securities or other property or assets (including cash) with respect to
or in exchange for such BJ Common Stock, or (iii) any sale or conveyance of the
property or assets of BJ as, or substantially as, an entirety to any other
entity as a result of which holders of BJ Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such BJ Common Stock, then BJ, or such successor
corporation or transferee, as the case may be, shall make appropriate provision
by amendment of this Agreement or by the successor corporation or transferee
executing with the Warrant Agent an agreement so that the holders of the BJ
Warrants then outstanding shall have the right at any time thereafter, upon
exercise of such BJ Warrants, to receive the kind and amount of securities,
cash and other property receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance as would be received by
a holder of the number of shares of BJ Common Stock issuable upon exercise of
such Warrant immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance.
If the holders of the BJ Common Stock may elect from choices the
kind or amount of securities, cash and other property receivable upon such
reclassification, consolidation, merger, combination, sale or conveyance, then
for the purpose of this Section 12 the kind and amount of securities, cash and
other property receivable upon such reclassification, consolidation, merger,
combination, sale or conveyance shall be deemed to be the choice specified by
the holder of the BJ Warrant, which specification shall be made by the holder
of the BJ Warrant by the later of (A) 15 Trading Days after the holder of the
BJ Warrant is provided with a final version of all information required by law
or regulation to be furnished to holders of BJ Common Stock concerning such
choice, or if no such information is required, 15 Trading Days after BJ
notified the holder of the BJ Warrant of all material facts concerning such
specification and (B) the last time at which holders of BJ Common Stock are
permitted to make their specification known to BJ. If the holder of the BJ
Warrant fails to make any specification, the holder's choice shall be deemed to
be whatever choice is made by a plurality of holders of BJ Common Stock not
affiliated with BJ or any other party to the reclassification, consolidation,
merger, combination, sale or conveyance. Such new BJ Warrants shall provide
for adjustments which, for events subsequent to the effective date of such new
BJ Warrants, shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 10 and this Section 12. The above
provisions of this Section 12 shall similarly apply to successive
reclassifications, consolidations, mergers, combinations, sales or conveyances.
BJ shall mail by first-class mail, postage prepaid, to each
registered holder of a BJ Warrant, written notice of the execution of any such
amendment or agreement. Any new agreement entered into by the successor
corporation or transferee shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
Section 10. The Warrant
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Agent shall be under no responsibility to determine the correctness of any
provisions contained in such agreement relating either to the kind or amount of
securities or other property receivable upon exercise of BJ Warrants or with
respect to the method employed and provided therein for any adjustments and
shall be entitled to rely upon the provisions contained in any such agreement.
The provisions of this Section 12 shall similarly apply to successive
reclassifications, changes, consolidations, mergers, sales and conveyances of
the kind described above.
Section 13. Fractional BJ Warrants and Fractional Shares of BJ
Common Stock. (a) BJ shall not be required to issue fractions of BJ Warrants
or to distribute Warrant Certificates which evidence fractional BJ Warrants.
In lieu of such fractional BJ Warrants, there shall be paid to the persons to
whom Warrant Certificates representing such fractional BJ Warrants would
otherwise be issuable an amount in cash (without interest) equal to the product
of such fraction of a BJ Warrant multiplied by the following: (i) with respect
to all fractions of BJ Warrants issued in the Merger, the Warrant Merger Price
and (ii) with respect to all the other fractions of BJ Warrants, the Current
Market Price per whole BJ Warrant (as defined in Section 10(f)).
(b) BJ shall not be required to issue fractions of shares of
BJ Common Stock upon exercise of BJ Warrants or to distribute stock
certificates which evidence fractional shares of BJ Common Stock. In lieu of
fractional shares, there shall be paid to the registered holders of Warrant
Certificates at the time such Warrant Certificates are exercised as herein
provided an amount in cash (without interest) equal to the product of such
fractional part of a share of BJ Common Stock multiplied by the Current Market
Price per share of BJ Common Stock (as defined in Section 10(f)).
(c) The holder of a BJ Warrant by the acceptance of the BJ
Warrant expressly waives his right to receive any fractional BJ Warrant or any
fractional share of BJ Common Stock upon exercise of a BJ Warrant.
Section 14. Right of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Warrant
Certificates, and any registered holder of any Warrant Certificate, without the
consent of the Warrant Agent or of the holder of any other Warrant Certificate,
may, on such holder's own behalf and for such holder's own benefit, enforce,
and may institute and maintain any suit, action or proceeding against BJ to
enforce, or otherwise act in respect of, such holder's right to exercise the BJ
Warrants evidenced by such Warrant Certificate in the manner provided in such
Warrant Certificate and in this Agreement.
Section 15. Agreement of Warrant Certificate Holders. Every
holder of a Warrant Certificate by accepting the same consents and agrees with
BJ and the Warrant Agent and with every other holder of a Warrant Certificate
that:
(a) the Warrant Certificates are transferable only on the
registry books of the Warrant Agent if surrendered at the principal
office of the Warrant Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(b) BJ and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the absolute
owner thereof and of the BJ Warrants evidenced thereby
(notwithstanding any notations of ownership or writing on the Warrant
Certificates made by anyone other than BJ or the Warrant Agent) for
all purposes whatsoever, and neither BJ nor the Warrant Agent shall be
affected by any notice to the contrary.
Section 16. Warrant Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Warrant Certificate shall be entitled
to vote, receive dividends or distributions on, or be deemed for any purpose
the holder of, BJ Common Stock or any other securities of BJ which may at any
time be issuable on the exercise or conversion of the BJ Warrants represented
thereby, nor shall anything contained herein or in any Warrant Certificate be
construed to confer upon the holder of any Warrant
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Certificate, as such, any of the rights of a stockholder of BJ or any right to
vote for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any corporate action,
or to receive notice of meetings or other actions affecting stockholders
(except as provided in Section 24), or to receive dividends or distributions or
subscription rights, or otherwise, until the BJ Warrant or BJ Warrants
evidenced by such Warrant Certificate shall have been exercised in accordance
with the provisions hereof.
Section 17. Concerning the Warrant Agent. BJ agrees to pay to
the Warrant Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Warrant Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. BJ also agrees to indemnify the Warrant Agent for,
and to hold it harmless against, any loss, liability or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Warrant Agent, for anything done or omitted by the Warrant Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises.
The Warrant Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Warrant
Certificate or certificate for BJ Common Stock or for other securities of BJ,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons.
Section 18. Merger or Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent or any successor Warrant
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent or any
successor Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent or any successor Warrant Agent,
shall be the successor to the Warrant Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for
appointment as a successor Warrant Agent under the provisions of Section 21. In
case at the time such successor Warrant Agent shall succeed to the agency
created by this Agreement any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor Warrant Agent may adopt the
countersignature of the predecessor Warrant Agent and deliver such Warrant
Certificates so countersigned; and in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor Warrant Agent may
countersign such Warrant Certificates either in the name of the predecessor
Warrant Agent or in the name of the successor Warrant Agent; and in all such
cases such Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name and deliver Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
Section 19. Duties of Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which BJ and the holders of Warrant
Certificates, by their acceptance thereof, shall be bound:
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(a) The Warrant Agent may consult with legal counsel (who
may be legal counsel for BJ), and the opinion of such counsel shall
be full and complete authorization and protection to the Warrant
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by BJ prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by the Chairman, President or any Vice President of BJ and by
the Treasurer or any Assistant Treasurer or the Secretary of BJ and
delivered to the Warrant Agent; and such certificate shall be full
authentication to the Warrant Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Warrant Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Warrant Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Warrant Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements
and recitals are and shall be deemed to have been made by BJ only.
(e) The Warrant Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Warrant Agent)
or in respect of the validity or execution of any Warrant Certificate
(except its countersignature thereof); nor shall it be responsible for
any breach by BJ of any covenant or condition contained in this
Agreement or in any Warrant Certificate; nor shall it be responsible
for the adjustment of the Exercise Price or the making of any change
in the number of shares of BJ Common Stock required under the
provisions of Sections 10 or 12 or responsible for the manner, method
or amount of any such change or the ascertaining of the existence of
facts that would require any such adjustment or change (except with
respect to the exercise of BJ Warrants evidenced by Warrant
Certificates after actual notice of any adjustment of the Exercise
Price); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any shares of BJ Common Stock to be issued pursuant to this Agreement
or any Warrant Certificate or as to whether any shares of BJ Common
Stock will, when issued, be duly authorized, validly issued, fully
paid and nonassessable.
(f) BJ agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or
performing by the Warrant Agent of the provisions of this Agreement.
(g) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman or the President or any Vice President or
the Secretary of BJ, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Warrant Agent and any shareholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the
BJ Warrants or other securities of BJ or become pecuniarily interested
in any transaction in which BJ may be interested, or contract with or
lend money to BJ or otherwise act as fully and freely as though it
were not Warrant
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Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for BJ or for any other legal
entity.
(i) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorney or agents, and the Warrant
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to BJ resulting from any such act, default, neglect or misconduct,
provided reasonable care was exercised in the selection and continued
employment thereof.
Section 20. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement upon 30 days'
notice in writing mailed to BJ and to each transfer agent of the BJ Common
Stock by registered or certified mail, and to the holders of the Warrant
Certificates by first-class mail. BJ may remove the Warrant Agent or any
successor Warrant Agent upon 30 days' notice in writing, mailed to the Warrant
Agent or successor Warrant Agent, as the case may be, and to each transfer
agent of the BJ Common Stock by registered or certified mail, and to the
holders of the Warrant Certificates by first-class mail. If the Warrant Agent
shall resign or be removed or shall otherwise become incapable of acting, BJ
shall appoint a successor to the Warrant Agent. If BJ shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by the holder of a Warrant Certificate (who
shall, with such notice, submit his Warrant Certificate for inspection by BJ),
then the registered holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new Warrant Agent. Any
successor Warrant Agent, whether appointed by BJ or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of a state thereof, in good standing, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Warrant Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the predecessor Warrant Agent
shall deliver and transfer to the successor Warrant Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, BJ shall file notice thereof in writing with the
predecessor Warrant Agent and each transfer agent of the BJ Common Stock, and
mail a notice thereof in writing to the registered holders of the Warrant
Certificates. However, failure to give any notice provided for in this Section
20, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
Warrant Agent, as the case may be.
Section 21. Issuance of New Warrant Certificates.
Notwithstanding any of the provisions of this Agreement or of the BJ Warrants
to the contrary, BJ may, at its option, issue new Warrant Certificates
evidencing BJ Warrants in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Exercise Price per share
and the number or kind or class of shares of stock or other securities or
property purchasable under the several Warrant Certificates made in accordance
with the provisions of this Agreement.
Section 22. Purchase of BJ Warrants by BJ. BJ shall have the
right, except as limited by applicable law or other agreements, to purchase or
otherwise acquire BJ Warrants at such time, in such manner and for such
consideration as it may deem appropriate.
Section 23. Notice of Proposed Actions. In case BJ shall
propose (a) to declare a dividend on shares of BJ Common Stock payable in
shares of capital stock of any class or to make any other distribution (other
than aggregate cash dividends and distributions not in excess of $.25 per share
of BJ Common Stock for the fiscal year ended September 30, 1995, and then $1.50
for each 12-month
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period thereafter, payable out of retained earnings or earned surplus) to all
holders of BJ Common Stock (including any distribution made in connection with
a consolidation or merger in which BJ is the continuing corporation), or (b) to
offer rights, options or warrants to all holders of BJ Common Stock entitling
them to subscribe for or purchase BJ Common Stock (or securities convertible
into or exercisable or exchangeable for BJ Common Stock or any other
securities), or (c) to offer any shares of capital stock in a reclassification
of shares of the BJ Common Stock (including any such reclassification in
connection with a consolidation or merger in which BJ is the continuing
corporation), or (d) to effect any consolidation or merger into or with, or to
effect any sale or other transfer (or to permit one or more of its subsidiaries
to effect any sale or other transfer), in one or more transactions, of more
than 50% of the assets or net income of BJ and its subsidiaries (taken as a
whole) to, any other Person, or (e) to effect the liquidation, dissolution or
winding up of BJ, then, in each such case, BJ shall give to each registered
holder of a BJ Warrant, in accordance with Section 24, a notice of such
proposed action, which shall specify the record date for the purpose of such
stock dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of BJ Common Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a)
or (b) above at least 20 days prior to the record date for determining holders
of the BJ Common Stock for purposes of such action, and in the case of any such
other action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of BJ Common Stock,
whichever shall be the earlier. The failure to give notice required by this
Section 23 or any defect therein shall not affect the legality or validity of
the action taken by BJ or the vote upon any such action. Unless specifically
required by Section 10, the Exercise Price, the number of shares of BJ Common
Stock covered by each BJ Warrant and the number of BJ Warrants outstanding
shall not be subject to adjustment as a result of BJ being required to give
notice pursuant to this Section 23.
Section 24. Notices. Notices or demands authorized by this
Agreement to be given or made (i) by the Warrant Agent or by the holder of any
Warrant Certificate to or on BJ, (ii) subject to the provisions of Section 20,
by BJ or by the holder of any Warrant Certificate to or on the Warrant Agent or
(iii) by BJ or the Warrant Agent to the holder of any Warrant Certificate,
shall be deemed given (x) on the date delivered, if delivered personally, (y)
on the first Trading Day following the deposit thereof with Federal Express or
another recognized overnight courier, if sent by Federal Express or another
recognized overnight courier, and (z) on the fourth Trading Day following the
mailing thereof with postage prepaid, if mailed by registered or certified mail
(return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to BJ, to:
BJ Services Company
5500 Northwest Central Drive
Houston, Texas 77092
Attention: President
(b) If to the Warrant Agent, to:
First Chicago Trust Company of New York
525 Washington Boulevard
Jersey City, New Jersey 07310
Attention: Joann Gorostiola
Assistant Vice President
22
<PAGE> 23
(c) If to the holder of any Warrant Certificate, to the address
of such holder as shown on the registry books of BJ.
Section 25. Supplements and Amendments. (a) BJ and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any holders of BJ Warrant Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any
other provisions with regard to matters or questions arising hereunder which BJ
and the Warrant Agent may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant Certificates.
(b) In addition to the foregoing, with the consent of holders
of not less than a majority in number of the then outstanding BJ Warrants, BJ
and the Warrant Agent may modify this Agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Warrant Agreement or modifying in any manner the rights of the holders of
the BJ Warrant Certificates; provided, however, that no modification of the
terms (including but not limited to the adjustments described in Section 10)
upon which the BJ Warrants are exercisable or reducing the percentage required
for consent to modification of this Agreement may be made without the consent
of the holder of each outstanding BJ Warrant affected thereby.
Section 26. Successors. All covenants and provisions of this
Agreement by or for the benefit of BJ or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
Section 27. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give any Person other than BJ, the Warrant
Agent and the registered holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of BJ, the Warrant Agent and the
registered holders of the Warrant Certificates.
Section 28. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to the conflicts
of law principles thereof.
Section 29. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 30. Captions. The caption of the sections of this
Agreement have been inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
23
<PAGE> 24
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be hereunder
affixed and attested, all as of the day and year first above written.
BJ SERVICES COMPANY
By:_______________________________________
Name:_____________________________________
Title:____________________________________
By:_______________________________________
Title:____________________________________
FIRST CHICAGO TRUST COMPANY
OF NEW YORK, as Warrant Agent
By:_______________________________________
Name:_____________________________________
Title:____________________________________
24
<PAGE> 25
Exhibit 1
[Form of Warrant Certificate]
Certificate No. M- _______________ Warrants
NOT EXERCISABLE AFTER ________ __, 2000
Warrant Certificate
BJ SERVICES COMPANY
This certifies that __________________________, or registered
assigns, is the registered owner of the number of BJ Warrants set forth above,
each of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Warrant Agreement dated as of ________ __, 1995 [the Closing
Date] (the "Warrant Agreement") between BJ Services Company, a corporation
organized under the laws of the State of Delaware ("BJ"), and First Chicago
Trust Company of New York, a New York limited purpose trust company (the
"Warrant Agent"), to purchase or receive from BJ at any time after ________ __,
1995 [the Closing Date] and prior to 5:00 P.M. (New York City time) on
________ __, 2000 [fifth anniversary of the Closing Date] at the principal
office of the Warrant Agent, or its successors as Warrant Agent, in New York
City, the number of shares of common stock, par value $.10 per share, of
BJ ("BJ Common Stock") represented hereby to be purchased at $30 per share
of BJ Common Stock (the "Exercise Price"), in each case upon presentation and
surrender of this Warrant Certificate with the Form of Election to Purchase
duly executed. The number of BJ Warrants evidenced by this Warrant Certificate
(and the number of shares of BJ Common Stock which may be purchased upon
exercise thereof) set forth above and the Exercise Price set forth above are
the number and Exercise Price as of __________________, 1995, based on the
shares of BJ Common Stock as constituted at such date. As provided in the
Warrant Agreement, the Exercise Price and the number of shares of BJ Common
Stock which may be purchased upon the exercise of the BJ Warrants evidenced by
this Warrant Certificate are subject to modification and adjustment upon the
occurrence of certain events.
This Warrant Certificate is subject to all of the terms,
provisions and conditions of the Warrant Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Warrant Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Warrant Agent, BJ and the holders of the Warrant Certificates.
Copies of the Warrant Agreement are on file at the above-mentioned office of
the Warrant Agent.
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender at the principal office of the Warrant Agent, may
be exchanged for another Warrant Certificate or Warrant Certificates of like
tenor and date evidencing BJ Warrants entitling the holder to purchase a like
aggregate number of shares of BJ Common Stock, in each case as the BJ Warrants
evidenced by the Warrant Certificate or Warrant Certificates surrendered shall
have entitled such holder to purchase or receive. If this Warrant Certificate
shall be exercised in part, the holder hereof shall be entitled to receive upon
surrender hereof another Warrant Certificate or Warrant Certificates for the
number of BJ Warrants not exercised.
25
<PAGE> 26
BJ shall make a cash payment in lieu of issuing fractional BJ
Warrants or fractional shares of BJ Common Stock, as provided in the Warrant
Agreement.
No holder of this Warrant Certificate shall be entitled to vote,
receive dividends or distributions on, or be deemed for any purpose the holder
of, BJ Common Stock or of any other securities of BJ which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of BJ or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Warrant Agreement), or to receive dividends or subscription rights, or
otherwise, until the BJ Warrant or BJ Warrants evidenced by this Warrant
Certificate shall have been exercised as provided in the Warrant Agreement.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
WITNESS the facsimile signature of the proper officers of BJ and
its corporate seal. Dated as of ________, 199__.
ATTEST: BJ SERVICES COMPANY
_____________________________ By:___________________________
Secretary Name:_________________________
Title:________________________
Countersigned:
_____________________________
By___________________________
Authorized signature
26
<PAGE> 27
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Warrant Certificate.)
To First Chicago Trust Company of New York, as Warrant Agent:
The undersigned hereby irrevocably elects to exercise
___________________ BJ Warrants represented by this Warrant Certificate to
purchase the shares of BJ Common Stock issuable upon the exercise of such BJ
Warrants and requests that Certificates for such shares be issued in the name
of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of BJ Warrants shall not be all the BJ Warrants evidenced by
this Warrant Certificate, a new Warrant Certificate for the balance remaining
of such BJ Warrants shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: ____________________
________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate)
Signature Guaranteed:
27
<PAGE> 28
Annex A
ASSIGNMENT FORM
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificates)
FOR VALUE RECEIVED, ________________________________________________
hereby sells, assigns and transfers unto
Name:__________________________________________________________________________
(please typewrite or print in block letters)
Address:_______________________________________________________________________
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer within the Warrant Certificate the same on the books of the Company,
with full power of substitution in the premises.
Date ________, 19__
Signature
____________________________________________
Signature Guaranteed:
Notice
The signature to the foregoing assignment must correspond to the
name as written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
28
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED
BYLAWS
OF
BJ SERVICES COMPANY
AS OF DECEMBER 7, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
---------
<S> <C>
ARTICLE I - Offices . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1. Registered Office . . . . . . . . . . . . . . . . . .
Section 2. Other Offices . . . . . . . . . . . . . . . . . . . .
ARTICLE II - Meetings of Stockholders . . . . . . . . . . . . . . . . . .
Section 1. Place of Meetings . . . . . . . . . . . . . . . . . .
Section 2. Annual Meeting of Stockholders . . . . . . . . . . .
Section 3. Quorum; Adjourned Meetings and Notice Thereof . . . .
Section 4. Voting . . . . . . . . . . . . . . . . . . . . . . .
Section 5. Proxies . . . . . . . . . . . . . . . . . . . . . . .
Section 6. Special Meetings . . . . . . . . . . . . . . . . . .
Section 7. Notice of Stockholders' Meetings . . . . . . . . . .
Section 8. Waiver of Notice . . . . . . . . . . . . . . . . . .
Section 9. Maintenance and Inspection of Stockholder List . . .
Section 10. Stockholder Action by Written Consent
Without a Meeting . . . . . . . . . . . . . . . .
Section 11. Inspectors of Election . . . . . . . . . . . . . . .
Section 12. Procedure for Stockholders' Meetings . . . . . . . .
Section 13. Order of Business . . . . . . . . . . . . . . . . .
Section 14. Procedures for Bringing Business before
an Annual Meeting . . . . . . . . . . . . . . . .
Section 15. Procedures for Nominating Directors . . . . . . . .
ARTICLE III - Directors . . . . . . . . . . . . . . . . . . . . . . . .
Section 1. Number and Qualification of Directors . . . . . . .
Section 2. Election and Term of Office . . . . . . . . . . . .
Section 3. Resignation and Removal of Directors . . . . . . . .
Section 4. Vacancies . . . . . . . . . . . . . . . . . . . . .
Section 5. Powers . . . . . . . . . . . . . . . . . . . . . . .
Section 6. Place of Directors' Meetings . . . . . . . . . . . .
Section 7. Regular Meetings . . . . . . . . . . . . . . . . . .
Section 8. Special Meetings . . . . . . . . . . . . . . . . . .
Section 9. Quorum . . . . . . . . . . . . . . . . . . . . . . .
Section 10. Action Without Meeting . . . . . . . . . . . . . . .
Section 11. Telephonic Meetings . . . . . . . . . . . . . . . .
Section 12. Meetings and Action of Committees . . . . . . . . .
Section 13. Special Meetings of Committees . . . . . . . . . . .
Section 14. Minutes of Committee Meetings . . . . . . . . . . .
Section 15. Compensation of Directors . . . . . . . . . . . . .
Section 16. Indemnification . . . . . . . . . . . . . . . . . .
</TABLE>
i
<PAGE> 3
ARTICLE IV - Officers . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1. Officers . . . . . . . . . . . . . . . . . . . . . .
Section 2. Election of Officers . . . . . . . . . . . . . . . .
Section 3. Subordinate Officers . . . . . . . . . . . . . . . .
Section 4. Removal and Resignation of Officers . . . . . . . .
Section 5. Vacancies in Offices . . . . . . . . . . . . . . . .
Section 6. Chairman of the Board . . . . . . . . . . . . . . .
Section 7. Vice Chairman of the Board . . . . . . . . . . . . .
Section 8. President . . . . . . . . . . . . . . . . . . . . .
Section 9. Vice President . . . . . . . . . . . . . . . . . . .
Section 10. Secretary . . . . . . . . . . . . . . . . . . . . .
Section 11. Chief Financial Officer . . . . . . . . . . . . . .
Section 12. Treasurer and Controller . . . . . . . . . . . . . .
ARTICLE V - Certificates of Stock . . . . . . . . . . . . . . . . . . .
Section 1. Certificates . . . . . . . . . . . . . . . . . . . .
Section 2. Signatures on Certificates . . . . . . . . . . . . .
Section 3. Statement of Stock Rights, Preferences, Privileges . .
Section 4. Lost Certificates . . . . . . . . . . . . . . . . .
Section 5. Transfers of Stock . . . . . . . . . . . . . . . . .
Section 6. Fixing Record Date . . . . . . . . . . . . . . . . .
Section 7. Registered Stockholders . . . . . . . . . . . . . .
ARTICLE VI - General Provisions - Dividends . . . . . . . . . . . . . .
Section 1. Dividends . . . . . . . . . . . . . . . . . . . . .
Section 2. Payment of Dividends; Directors' Duties . . . . . .
Section 3. Checks . . . . . . . . . . . . . . . . . . . . . . .
Section 4. Corporate Contracts and Instruments . . . . . . . .
Section 5. Fiscal Year . . . . . . . . . . . . . . . . . . . .
Section 6. Manner of Giving Notice . . . . . . . . . . . . . .
Section 7. Waiver of Notice . . . . . . . . . . . . . . . . . .
Section 8. Annual Statement . . . . . . . . . . . . . . . . . .
ARTICLE VII - Amendments . . . . . . . . . . . . . . . . . . . . . . . .
Section 1. Amendment by Directors . . . . . . . . . . . . . . .
Section 2. Amendment by Stockholders . . . . . . . . . . . . .
ii
<PAGE> 4
BYLAWS
OF
BJ SERVICES COMPANY
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at
such place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors and stated in the notice
of the meeting.
Section 2. An annual meeting of stockholders shall be
held on the fourth Thursday in January in each year, if not a legal holiday,
and if a legal holiday, then on the next business day following, at 2:00 p.m.
or at such other date and time as may be determined from time to time by
resolution adopted by the Board of Directors, for the purpose of electing,
subject to Article III, Section 17 hereof, one class of the directors of the
Corporation, and transacting such other business as may properly be brought
before the meeting.
Section 3. A majority of the stock issued and outstanding and
entitled to vote at any meeting of stockholders, the holders of which are
present in person or represented by proxy, without regard to class or series,
shall constitute a quorum for the transaction of business except as otherwise
provided by law, by the Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), or by these Bylaws. A quorum, once
established, shall not be broken by the withdrawal of enough votes to leave
less than a quorum and the votes present may continue to transact business
until adjournment provided that any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, a majority of the voting stock represented in person or by
proxy may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally noticed. If the adjournment
<PAGE> 5
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote thereat.
Section 4. When a quorum is present at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy and entitled to vote shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of the statutes or the Certificate of Incorporation or these Bylaws, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 5. At each meeting of the stockholders, each
stockholder having the right to vote may vote in person or may authorize
another person or persons to act for him by proxy appointed by an instrument in
writing subscribed by such stockholder and bearing a date not more than three
years prior to said meeting, unless said instrument provides for a longer
period. All proxies must be filed with the Secretary of the Corporation at the
beginning of each meeting in order to be counted in any vote at the meeting. A
proxy shall be deemed signed if the stockholder's name is placed on the proxy
(whether by manual signature, telegraphic transmission or otherwise) by the
stockholder or the stockholder's attorney in fact. Except as otherwise set
forth in the Certificate of Incorporation, each stockholder shall have one vote
for each share of stock having voting power, registered in his name on the
books of the Corporation on the record date set by the Board of Directors as
provided in Article V, Section 6 hereof.
Section 6. Special meetings of the stockholders, for any
purpose, or purposes, unless otherwise prescribed by statute or by the
Certificate of Incorporation, may be called at any time by the Board of
Directors or by a committee of the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as
provided in a resolution of the Board of Directors or in these Bylaws, include
the power to call such meetings. Special meetings of stockholders of the
corporation may not be called by any other person or persons. Business
transacted at any special meeting of stockholders shall be limited to the
purposes stated in the notice.
Section 7. Any notice requested to be given to stockholders
by statute, the Certificate of Incorporation or these Bylaws, including notice
of any meeting of stockholders, shall be given personally, by first-class mail
or by telegraphic communication, charges prepaid, addressed to the stockholder
at the address of such stockholder appearing on the books of the Corporation or
given by the stockholder to the Corporation for the purpose of notice. If no
such address appears on the Corporation's books or has been so given, notice
shall be deemed to have been given if sent by first-class mail or telegraphic
communication to the Corporation's principal executive office, or if published
at least once in a newspaper of general circulation in the county where such
principal executive office is located. Notice shall be deemed to have been
given at the time when delivered personally or deposited in the mail or sent by
telegram.
-2-
<PAGE> 6
If any notice addressed to a stockholder at the address of
such stockholder appearing on the books of a Corporation is returned to the
Corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the stockholder
at such address, all further notices shall be deemed to have been duly given
without further mailing if the same shall be available to the stockholder upon
written demand of the stockholder at the principal executive office of the
Corporation for a period of one year from the date of the giving of such
notice.
Section 8. Attendance of a person at a meeting shall
constitute a waiver of notice to such person of such meeting, except when the
person objects at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened, or objects to
the consideration of matters not included in the notice of the meeting.
Section 9. The officer or agent who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where their meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept open at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine such list or
to vote at any meetings of stockholders.
Section 10. No action shall be taken by stockholders except
at an annual or special meeting of stockholders, and stockholders may not act
by written consent.
Section 11. Before any meeting of stockholders, the Board of
Directors may appoint any persons other than nominees for office to act as
inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the chairman of the meeting may, and on the request
of any stockholder or a stockholder's proxy shall, appoint inspectors of
election at the meeting. The number of inspectors shall be either one or
three. If inspectors are appointed at a meeting on the request of one or more
stockholders or proxies, the holders of a majority of shares or their proxies
present at the meeting shall determine whether one or three inspectors are to
be appointed. If any person appointed as inspector fails to appear or fails or
refuses to act, the chairman of the meeting may, and upon the request of any
stockholder or a stockholder's proxy shall, appoint a person to fill such
vacancy.
-3-
<PAGE> 7
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and
validity voting power of each, the shares represented at the meeting,
the existence of a quorum, and the authenticity,
(b) Receive votes or ballots;
(c) Hear and determine all challenges and questions in
any way arising in connection with the right to vote;
(d) Count and tabulate all votes;
(e) Determine when the polls shall close;
(f) Determine the results; and
(g) Do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.
Section 12. Meetings of the stockholders shall be presided
over by the Chairman of the Board of Directors, or in his absence, by the Vice
Chairman, the President or by any Vice President, or, in the absence of any of
such officers, by a chairman to be chosen by a majority of the stockholders
entitled to vote at the meeting who are present in person or by proxy. The
Secretary, or, in his absence, any person appointed by the Chairman, shall act
as secretary of all meetings of the stockholders.
Section 13. The order of business at all meetings of
stockholders shall be as determined by the chairman of the meeting.
Section 14. Notwithstanding anything in these Bylaws to the
contrary, no business shall be conducted at an annual meeting of the
stockholders except in accordance with the procedures hereinafter set forth in
this Section 14; provided, however, that nothing in this Section 14 shall be
deemed to preclude discussion by any stockholder of any business properly
brought before the annual meeting in accordance with said procedures.
At an annual meeting of the stockholders, only such business
shall be conducted as shall have been properly brought before the meeting. To
be properly brought before an annual meeting, business must be (1) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the business, (2) otherwise properly brought before the meeting by or at the
direction of the business, or (3) otherwise properly brought before the meeting
by a stockholder. In addition to any other applicable requirements, for
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice must be delivered to
or mailed
-4-
<PAGE> 8
and received at the principal executive offices of the Corporation
not less than 30 days not more than 60 days prior to the meeting as originally
scheduled; provided, however, that in the event that less than 40 days notice
of public notice disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day
on which such notice of the date of the annual meeting was mailed or such
public disclosure was made. Any adjournment(s) or postponement(s) of the
original meeting whereby the meeting will reconvene within 30 days from the
original date shall be deemed for purposes of notice to be a continuation of
the original meeting and no business may be brought before any such reconvened
meeting unless timely notice of such business was given to the Secretary of the
Corporation for the meeting as originally scheduled. A stockholder's notice to
the Secretary shall set forth as to each matter the stockholder proposes to
bring before the annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and their reasons for conducting such
business at the annual meeting, (ii) the name and record address of the
stockholder proposing such business, (iii) the class and number of shares of
the Corporation which are beneficially owned by the stockholder, and (iv) any
material interest of the stockholder in such business.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 14, and if
he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Section 15. Notwithstanding anything in these Bylaws to the
contrary, only persons who are nominated in accordance with the procedures
hereinafter set forth in this Section 15 shall be eligible for election as
directors of the Corporation.
Nominations of persons for election to the Board of Directors
of the Corporation may be made at a meeting of stockholders only (1) by or at
the direction of the Board of Directors of (2) by any stockholder of the
Corporation entitled to vote for the election of directors at the meeting who
complies with the notice procedures set forth in this Section 15. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation
not less than 30 days nor more than 60 days prior to the meeting; provided,
however, that in the event that less than 40 days notice or prior public
disclosure of the date of the meeting is given or made to stockholders, notice
by the stockholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Any adjournment(s)
or postponement(s) of the original meeting whereby the meeting will reconvene
within 30 days from the original date shall be deemed for purposes of notice to
be a continuation of the original meeting and no nominations by a shareholder
of persons to be elected directors of the Corporation may be made at any such
reconvened meeting other than pursuant to a notice that was timely for the
meeting on the date originally scheduled. Such stockholder's notice shall set
forth: (i) as to each person whom the stockholder proposes to nominate for
election or re-election as a director, all information relating to such person
that is required to be
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disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, or any successor
regulation thereto (including such person's written consent to being named in
the proxy statement as a nominee and to serving as a director if elected); and
(ii) as to the stockholder giving the notice (A) the name and address, as they
appear on the Corporation's books, of such stockholder, and (B) the class and
number of shares of the Corporation which are beneficially owned by such
stockholder. At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a director shall furnish to the
Secretary of the Corporation that information required to be set forth in a
stockholder's notice of nomination which pertains to the nominee.
The Chairman of the meeting shall, if the facts warrant,
determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by this Section 15, and if he should
so determine, he shall so declare to the meeting and the defective nomination
shall be disregarded.
ARTICLE III
DIRECTORS
Section 1. The Board of Directors shall consist of a minimum
of four (4) and a maximum of nine (9) directors. The number of directors shall
be fixed from time to time within the minimum and the maximum number
established by the then elected Board of Directors. The number of directors
until changed by resolution of the Board shall be four (4). The maximum
number of directors may not be increased by the Board of Directors to exceed
nine without the affirmative vote of 75% of the members of the entire Board.
The directors need not be stockholders. No officer of the Corporation may
serve on a board of directors of any company having a present or retired
employee on the Corporation's Board of Directors. No person may stand for
election as a director if within the previous one (1) year he has resigned from
the Board as a result of the tenure provisions of Article III, Section 3 hereof
regarding service for more than 10, 11 or 12 consecutive years on the Board.
No person associated with an organization whose services are contracted by the
Corporation shall serve on the Corporation's Board of Directors, provided
however that this prohibition may be waived by a majority of the members of the
whole Board if the Board in its judgment determines that such waiver would be
in the best interest of the Corporation.
Section 2. The Board of Directors shall be divided into three
classes, Class I, Class II and Class III. The number of directors in each
class shall be the whole number contained in the quotient arrived at by
dividing the authorized number of directors by three, and if a fraction is also
contained in such quotient then if such fraction is one-third (1/3), the extra
director shall be a member of Class III, and if the fraction is two-thirds
(2/3), one of the extra directors shall be a number of Class III and the other
a member of Class II. Each director shall serve for a term ending on the date
of the third annual meeting following the annual meeting at which such director
was elected; provided, however, that the directors initially appointed to Class
I shall serve for a term ending on the date of the first annual meeting next
following September 30, 1990, the directors initially appointed to Class II
shall serve for a term ending on the date of the second annual meeting
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next following September 30, 1990, and the directors initially appointed to
Class III shall serve for a term ending on the date of the third annual meeting
next following September 30, 1990. One class of the directors shall be elected
at each annual meeting of the stockholders. If any such annual meeting is not
held for the directors are not elected thereat, the directors may be elected at
any special meeting of stockholders held for that purpose. All directors shall
hold office until their respective successors are elected and qualified or
until their earlier death, resignation or removal.
Section 3. Directors who are employees of the Corporation
must resign from the Board of Directors at the time of any diminution in their
duties or responsibilities as an officer, at the time they leave the employ of
the Corporation for any reason or on their 70th birthday. A director's term of
office shall automatically terminate on the date of the annual meeting of
stockholders following: (i) his 70th birthday; (ii) the third anniversary of
his retirement from his principal occupation; (iii) unless he is an officer of
the Corporation, the date on which he has served on the Corporation's Board of
Directors for a consecutive period of (a) twelve (12) complete years or more
prior to the Corporation's 1991 annual meeting of stockholders, (b) eleven (11)
complete years or more prior to the Corporation's 1992 annual meeting
of stockholders, or (c) commencing with the 1993 annual meeting of
stockholders, a total of ten (10) complete years or more thereafter; (iv) any
fiscal year in which he has failed to attend at least 66% of the meetings of
the Board of Directors and any committees of the Board of Directors on which
such director serves; or (v) the first anniversary of any change in his
employment (other than a promotion or lateral movement within the same
organization). The requirements of sections 3(i) and 3(ii) of this Article III
shall not apply to a director who was 68 years old and serving on the Company's
Board of Directors on December 1, 1995. The requirements of Section 3(v) of
Article III may be waived by a majority of the members of the whole Board
(excluding the director whose resignation would otherwise be required) if the
Board in its judgment determines that such waiver would be in the best interest
of the Corporation. Any director may be removed for cause by the holders of a
majority of the shares of the Corporation entitled to vote in the election of
directors; stockholders may not remove any director without cause. The Board of
Directors may not remove any director for or without cause, and no
recommendation by the Board of Directors that a director be removed for cause
may be made to the stockholders except by the affirmative vote of not less than
75% of the members of the whole Board; provided that the Board may remove any
director who fails to resign as required by the provisions of these Bylaws.
Section 4. Except as otherwise provided by statute or the
Certificate of Incorporation, in the case of any increase in the number of
directors, such additional director or directors shall be proposed for election
to terms of office that will most nearly result in each Class of directors
containing one-third of the entire number of members of the whole Board, and,
unless such position is to be filled by a vote of the stockholders at an annual
or special meeting, shall be elected by a majority vote of the directors in
such Class or Classes, voting separately by Class. In the case of any vacancy
in the Board of Directors, however created, the vacancy or vacancies shall be
filled by a majority vote of the directors remaining in the Class in which the
vacancy occurs or, if only one such director remains, by such director. In the
event one or more directors shall resign, effective at a future date, such
vacancy or vacancies shall be filled as provided herein. Directors so chosen
or elected shall hold office for the remaining term of the directorship to
which appointed. Any director elected or chosen as provided herein shall serve
for the unexpired term of office or until his successor is elected and
qualified or until his earlier death, resignation or removal.
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In the event of any decrease in the authorized number of
directors, (a) each director then serving as such shall nevertheless continue
as a director of the class of which he is a member until the expiration of this
current term, or his prior death, resignation or removal, and (b) the newly
eliminated directorships resulting from such decrease shall be apportioned by
the board of directors to such class or classes as shall, so far as possible,
bring the number of directors in the respective classes into conformity with
the formula in Section 2 hereof as applied to the new authorized number of
directors.
Section 5. The property and business of the Corporation shall
be managed by or under the direction of its Board of Directors. In addition to
the powers and authorities by these Bylaws expressly conferred upon them, the
Board may exercise all such powers of the corporation and do all such lawful
acts and things as are not by statute, by the Certificate of Incorporation or
by these Bylaws directed or required to be exercised or done by the
stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 6. The directors may hold their meetings and have one
or more office, and keep the books of the Corporation outside the state of
Delaware.
Section 7. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to time be
determined by the Board. Except as otherwise provided by statute, any business
may be transacted at any regular meeting of the Board of Directors.
Section 8. Special meetings of the Board of Directors may be
called by the Chairman of the Board, the Vice Chairman or the President on at
least forty-eight hours notice to each director. Special meetings shall be
called by the President or the Secretary in like manner and on like notice on
the written request of any two directors unless the Board consists of only one
director, in which case special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of the sole
director.
Section 9. At all meetings of the Board of Directors a
majority of the authorized number of directors shall be necessary and
sufficient to constitute a quorum for the transaction of business, and the vote
of a majority of the directors present at any meeting at which there is a
quorum, shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute, by the Certificate of Incorporation or by
these Bylaws. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present. If only one director is authorized, such sole director shall
constitute a quorum. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of directors, if
any action is approved by at least a majority of the required quorum for such
meeting.
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Section 10. Unless otherwise restricted by statute, the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee
thereof may be taken without a meeting, if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of committee.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
COMMITTEES OF DIRECTORS
Section 12. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each such
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. If no alternate members have been appointed, the committee
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. The Board of Directors shall, by resolution
passed by a majority of the whole Board, designate one member of each committee
as chairman of such committee. Each such chairman shall hold such office for a
period not in excess of five years, and shall upon surrender of such
chairmanship resign from membership on such committee. Any such committee, to
the extent provided in the resolution of the Board of Directors, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, but no such
committee shall have the power or authority to authorize an amendment to the
Certificate of Incorporation, adopt an agreement of merger or consolidation,
recommend to the stockholders the sale, lease or exchange of all or
substantially all of the Corporation's property and assets, recommend to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amend the Bylaws of the Corporation; and, unless the resolution or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
Section 13. Special meetings of committees may be called by
the Chairman of such committee, the Chairman of the Board or the
President, on at least 48 hours notice to each member and alternate member.
Alternate members shall have the right to attend all meetings of the committee.
The Board of Directors may adopt rules for the government of any committee
not inconsistent with the provisions of these Bylaws. If a committee is
comprised of an odd number of members, a quorum shall consist of a majority of
that number. If the committee is comprised of an even number of meetings, a
quorum shall consist of one-half of that number. If a committee is comprised
of two members, a quorum shall consist of both members.
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Section 14. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when requested.
COMPENSATION OF DIRECTORS
Section 15. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
INDEMNIFICATION
Section 16. (a) The Corporation shall indemnify every person
who is or was a party or is or was threatened to be made a party to any action,
suit, or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation or any of its direct or indirect wholly-owned subsidiaries
or, while a director, officer, employee or agent of the Corporation or any of
its direct or indirect wholly-owned subsidiaries, is or was serving at the
request of the Corporation or any of its direct or indirect wholly-owned
subsidiaries, as a director, officer, employee, agent or trustee of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including counsel fees), judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding, to the full extent permitted
by applicable laws provided that the Corporation shall not be obligated to
indemnify any such person against any such action, suit or proceeding which is
brought by such person against the Corporation or any of its direct or indirect
wholly-owned subsidiaries or the directors of the Corporation or any of its
direct or indirect wholly-owned subsidiaries, other than an action brought by
such person to enforce his rights to indemnification hereunder, unless a
majority of the Board of Directors of the Corporation shall have previously
approved the bringing of such action, suit or proceeding. The Corporation
shall indemnify every person who is or was a party or is or was threatened to
be made a party to any action, suit, or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was
licensed to practice law and an employee (including an employee who is or was
an officer) of the Corporation or any of its direct or indirect wholly-owned
subsidiaries and, while acting in the course of such employment committee or is
alleged to have committed any negligent acts, errors or omissions in rendering
professional legal services at the request of the Corporation or pursuant
to his employment (including, without limitation, rendering written or oral
legal opinions to third parties) against expenses (including counsel fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, to the full
extent permitted by applicable law; provided that the Corporation shall not be
obligated to indemnify any such person against any action, suit or proceeding
arising out of any adjudicated criminal, dishonest or fraudulent acts, errors
or omissions of such person or any adjudicated willful, intentional or
malicious acts, errors or omissions of such person.
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(b) Expenses incurred by an officer or director of the
Corporation or any of its direct or indirect wholly-owned subsidiaries in
defending a civil or criminal action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Corporation as authorized in this Section
16. Such expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
(c) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 16 shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any provision of law, the
Corporation's Certificate of Incorporation, the Certificate of Incorporation or
bylaws or other governing documents of any direct or indirect wholly-owned
subsidiary of the Corporation, or any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding any of the
positions or having any of the relationships referred to in this Section 16.
ARTICLE IV
OFFICERS
Section 1. The officers of the Corporation shall be a
Chairman of the Board, a President, a Chief Financial Officer, a Vice
President, a Secretary, a Treasurer and a Controller. The Corporation may also
have, at the discretion of the Board of Directors, a Vice Chairman of the
Board, one or more additional Vice Presidents, and such other officers as may
be appointed in accordance with the provisions of Section 3 of this Article.
Section 2. The officers of the Corporation, except such
officers as may be appointed in accordance with the provisions of Section 3 or
Section 5 of this Article, shall be chosen by the Board of Directors, and each
shall serve at the pleasure of the Board, subject to the rights, if any, of any
officer under any contract of employment.
Section 3. The Board of Directors may appoint, and may
empower the President to appoint, such other officers as the business of the
Corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in the Bylaws or as the
Board of Directors may from time to time determine.
Section 4. Any officer may be removed, either with or without
cause, by the Board of Directors, at any regular or special meeting thereof, or
except in case of an officer chosen by the Board of Directors, by any officer
upon whom such power of removal may be conferred by the Board of Directors,
provided that such removal shall not prejudice the remedy of such officer for
breach of any contract of employment.
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Any officer may resign at any time by giving written notice to
the Corporation. Any such resignation shall take effect on receipt of such
notice or at any later time specified therein. Unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective. Any such resignation is without prejudice to the rights, if any, of
the Corporation under any contract to which the officer is a party.
Section 5. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in
the manner prescribed in these Bylaws for regular appointments to such office.
Section 6. The Chairman of the Board shall, if present,
preside at all meetings of the Board of Directors and of the stockholders, and
shall exercise and perform such other powers and duties as may be from time to
time assigned to him by the Board of Directors or prescribed by the Bylaws.
Section 7. The Vice Chairman of the Board shall exercise and
perform such powers and duties as may be from time to time assigned to him by
the Board of Directors or prescribed in these Bylaws. In the absence of the
Chairman of the Board, the Vice Chairman of the Board shall preside at all
meetings of the stockholders and the Board of Directors.
Section 8. The President shall be the chief executive officer
of the Corporation and shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business and the
officers of the Corporation. In the absence of the Chairman of the Board and
the Vice Chairman of the Board, the President shall preside at all meetings of
the stockholders and the Board of Directors. He shall have the general powers
and duties of management usually vested in the office of President of a
Corporation, and shall have such other powers and duties as may be prescribed
by the Board of Directors or the Bylaws.
Section 9. In the absence or disability of the President, the
Vice Presidents, if any, in order of their rank as fixed by the Board of
Directors, or if not ranked, the Vice President designated by the President,
shall perform all the duties of the President, and when so acting shall have
all the powers of, and be subject to all the restrictions upon, the President.
The Vice Presidents shall have such other powers and perform such other duties
as from time to time may be prescribed for them respectively by the Board of
Directors, these Bylaws or the President.
Section 10. The Secretary shall keep or cause to be kept, at
the principal office or such other place as the Board of Directors may order, a
book of minutes of all meetings and actions or directors, committees of
directors and stockholders, with the time and place of holding, whether
regular or special, and, if special, how authorized, the notice thereof
given, the names of those present at directors' and committee meetings, the
number of shares present or represented at stockholders' meetings, and the
proceedings thereof.
The Secretary shall keep, or cause to be kept, at the
principal office or at the office of the Corporation's transfer agent or
registrar, a share register, or a duplicate share register, showing
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the names of all stockholders and their addresses, the number and classes of
shares by each, the number and date of certificates issued for the same, and the
number and date of cancellation of every certificate surrendered for
cancellation.
The Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and of the Board of Directors required by these
Bylaws or by law to be given, and he shall keep the seal of the Corporation, if
one be adopted, in safe custody, and shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or by the
Bylaws.
Section 11. The Chief Financial Officer shall keep and
maintain, or cause to be kept and maintained, adequate and correct books and
records of accounts of the properties and business transactions of the
Corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings and shares. The books
of account shall be open at all times to inspection by any director.
The Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositaries as may be designated by the Board of Directors. He shall disburse
the funds of the Corporation as may be ordered by the Board of Directors, shall
render to the President and Directors, whenever they request it, an account of
all of his transactions as Chief Financial Officer and of the financial
condition of the Corporation, and shall have other powers and perform such
other duties as may be prescribed by these Board of Directors or these Bylaws.
Section 12. The Treasurer and the Controller shall each have
such powers and perform such duties as from time to time may be prescribed for
him by the Board of Directors, the President or these Bylaws.
ARTICLE V
CERTIFICATE OF STOCK
Section 1. Every holder of stock of the Corporation shall be
entitled to have a certificate signed by, or in the name of the Corporation by,
the Chairman or Vice Chairman of the Board of Directors, or the President or a
Vice President, and by the Secretary or an Assistant Secretary, if one be
appointed, or the Treasurer or an Assistant Treasurer, if one be appointed,
of the Corporation, certifying the number of shares represented by the
certificate owned by such stockholder in the Corporation.
Section 2. Any or all of the signatures on the certificate
may be a facsimile. In case any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a certificate shall
have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
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Section 3. If the Corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series or stock, provided
that, except as otherwise provided by statute, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
LOST, STOLEN OR DESTROYED CERTIFICATES
Section 4. The Board of Directors, the Secretary and the
Treasurer each may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the owner of such certificate, or his legal representative.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to furnish the Corporation a bond in such form and
substance and with such surety as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the Corporation
alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 5. Upon surrender to the Corporation, or the transfer
agent of the Corporation, of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 6. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of the
stockholders, or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix a
record date which shall not be more than 60 nor less than 10 days before the
date of such meeting, nor more than 60 days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
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REGISTERED STOCKHOLDER
Section 7. The Corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in fact thereof
and, accordingly, shall not be bound to recognize any equitable or other claim
or interest in such share on the part of any other person, whether or not it
shall have express or other notice thereof, save as expressly provided by the
laws of the State of Delaware.
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property or in
shares of the Corporation's capital stock, subject to the provisions of the
Certificate of Incorporation.
Section 2. Before declaration of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such sum
or sums as the Board of Directors from time to time, in their absolute
discretion, thinks proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the Corporation, and the Board of Directors may
thereafter abolish any such reserve in its absolute discretion.
CHECKS
Section 3. All checks, drafts or other orders for payment of
money, notes or other evidences of indebtedness, issued in the name of or
payable to the Corporation shall be signed by such officer or officers as the
Board of Directors or the President or any Vice President, acting jointly, may
from time to time designate.
Section 4. The President, any Vice President, the Secretary
or the Treasurer may enter into contracts and execute instruments on behalf of
the Corporation. The Board of Directors, the President or any Vice President
may authorize any officer or officers, and any employee or employees or agent
or agents of the Corporation or any of its subsidiaries, to enter into any
contract or execute any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
FISCAL YEAR
Section 5. The fiscal year of the Corporation shall be
October 1 through September 30, unless otherwise fixed by resolution of the
Board of Directors.
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NOTICES
Section 6. Whenever, under the provisions of the statutes,
the Certificate of Incorporation or these Bylaws, notice is required to be
given to any director, it shall not be construed to require personal notice,
but such notice may be given in writing, by mail, addressed to such director,
at his address as it appears on the records of the Corporation (unless prior to
the mailing of such notice he shall have filed with the Secretary a written
request that notices intended for him be mailed to some other address, in which
case such notice shall be mailed to the address designated in the request) with
postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail; provided,
however, that, in the case of notice of a special meeting of the Board of
Directors, if such meeting is to be held within seven calendar days after the
date of such notice, notice shall be deemed given as of the date such notice
shall be accepted for delivery by a courier service that provides "opening of
business next day" delivery, so long as at least one attempt shall have been
made, on or before the date such notice is accepted for delivery by such
courier service, to provide notice by telephone to each director at his
principal place of business and at his principal residence. Notice to
directors may also be given by telegram, by personal delivery or telephone.
Section 7. Whenever any notice is required to be given under
the provisions of the statutes, the Certificate of Incorporation or these
Bylaws, a waiver thereof in writing, or by telegraph, cable or other written
form of recorded communication, signed by the person or persons entitled to
said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ANNUAL STATEMENT
Section 8. The Board of Directors shall present at each
annual meeting, and at any special meeting of the stockholders when called for
by vote of the stockholders, a full and clear statement of the business and
condition of the Corporation.
ARTICLE VII
AMENDMENTS
Section 1. Except any amendment to this Article VII and to
Article II, Section 6, Article II, Section 10, Article III, Section 1 (as it
relates to increases in the number of directors), Article III, Section 2, the
last sentence of Article III, Section 3 (as it relates to removal of
directors), Article III, Section 4, Article III, Section 16 and Article VI,
Section 6 of these Bylaws, or any of such provisions, which shall require
approval by the affirmative vote of directors representing at least 75% of the
number of directors provided for in accordance with Article III, Section 1, and
except as otherwise expressly provided in a bylaw adopted by the stockholders
as hereinafter provided, the directors, by the affirmative vote of a majority
of the whole Board and without the assent or vote of the stockholders, may at
any meeting, make, repeal, alter, amend or rescind any of these Bylaws,
provided the substance of the proposed amendment or other action shall have
been stated in a notice of the meeting.
-16-
<PAGE> 20
Section 2. These Bylaws may not be altered, amended or
rescinded, and new Bylaws may not be adopted, by the stockholders of the
Corporation except by the vote of the holders of not less than 75% of the total
voting power of all shares of stock of the Corporation entitled to vote in the
election of directors, considered for such purpose as one class.
-17-
<PAGE> 1
EXHIBIT 4.6
________________________________________________________________________________
BJ SERVICES COMPANY
and
FIRST CHICAGO TRUST COMPANY OF NEW YORK,
Warrant Agent
________________________________________________________________________________
Warrant Agreement
Dated as of April 13, 1995
________________________________________________________________________________
<PAGE> 2
Table of Contents
-----------------
Page
----
Section 1. Certain Definitions......................................... 1
Section 2. Appointment of Warrant Agent................................ 2
Section 3. Form of Warrant Certificates................................ 2
Section 4. Countersignature and Registration........................... 2
Section 5. Transfer, Split Up, Combination and Exchange
of Warrant Certificates; Mutilated,
Destroyed, Lost or Stolen Warrant
Certificates.............................................. 3
Section 6. Exercise of BJ Warrants; Exercise Price;
Expiration Date of BJ Warrants............................ 3
Section 7. Cancellation and Destruction of Warrant
Certificates.............................................. 4
Section 8. Reservation and Availability of Shares of BJ
Common Stock or Cash...................................... 5
Section 9. BJ Common Stock Record Date................................. 6
Section 10. Adjustment of Exercise Price, Number of
Shares of BJ Common Stock or Number of BJ
Warrants.................................................. 6
Section 11. Certification of Adjusted Exercise Price or
Number of Shares of BJ Common Stock....................... 12
Section 12. Reclassification, Consolidation, Merger,
Combination, Sale or Conveyance........................... 13
Section 13. Fractional BJ Warrants and Fractional Shares
of BJ Common Stock........................................ 14
Section 14. Right of Action............................................. 15
Section 15. Agreement of Warrant Certificate Holders.................... 15
Section 16. Warrant Certificate Holder Not Deemed a
Stockholder............................................... 15
Section 17. Concerning the Warrant Agent................................ 16
Section 18. Merger or Consolidation or Change of Name of
Warrant Agent............................................. 16
<PAGE> 3
Page
----
Section 19. Duties of Warrant Agent..................................... 17
Section 20. Change of Warrant Agent..................................... 19
Section 21. Issuance of New Warrant Certificates........................ 19
Section 22. Purchase of BJ Warrants by BJ............................... 20
Section 23. Notice of Proposed Actions.................................. 20
Section 24. Notices..................................................... 21
Section 25. Supplements and Amendments.................................. 21
Section 26. Successors.................................................. 22
Section 27. Benefits of this Agreement.................................. 22
Section 28. Governing Law............................................... 22
Section 29. Counterparts................................................ 22
Section 30. Captions.................................................... 22
<PAGE> 4
WARRANT AGREEMENT
This Agreement, dated as of April 13, 1995, between
BJ SERVICES COMPANY, a Delaware corporation ("BJ"), and FIRST CHICAGO
TRUST COMPANY OF NEW YORK, a New York limited purpose trust company (the
"Warrant Agent").
W I T N E S S E T H
WHEREAS, BJ has entered into an Agreement and Plan of Merger,
dated as of November 17, 1994, as amended (the "Merger Agreement"), with The
Western Company of North America, a Delaware corporation ("Western"), providing
for the merger of Western into BJ (the "Merger") pursuant to the terms of the
Merger Agreement; and
WHEREAS, the Merger Agreement provides that all of the
outstanding shares of common stock, par value $.10 per share, of Western,
except as provided in the Merger Agreement, shall be converted into, exchanged
for and represent the right to receive consideration specified in the Merger
Agreement, which consideration is to include warrants (the "BJ Warrants") to
purchase BJ Common Stock (as hereinafter defined) upon the terms and subject to
the conditions hereinafter set forth; and
WHEREAS, BJ wishes the Warrant Agent to act on behalf of BJ, and
the Warrant Agent is willing so to act, in connection with the issuance,
transfer, exchange and exercise of BJ Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement,
the following terms have the meanings indicated:
(a) "BJ Common Stock" shall mean the Common Stock, par value
$.10 per share, of BJ.
(b) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in New York are
authorized or obligated by law or executive order to close.
(c) "Close of Business" on any given date shall mean 5:00
P.M., New York City time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York City
time, on the next succeeding Business Day.
<PAGE> 5
(d) "Closing Date" shall have the meaning ascribed to it in
the Merger Agreement.
(e) "Person" shall mean an individual, corporation,
association, partnership, joint venture, trust, unincorporated
organization, government or political subdivision thereof or
governmental agency or other entity.
Section 2. Appointment of Warrant Agent. BJ hereby appoints
the Warrant Agent to act as agent for BJ in accordance with the terms and
conditions hereof, and the Warrant Agent hereby accepts such appointment.
BJ may from time to time appoint such Co-Warrant Agents as it may, in its sole
discretion, deem necessary or desirable.
Section 3. Form of Warrant Certificates. The Warrant
Certificates (together with the form of election to purchase Common Stock and
the form of assignment to be printed on the reverse thereof) shall be
substantially in the form of Exhibit 1 hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as BJ may deem appropriate and as are not inconsistent with the
provisions of this Agreement and the Merger Agreement or as may be required to
comply with any law or with any rule or regulation made pursuant thereto, or to
conform to usage. Subject to the provisions of Section 21 hereof, the Warrant
Certificates, whenever issued, shall be dated the Closing Date and on their
face shall entitle the holders thereof to purchase such number of shares of
Common Stock as shall be set forth therein at $30 per share (the "Exercise
Price"), but the number of such shares and the Exercise Price shall be subject
to the adjustments as provided herein.
Section 4. Countersignature and Registration. The Warrant
Certificates shall be executed on behalf of BJ by its Chairman, its President
or a Vice President, either manually or by facsimile signature, and have
affixed thereto BJ's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of BJ, either manually or by facsimile
signature. The Warrant Certificate shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of BJ who shall have signed any of the Warrant Certificates
shall cease to be such officer of BJ before countersignature by the Warrant
Agent and issuance and delivery by BJ, such Warrant Certificates, nevertheless,
may be countersigned by the Warrant Agent, issued and delivered with the same
force and effect as though the person who signed such Warrant Certificate had
not ceased to be such officer of BJ; and any Warrant Certificate may be signed
on behalf of BJ by any person who, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of BJ to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement
any such person was not such an officer.
2
<PAGE> 6
The Warrant Agent will keep or cause to be kept, at one of its
offices in New York City, books for registration and transfer of the Warrant
Certificates issued hereunder. Such books shall show the names and addresses
of the respective holders of the Warrant Certificates, the number of BJ
Warrants evidenced on its face by each of the Warrant Certificates and the date
of each of the Warrant Certificates.
Section 5. Transfer, Split Up, Combination and Exchange of
Warrant Certificates; Mutilated, Destroyed, Lost or Stolen Warrant
Certificates. Subject to the provisions of Section 13 hereof, at any time
after the close of business on the date hereof, and at or prior to the close of
business on the Expiration Date (as such term is hereinafter defined), any
Warrant Certificate or Warrant Certificates may be transferred, split up,
combined or exchanged for another Warrant Certificate or Warrant Certificates,
entitling the registered holder to purchase a like number of shares of BJ
Common Stock as the Warrant Certificate or Warrant Certificates surrendered
then entitled such holder to purchase. Any registered holder desiring to
transfer, split up, combine or exchange any Warrant Certificate shall make such
request in writing delivered to the Warrant Agent, and shall surrender the
Warrant Certificate or Warrant Certificates to be transferred, split up,
combined or exchanged at the principal office of the Warrant Agent. Thereupon
the Warrant Agent shall countersign and deliver to the person entitled thereto
a Warrant Certificate or Warrant Certificates, as the case may be, as so
requested. BJ may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Warrant Certificates, together with
reimbursement to BJ and the Warrant Agent of all reasonable expenses incidental
thereto.
Upon receipt by BJ and the Warrant Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security in customary form and amount, and reimbursement to BJ and the Warrant
Agent of all reasonable expenses incidental thereto, and upon surrender to the
Warrant Agent and cancellation of the Warrant Certificate if mutilated, BJ will
make and deliver a new Warrant Certificate of like tenor to the Warrant Agent
for delivery to the registered holder in lieu of the Warrant Certificate so
lost, stolen, destroyed or mutilated.
Section 6. Exercise of BJ Warrants; Exercise Price; Expiration
Date of BJ Warrants. (a) Subject to Section 6(c) below, the registered holder
of any Warrant Certificate may exercise the BJ Warrants evidenced thereby in
whole or in part upon surrender of the Warrant Certificate, with the form of
election to purchase on the reverse side thereof duly executed, to the Warrant
Agent at the principal office of the Warrant Agent in New York City, together
with payment of the Exercise Price in
3
<PAGE> 7
immediately available funds for each share of BJ Common Stock as to which the BJ
Warrants are exercised, at any time prior to the close of business on April 13,
2000 (the "Expiration Date").
(b) The Exercise Price for each share of BJ Common Stock
pursuant to the exercise of BJ Warrants shall initially be $30, subject to
adjustment from time to time as provided in Section 10 hereof. The Exercise
Price shall be payable in lawful money of the United States of America.
(c) Upon receipt of a Warrant Certificate, with the form of
election to purchase duly executed, accompanied by payment of the Exercise
Price for the shares to be purchased and an amount equal to any applicable tax
or governmental charge referred to in Section 8 in cash, or by certified check
or bank draft payable to the order of BJ, the Warrant Agent shall thereupon
promptly (i) requisition from any transfer agent of the BJ Common Stock
certificates for the number of whole shares of BJ Common Stock to be purchased,
and BJ hereby irrevocably authorizes its transfer agent to comply with all such
requests, (ii) when appropriate, requisition from BJ the amount of cash to be
paid in lieu of the issuance of fractional shares and (iii) after receipt of
such certificates, cause the same to be delivered to or upon the order of the
registered holder of such Warrant Certificate, registered in such name or names
as may be designated by such holder, and, when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of
such Warrant Certificate. Upon receipt by BJ of a Warrant Certificate at the
principal office of the Warrant Agent, in proper form for exercise, and payment
of the applicable Exercise Price as required hereby, the holder of such Warrant
Certificate shall be deemed to be the holder of record of the shares of BJ
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of BJ shall then be closed or that certificates representing
such shares of BJ Common Stock shall not then be actually delivered to the
holder of such Warrant Certificate.
(d) In case the registered holder of any Warrant Certificate
shall exercise less than all BJ Warrants evidenced thereby, a new Warrant
Certificate evidencing BJ Warrants equivalent to the BJ Warrants remaining
unexercised shall be issued by the Warrant Agent to the registered holder of
such Warrant Certificate or to his duly authorized assigns, subject to the
provisions of Section 13 hereof.
Section 7. Cancellation and Destruction of Warrant Certificates.
All Warrant Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to BJ or to any or its
agents, be delivered to the Warrant Agent for cancellation or in cancelled
form, or, if surrendered to the Warrant Agent, shall be cancelled by it, and no
Warrant Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this
4
<PAGE> 8
Warrant Agreement. BJ shall deliver to the Warrant Agent for cancellation and
retirement, and the Warrant Agent shall so cancel and retire, any other Warrant
Certificate purchased or acquired by BJ otherwise then upon the exercise
thereof. The Warrant Agent shall deliver all cancelled Warrant Certificates to
BJ, or shall, at the written request of BJ, destroy such cancelled Warrant
Certificates, and in such case shall deliver a certificate of destruction
thereof to BJ.
Section 8. Reservation and Availability of Shares of BJ Common
Stock or Cash. BJ covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued shares of Common Stock or its
authorized and issued shares of Common Stock held in its treasury, free from
preemptive rights, the number of shares of BJ Common Stock that will be
sufficient to permit the exercise in full of all outstanding BJ Warrants or keep
sufficient cash available for payment in lieu of BJ Common Stock.
BJ covenants and agrees that it will use its best efforts to
cause the BJ Common Stock issuable upon the exercise of the BJ Warrants to be
listed on the NYSE (as defined below). In addition, BJ covenants and agrees to
use its best efforts to cause the BJ Warrants to be listed on the NYSE. To the
extent that the BJ Warrants cannot be listed on the NYSE, BJ shall use its best
efforts to cause the BJ Warrants to be listed on the NASDAQ (as defined below).
BJ covenants and agrees that it will take all such actions as may
be necessary to insure that all shares of BJ Common Stock delivered upon
exercise of BJ Warrants shall, at the time of delivery of the certificates for
such shares (subject to payment of the Exercise Price as contemplated by
Section 6(c)), be duly authorized, validly issued, fully paid and
nonassessable.
BJ further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the original issuance or delivery of the Warrant
Certificates or certificates evidencing BJ Common Stock upon exercise of the
Warrant Certificate. BJ shall not, however, be required to pay any tax or
governmental charge which may be payable in respect of any transfer involved in
the transfer or delivery of Warrant Certificates or the issuance or delivery of
certificates for BJ Common Stock in a name other than that of the registered
holder of the Warrant Certificate evidencing BJ Warrants surrendered for
exercise or to issue or deliver any certificate for shares of BJ Common Stock
upon the exercise of any BJ Warrants until any such tax or governmental charge
shall have been paid (any such tax or governmental charge being payable by the
holder of such Warrant Certificate at the time of surrender) or until it has
been established to BJ's satisfaction that no such tax or governmental charge
is due.
5
<PAGE> 9
Section 9. BJ Common Stock Record Date. Each person in whose
name any certificate for shares of BJ Common Stock is issued upon the exercise
of BJ Warrants shall for all purposes be deemed to have become the holder of
record for the BJ Common Stock represented thereby on, and such certificate
shall be dated, the date upon which the Warrant Certificate evidencing such BJ
Warrants was duly surrendered and payment of the Exercise Price (and any
applicable transfer taxes) was made; provided, however, that if the date of
such surrender and payment is a date upon which the BJ Common Stock transfer
books of BJ are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding business day on which the BJ Common Stock transfer books of BJ are
open.
Section 10. Adjustment of Exercise Price, Number of Shares of BJ
Common Stock or Number of BJ Warrants. The Exercise Price, the number of
shares covered by such BJ Warrant and the number of BJ Warrants outstanding are
subject to adjustment from time to time as provided in this Section 10.
(a) In the event BJ shall at any time after the date of this
Agreement (i) declare a dividend on shares of BJ Common Stock payable in shares
of any class of capital stock of BJ, (ii) subdivide the outstanding shares of
BJ Common Stock into a greater number of shares of BJ Common Stock, (iii)
combine the outstanding shares of BJ Common Stock into a smaller number of
shares, or (iv) issue any shares of capital stock in a reclassification of
shares of the BJ Common Stock (including any such reclassification in
connection with a consolidation or merger in which BJ is the continuing
corporation), the Exercise Price in effect at the time of the record date for
such dividend or distribution or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any BJ Warrant exercised after such time shall be entitled to receive
the aggregate number and kind of shares of capital stock which, if such BJ
Warrant had been exercised immediately prior to such date and at a time when the
BJ Common Stock transfer books of BJ were open, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification.
(b) In case BJ shall fix a record date for the issuance of
rights, options or warrants to all holders of BJ Common Stock (such rights,
options or warrants not being available to holders of BJ Warrants) entitling
them (for a period expiring within 45 calendar days after such date of issue)
to subscribe for or purchase BJ Common Stock (or securities convertible into or
exercisable or exchangeable for BJ Common Stock), other than Permitted
Issuances (as defined below), at a price per share of BJ Common Stock (or
having a conversion, exercise or exchange price per share of BJ Common Stock,
in the
6
<PAGE> 10
case of a security convertible into or exercisable or exchangeable for
BJ Common Stock) less than the Current Market Price (as defined in Section
10(f)) per share of BJ Common Stock on such record date, the Exercise Price to
be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction of
which the numerator shall be the number of shares of BJ Common Stock
outstanding on such record date plus the number of shares of BJ Common Stock
which the aggregate offering price of the total number of shares of BJ Common
Stock so to be offered (or the aggregate initial conversion, exercise or
exchange price of the convertible, exercisable or exchangeable securities so to
be offered) would purchase at such Current Market Price and of which the
denominator shall be the number of shares of BJ Common Stock outstanding on
such record date plus the number of additional shares of BJ Common Stock to be
offered for subscription or purchase (or into which the convertible,
exercisable or exchangeable securities so to be offered are initially
convertible, exercisable or exchangeable). In case such subscription price may
be paid in a consideration part or all of which shall be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of BJ, whose determination shall be described in a
statement filed with the Warrant Agent. Such adjustment shall be made
successively whenever such a record date is fixed, and in the event that such
rights or warrants are not so issued the Exercise Price shall be adjusted to be
the Exercise Price which would then be in effect if such record date had not
been fixed. For purposes of this paragraph (b), "Permitted Issuances" shall
mean any and all issuances of shares of BJ Common Stock or rights, options or
warrants entitling the holders thereof to subscribe for or purchase BJ Common
Stock (or securities convertible into or exercisable or exchangeable for BJ
Common Stock) pursuant to any stock option, stock purchase or other employee or
director benefit plan of BJ or any of its subsidiaries approved by
stockholders.
(c) In case BJ shall fix a record date for the making of a
dividend or distribution (other than aggregate cash dividends and distributions
not in excess of $.25 per share of BJ Common Stock for the fiscal year ended
September 30, 1995, and then $1.50 for each 12-month period thereafter, payable
out of retained earnings or earned surplus) to all holders of BJ Common Stock
(including any distribution made in connection with a consolidation or merger
in which BJ is the continuing corporation) or evidences of indebtedness or
assets or subscription rights or warrants (excluding those referred to in
Section 10(b)), the Exercise Price to be in effect after such record date shall
be determined by multiplying the Exercise Price in effect immediately prior to
such record date by a fraction of which the numerator shall be the Current
Market Price (as defined in Section 10(f)) per share of BJ Common Stock on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of BJ, whose determination shall be
7
<PAGE> 11
described in a statement filed with the Warrant Agent) of such distribution
applicable to one share of BJ Common Stock, and of which the denominator shall
be such Current Market Price per share of BJ Common Stock. Such adjustment
shall be made successively whenever such a record date is fixed, and in the
event that such distribution is not so made the Exercise Price shall again be
adjusted to be the Exercise Price which would then be in effect if such record
date had not been fixed.
(d) In case a tender offer (a "Tender Offer") made by BJ or
any of its subsidiaries for all or any portion of the BJ Common Stock shall
expire (the "Expiration Time") and the Tender Offer (as amended upon the
expiration thereof) shall require the payment to stockholders based on the
acceptance (up to any maximum specified in the terms of the Tender Offer) of
Purchased Shares (as defined below) of an aggregate of the cash plus other
consideration having a fair market value (as determined by the Board of
Directors) as of the Expiration Time of such Tender Offer that combined with
the aggregate of the cash plus the fair market value (as determined by the
Board of Directors) of consideration payable in respect of any other tender
offer (determined as of the Expiration Time of such other tender offer) by BJ
or any of its subsidiaries for all or any portion of the BJ Common Stock
expiring within the 12 months preceding the expiration of the Tender Offer and
in respect of which no adjustment pursuant to this clause (d) has been made
exceeds 12.5% of the product of the Current Market Price per share of the BJ
Common Stock as of the Expiration Time of the Tender Offer multiplied by the
number of shares of BJ Common Stock outstanding (including any tendered shares)
at the Expiration Time of the Tender Offer, then, and in each such case,
immediately prior to the opening of business on the next Trading Day after the
date of the Expiration Time of the Tender Offer, the Exercise Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Exercise Price immediately prior to close of business on the date of the
Expiration Time of the Tender Offer by a fraction (A) the numerator of which
shall be equal to (x) the product of (i) the Current Market Price per share of
the BJ Common Stock as of the Expiration Time of the Tender Offer and (ii) the
number of shares of BJ Common Stock outstanding (including any tendered shares)
at the Expiration Time of the Tender Offer less (y) the amount of cash plus the
fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the acceptance (up to any maximum specified in
the terms of the Tender Offer) of Purchased Shares (as defined below), and (B)
the denominator of which shall be equal to the product of (x) the Current
Market Price per share of the BJ Common Stock as of the Expiration Time of the
Tender Offer and (y) the number of shares of BJ Common Stock outstanding
(including any tendered shares) as of the Expiration Time of the Tender Offer
less the number of all shares validly tendered and not withdrawn as of the
Expiration Time of the Tender Offer, and accepted for purchase up to any
maximum. For purposes of this
8
<PAGE> 12
Section 10, the term "Purchased Shares" shall mean such shares as are deemed so
accepted up to any such maximum.
(e) If the rights (the "BJ Rights") outstanding under the
Stockholder Rights Agreement, dated as of January 12, 1994, as amended, between
BJ and First Chicago Trust Company of New York, as amended (the "Rights
Agreement"), shall become exercisable for shares of Series Two Junior
Participating Preferred Stock, par value $1.00 per share, of BJ ("BJ Preferred
Stock") or other property, the Exercise Price and the number of and kind of
securities or other property issuable upon exercise of each BJ Warrant shall be
appropriately adjusted so that the holder of any BJ Warrant exercised after
such time shall be entitled to receive the aggregate number and kind of shares
of BJ Preferred Stock or other property which would have been issuable under
the BJ Rights that would have been attached to the shares of BJ Common Stock
for which such BJ Warrant was exercisable immediately prior to the BJ Rights
having become exercisable, upon payment of the same consideration, if any,
payable under such BJ Rights for such shares or other property.
(f) For the purpose of any computation hereunder, the "Current
Market Price" per share of BJ Common Stock (or per BJ Warrant, for purposes of
Section 13(a) hereof) on any date shall be deemed to be the average of the
daily Closing Prices per share of such BJ Common Stock (or BJ Warrant, as the
case may be) for the 20 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date. The "Closing Price" for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York Stock
Exchange, Inc. ("NYSE") or, if such securities are not listed or admitted to
trading on the NYSE, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such securities are listed or admitted to trading
or, if such securities are not listed or admitted to trading on any national
securities exchange, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ"). If on any such Trading
Day or Days such securities are not quoted by any such organization, such
Trading Day or Days shall be replaced for purposes of the foregoing calculation
by the requisite Trading Day or Days preceding the commencement of such 20
Trading Day period on which such securities are so quoted. The term "Trading
Day" shall mean a day on which the principal national securities exchange on
which such securities are listed or admitted to trading is open for the
transaction of business or, if such securities are not listed or admitted to
trading on any national securities exchange, a Monday, Tuesday, Wednesday,
Thursday or Friday on which banking institutions in the State of New York are
not
9
<PAGE> 13
authorized or obligated by law or executive order to close. If the BJ
Common Stock (or BJ Warrant, as the case may be) is not so listed or traded, the
"Current Market Price" per share shall be deemed to be the fair value per share
as determined in good faith by the Board of Directors of BJ, whose determination
shall be described in a statement filed with the Warrant Agent. For the purpose
of any computation hereunder, the "Warrant Merger Price" means the average of
the midpoint of the daily high and low trading prices of BJ Warrants, rounded to
four decimal places, on a when-issued basis as reported in The Wall Street
Journal's New York Stock Exchange Composite Transactions Reports, for each of
the first 20 consecutive Trading Days in the period commencing 25 Trading Days
prior to the Closing Date or, if the BJ Warrants are not then admitted to
trading on the NYSE on a when-issued basis, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which such securities are admitted
to trading on a when-issued basis or, if the BJ Warrants are not admitted to
trading on any national securities exchange on a when-issued basis, the average
of the high bid and low asked prices in the over-the-counter market, as reported
by the NASDAQ, of BJ Warrants on a when-issued basis. If on any such Trading
Day or Days the BJ Warrants are not quoted on a when-issued basis by any such
organization, the 20 Trading Day period referred to above shall be reduced by
the number of such Trading Days on which the BJ Warrants are not so quoted. If
the BJ Warrants are not quoted on a when-issued basis on any Trading Day during
such 20 Trading Day period, the Warrant Merger Price shall be deemed to be
$5.00.
(g) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
Section 10(g) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Section
10 shall be made to the nearest cent or the nearest ten-thousandth of a share,
as the case may be. Notwithstanding the first sentence of this Section 10(g),
any adjustment required by this Section 10 shall be made no later than the
earlier of (i) three years from the date of the transaction which mandates such
adjustment or (ii) the date of the expiration of the right to exercise any BJ
Warrant.
(h) In the event that at any time, as a result of an
adjustment made pursuant to Section 10(a), the holder of any BJ Warrant
thereafter exercised shall become entitled to receive any shares of capital
stock of BJ other than shares of BJ Common Stock, thereafter the number of such
other shares so receivable upon exercise of any BJ Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the shares contained in Section
10(a) through (d) inclusive, and the provisions of Sections 6, 8, 9 and 12 with
respect to the shares
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of BJ Common Stock shall apply on like terms to any such other shares.
(i) All BJ Warrants originally issued by BJ subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of shares of BJ Common
Stock purchasable from time to time hereunder upon exercise of the BJ Warrants,
all subject to further adjustment as provided herein.
(j) Unless BJ shall have exercised its election as provided in
Section 10(k), upon each adjustment of the Exercise Price as a result of the
calculations made in Section 10(b), each BJ Warrant outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of shares (calculated to
the nearest ten-thousandth) obtained by (i) multiplying (x) the number of
shares covered by a BJ Warrant immediately prior to such adjustment by (y) the
Exercise Price in effect immediately prior to such adjustment of the Exercise
Price and (ii) dividing the product so obtained by the Exercise Price in effect
immediately after such adjustment of the Exercise Price.
(k) BJ may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of BJ Warrants, in substitution for any
adjustment in the number of shares of BJ Common Stock purchasable upon the
exercise of a BJ Warrant. Each of the BJ Warrants outstanding after such
adjustment of the number of BJ Warrants shall be exercisable for one share of
BJ Common Stock. Each BJ Warrant held of record prior to such adjustment of
the number of BJ Warrants shall become that number of BJ Warrants (calculated
to the nearest ten-thousandth) obtained by dividing the Exercise Price in
effect prior to adjustment of the Exercise Price by the Exercise Price in
effect after adjustment of the Exercise Price. BJ shall notify each of the
record holders of BJ Warrants of its election to adjust the number of BJ
Warrants, indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. Such record date may be the
date on which the Exercise Price is adjusted or any day thereafter, but shall
be at least 10 days later than the date of the public announcement. Upon each
adjustment of the number of BJ Warrants pursuant to this Section 10(k), BJ
shall, as promptly as practicable, cause to be distributed to holders of record
of Warrant Certificates on such record date Warrant Certificates evidencing,
subject to Section 13, the additional BJ Warrants to which such holders shall
be entitled as a result of such adjustment, or, at the option of BJ, shall
cause to be distributed to such holders of record in substitution and
replacement for the Warrant Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by BJ, new Warrant
Certificates evidencing all the BJ Warrants to which such holders shall be
entitled after such adjustment. Warrant Certificates so to be distributed
shall be
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<PAGE> 15
issued, executed and countersigned in the manner provided for herein
(and may bear, at the option of BJ, the adjusted Exercise Price) and shall be
registered in the names of the holders of record of Warrant Certificates on the
record date specified in the public announcement.
(l) Irrespective of any adjustment or change in the Exercise
Price or the number of shares of BJ Common Stock issuable upon the exercise of
the BJ Warrants, the Warrant Certificates theretofore and thereafter issued may
continue to express the Exercise Price per share and the number of shares which
were expressed upon the initial Warrant Certificates issued hereunder.
(m) BJ agrees that it will not, by amendment of its
Certificate of Incorporation or through reorganization, consolidation, merger,
dissolution or sale of assets, or by any other voluntary act, avoid or seek to
avoid the observance or performance of any of the covenants, stipulations or
conditions to be observed or performed hereunder by BJ. Before taking any
action that would cause an adjustment reducing the Exercise Price below the
then par value, if any, of the shares of BJ Common Stock issuable upon exercise
of the BJ Warrants, BJ shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that BJ may, at the option of BJ
in its sole discretion, either (i) validly and legally issue fully paid and
nonassessable shares of such BJ Common Stock or (ii) pay the equivalent amount
of cash, at such adjusted Exercise Price.
(n) In any case in which this Section 10 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, BJ may elect to defer until the occurrence of such event the
issuance to the holder of any BJ Warrant exercised after such record date of
the shares of BJ Common Stock and other capital stock of BJ issuable upon such
exercise over and above the shares of BJ Common Stock and other capital stock
of BJ, if any, issuable upon such exercise on the basis of the Exercise Price
in effect prior to such adjustment; provided, however, that BJ shall deliver to
such holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares upon the occurrence of the event
requiring such adjustment.
(o) Anything in this Section 10 to the contrary
notwithstanding, BJ shall be entitled to make such reductions in the Exercise
Price, in addition to those adjustments expressly required by this Section 10,
as and to the extent that it in its sole discretion shall determine to be
advisable in order that any event treated for federal income tax purposes as a
distribution of stock or stock rights shall not be taxable to the recipients.
Section 11. Certification of Adjusted Exercise Price or Number
of Shares of BJ Common Stock. Whenever the Exercise Price or the number of
shares of BJ Common Stock issuable upon
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<PAGE> 16
the exercise of each BJ Warrant is adjusted as provided in Sections 10 or 12, BJ
shall (a) promptly prepare a certificate setting forth the Exercise Price as so
adjusted and/or the number of shares of BJ Common Stock issuable upon exercise
of each BJ Warrant as so adjusted, and a brief statement of the facts accounting
for such adjustment, (b) promptly file with the Warrant Agent and with each
transfer agent for the BJ Common Stock a copy of such certificate and (c) mail a
brief summary thereof to each holder of a Warrant Certificate in accordance with
Section 23.
Section 12. Reclassification, Consolidation, Merger,
Combination, Sale or Conveyance. In case any of the following shall occur
while any BJ Warrants are outstanding: (i) any reclassification or change of
the outstanding shares of BJ Common Stock (other than a change in par value, or
from par value to no par value, or as covered by Section 10(a)), or (ii) any
consolidation, merger or combination of BJ with or into another corporation as
a result of which holders of BJ Common Stock shall be entitled to receive
stock, securities or other property or assets (including cash) with respect to
or in exchange for such BJ Common Stock, or (iii) any sale or conveyance of the
property or assets of BJ as, or substantially as, an entirety to any other
entity as a result of which holders of BJ Common Stock shall be entitled to
receive stock, securities or other property or assets (including cash) with
respect to or in exchange for such BJ Common Stock, then BJ, or such successor
corporation or transferee, as the case may be, shall make appropriate provision
by amendment of this Agreement or by the successor corporation or transferee
executing with the Warrant Agent an agreement so that the holders of the BJ
Warrants then outstanding shall have the right at any time thereafter, upon
exercise of such BJ Warrants, to receive the kind and amount of securities,
cash and other property receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance as would be received by
a holder of the number of shares of BJ Common Stock issuable upon exercise of
such Warrant immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance.
If the holders of the BJ Common Stock may elect from choices the
kind or amount of securities, cash and other property receivable upon such
reclassification, consolidation, merger, combination, sale or conveyance, then
for the purpose of this Section 12 the kind and amount of securities, cash and
other property receivable upon such reclassification, consolidation, merger,
combination, sale or conveyance shall be deemed to be the choice specified by
the holder of the BJ Warrant, which specification shall be made by the holder
of the BJ Warrant by the later of (A) 15 Trading Days after the holder of the
BJ Warrant is provided with a final version of all information required by law
or regulation to be furnished to holders of BJ Common Stock concerning such
choice, or if no such information is required, 15 Trading Days after BJ
notified the holder of the BJ
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<PAGE> 17
Warrant of all material facts concerning such specification and (B) the last
time at which holders of BJ Common Stock are permitted to make their
specification known to BJ. If the holder of the BJ Warrant fails to make any
specification, the holder's choice shall be deemed to be whatever choice is made
by a plurality of holders of BJ Common Stock not affiliated with BJ or any other
party to the reclassification, consolidation, merger, combination, sale or
conveyance. Such new BJ Warrants shall provide for adjustments which, for
events subsequent to the effective date of such new BJ Warrants, shall be as
nearly equivalent as may be practicable to the adjustments provided for in
Section 10 and this Section 12. The above provisions of this Section 12 shall
similarly apply to successive reclassifications, consolidations, mergers,
combinations, sales or conveyances.
BJ shall mail by first-class mail, postage prepaid, to each
registered holder of a BJ Warrant, written notice of the execution of any such
amendment or agreement. Any new agreement entered into by the successor
corporation or transferee shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
Section 10. The Warrant Agent shall be under no responsibility to determine the
correctness of any provisions contained in such agreement relating either to the
kind or amount of securities or other property receivable upon exercise of BJ
Warrants or with respect to the method employed and provided therein for any
adjustments and shall be entitled to rely upon the provisions contained in any
such agreement. The provisions of this Section 12 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, sales and
conveyances of the kind described above.
Section 13. Fractional BJ Warrants and Fractional Shares of BJ
Common Stock. (a) BJ shall not be required to issue fractions of BJ Warrants
or to distribute Warrant Certificates which evidence fractional BJ Warrants.
In lieu of such fractional BJ Warrants, there shall be paid to the persons to
whom Warrant Certificates representing such fractional BJ Warrants would
otherwise be issuable an amount in cash (without interest) equal to the product
of such fraction of a BJ Warrant multiplied by the following: (i) with respect
to all fractions of BJ Warrants issued in the Merger, the Warrant Merger Price
and (ii) with respect to all the other fractions of BJ Warrants, the Current
Market Price per whole BJ Warrant (as defined in Section 10(f)).
(b) BJ shall not be required to issue fractions of shares of
BJ Common Stock upon exercise of BJ Warrants or to distribute stock
certificates which evidence fractional shares of BJ Common Stock. In lieu of
fractional shares, there shall be paid to the registered holders of Warrant
Certificates at the time such Warrant Certificates are exercised as herein
provided an amount in cash (without interest) equal to the product of such
fractional part of a share of BJ Common Stock multiplied by the
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<PAGE> 18
Current Market Price per share of BJ Common Stock (as defined in Section 10(f)).
(c) The holder of a BJ Warrant by the acceptance of the BJ
Warrant expressly waives his right to receive any fractional BJ Warrant or any
fractional share of BJ Common Stock upon exercise of a BJ Warrant.
Section 14. Right of Action. All rights of action in respect of
this Agreement are vested in the respective registered holders of the Warrant
Certificates, and any registered holder of any Warrant Certificate, without the
consent of the Warrant Agent or of the holder of any other Warrant Certificate,
may, on such holder's own behalf and for such holder's own benefit, enforce,
and may institute and maintain any suit, action or proceeding against BJ to
enforce, or otherwise act in respect of, such holder's right to exercise the BJ
Warrants evidenced by such Warrant Certificate in the manner provided in such
Warrant Certificate and in this Agreement.
Section 15. Agreement of Warrant Certificate Holders. Every
holder of a Warrant Certificate by accepting the same consents and agrees with
BJ and the Warrant Agent and with every other holder of a Warrant Certificate
that:
(a) the Warrant Certificates are transferable only on the
registry books of the Warrant Agent if surrendered at the principal
office of the Warrant Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(b) BJ and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the absolute
owner thereof and of the BJ Warrants evidenced thereby
(notwithstanding any notations of ownership or writing on the Warrant
Certificates made by anyone other than BJ or the Warrant Agent) for
all purposes whatsoever, and neither BJ nor the Warrant Agent shall be
affected by any notice to the contrary.
Section 16. Warrant Certificate Holder Not Deemed a
Stockholder. No holder, as such, of any Warrant Certificate shall be entitled
to vote, receive dividends or distributions on, or be deemed for any purpose
the holder of, BJ Common Stock or any other securities of BJ which may at any
time be issuable on the exercise or conversion of the BJ Warrants represented
thereby, nor shall anything contained herein or in any Warrant Certificate be
construed to confer upon the holder of any Warrant Certificate, as such, any of
the rights of a stockholder of BJ or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in Section
24), or to receive dividends or distributions or subscription rights, or
otherwise, until the BJ
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<PAGE> 19
Warrant or BJ Warrants evidenced by such Warrant Certificate shall have been
exercised in accordance with the provisions hereof.
Section 17. Concerning the Warrant Agent. BJ agrees to pay to
the Warrant Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Warrant Agent, its
reasonable expenses and counsel fees and other disbursements incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. BJ also agrees to indemnify the Warrant Agent for,
and to hold it harmless against, any loss, liability or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Warrant Agent, for anything done or omitted by the Warrant Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability in the premises.
The Warrant Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Warrant
Certificate or certificate for BJ Common Stock or for other securities of BJ,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons.
Section 18. Merger or Consolidation or Change of Name of Warrant
Agent. Any corporation into which the Warrant Agent or any successor Warrant
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Warrant Agent or any
successor Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent or any successor Warrant Agent,
shall be the successor to the Warrant Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, provided that such corporation would be eligible for
appointment as a successor Warrant Agent under the provisions of Section 21. In
case at the time such successor Warrant Agent shall succeed to the agency
created by this Agreement any of the Warrant Certificates shall have been
countersigned but not delivered, any such successor Warrant Agent may adopt the
countersignature of the predecessor Warrant Agent and deliver such Warrant
Certificates so countersigned; and in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor Warrant Agent may
countersign such Warrant Certificates either in the name of the predecessor
Warrant Agent or in the name of the successor Warrant Agent; and in all such
cases such Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
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<PAGE> 20
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name and deliver Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
Section 19. Duties of Warrant Agent. The Warrant Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions, by all of which BJ and the holders of Warrant
Certificates, by their acceptance thereof, shall be bound:
(a) The Warrant Agent may consult with legal counsel (who
may be legal counsel for BJ), and the opinion of such counsel shall
be full and complete authorization and protection to the Warrant
Agent as to any action taken or omitted by it in good faith and in
accordance with such opinion.
(b) Whenever in the performance of its duties under this
Agreement the Warrant Agent shall deem it necessary or desirable that
any fact or matter be proved or established by BJ prior to taking or
suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be
deemed to be conclusively proved and established by a certificate
signed by the Chairman, President or any Vice President of BJ and by
the Treasurer or any Assistant Treasurer or the Secretary of BJ and
delivered to the Warrant Agent; and such certificate shall be full
authentication to the Warrant Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance
upon such certificate.
(c) The Warrant Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
(d) The Warrant Agent shall not be liable for or by reason
of any of the statements of fact or recitals contained in this
Agreement or in the Warrant Certificates (except its countersignature
thereof) or be required to verify the same, but all such statements
and recitals are and shall be deemed to have been made by BJ only.
(e) The Warrant Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Warrant Agent)
or in respect of the
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<PAGE> 21
validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach
by BJ of any covenant or condition contained in this Agreement or in
any Warrant Certificate; nor shall it be responsible for the adjustment
of the Exercise Price or the making of any change in the number of
shares of BJ Common Stock required under the provisions of Sections 10
or 12 or responsible for the manner, method or amount of any such
change or the ascertaining of the existence of facts that would require
any such adjustment or change (except with respect to the exercise of
BJ Warrants evidenced by Warrant Certificates after actual notice of
any adjustment of the Exercise Price); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of BJ Common Stock to be
issued pursuant to this Agreement or any Warrant Certificate or as to
whether any shares of BJ Common Stock will, when issued, be duly
authorized, validly issued, fully paid and nonassessable.
(f) BJ agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or
performing by the Warrant Agent of the provisions of this Agreement.
(g) The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties
hereunder from the Chairman or the President or any Vice President or
the Secretary of BJ, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer.
(h) The Warrant Agent and any shareholder, director, officer
or employee of the Warrant Agent may buy, sell or deal in any of the
BJ Warrants or other securities of BJ or become pecuniarily interested
in any transaction in which BJ may be interested, or contract with or
lend money to BJ or otherwise act as fully and freely as though it
were not Warrant Agent under this Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for BJ
or for any other legal entity.
(i) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorney or agents, and the Warrant
Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys or agents or for any loss
to BJ resulting from any such act, default, neglect or misconduct,
provided
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<PAGE> 22
reasonable care was exercised in the selection and continued
employment thereof.
Section 20. Change of Warrant Agent. The Warrant Agent may
resign and be discharged from its duties under this Agreement upon 30 days'
notice in writing mailed to BJ and to each transfer agent of the BJ Common
Stock by registered or certified mail, and to the holders of the Warrant
Certificates by first-class mail. BJ may remove the Warrant Agent or any
successor Warrant Agent upon 30 days' notice in writing, mailed to the Warrant
Agent or successor Warrant Agent, as the case may be, and to each transfer
agent of the BJ Common Stock by registered or certified mail, and to the
holders of the Warrant Certificates by first-class mail. If the Warrant Agent
shall resign or be removed or shall otherwise become incapable of acting, BJ
shall appoint a successor to the Warrant Agent. If BJ shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by the holder of a Warrant Certificate (who
shall, with such notice, submit his Warrant Certificate for inspection by BJ),
then the registered holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new Warrant Agent. Any
successor Warrant Agent, whether appointed by BJ or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of a state thereof, in good standing, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Warrant Agent a combined capital and surplus of at least $50,000,000. After
appointment, the successor Warrant Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the predecessor Warrant Agent
shall deliver and transfer to the successor Warrant Agent any property at the
time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, BJ shall file notice thereof in writing with the
predecessor Warrant Agent and each transfer agent of the BJ Common Stock, and
mail a notice thereof in writing to the registered holders of the Warrant
Certificates. However, failure to give any notice provided for in this Section
20, or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
Warrant Agent, as the case may be.
Section 21. Issuance of New Warrant Certificates.
Notwithstanding any of the provisions of this Agreement or of the BJ Warrants
to the contrary, BJ may, at its option, issue new Warrant Certificates
evidencing BJ Warrants in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Exercise Price per share
and the number or kind
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<PAGE> 23
or class of shares of stock or other securities or property purchasable under
the several Warrant Certificates made in accordance with the provisions of this
Agreement.
Section 22. Purchase of BJ Warrants by BJ. BJ shall have the
right, except as limited by applicable law or other agreements, to purchase or
otherwise acquire BJ Warrants at such time, in such manner and for such
consideration as it may deem appropriate.
Section 23. Notice of Proposed Actions. In case BJ shall
propose (a) to declare a dividend on shares of BJ Common Stock payable in
shares of capital stock of any class or to make any other distribution (other
than aggregate cash dividends and distributions not in excess of $.25 per share
of BJ Common Stock for the fiscal year ended September 30, 1995, and then $1.50
for each 12-month period thereafter, payable out of retained earnings or earned
surplus) to all holders of BJ Common Stock (including any distribution made in
connection with a consolidation or merger in which BJ is the continuing
corporation), or (b) to offer rights, options or warrants to all holders of BJ
Common Stock entitling them to subscribe for or purchase BJ Common Stock (or
securities convertible into or exercisable or exchangeable for BJ Common Stock
or any other securities), or (c) to offer any shares of capital stock in a
reclassification of shares of the BJ Common Stock (including any such
reclassification in connection with a consolidation or merger in which BJ is the
continuing corporation), or (d) to effect any consolidation or merger into or
with, or to effect any sale or other transfer (or to permit one or more of its
subsidiaries to effect any sale or other transfer), in one or more transactions,
of more than 50% of the assets or net income of BJ and its subsidiaries (taken
as a whole) to, any other Person, or (e) to effect the liquidation, dissolution
or winding up of BJ, then, in each such case, BJ shall give to each registered
holder of a BJ Warrant, in accordance with Section 24, a notice of such proposed
action, which shall specify the record date for the purpose of such stock
dividend, distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of BJ Common Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a) or
(b) above at least 20 days prior to the record date for determining holders of
the BJ Common Stock for purposes of such action, and in the case of any such
other action, at least 20 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of BJ Common Stock,
whichever shall be the earlier. The failure to give notice required by this
Section 23 or any defect therein shall not affect the legality or validity of
the action taken by BJ or the vote upon any such action. Unless specifically
required by Section 10, the Exercise Price, the number of shares of BJ Common
Stock covered by each BJ Warrant and the number of BJ Warrants
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<PAGE> 24
outstanding shall not be subject to adjustment as a result of BJ being required
to give notice pursuant to this Section 23.
Section 24. Notices. Notices or demands authorized by this
Agreement to be given or made (i) by the Warrant Agent or by the holder of any
Warrant Certificate to or on BJ, (ii) subject to the provisions of Section 20,
by BJ or by the holder of any Warrant Certificate to or on the Warrant Agent or
(iii) by BJ or the Warrant Agent to the holder of any Warrant Certificate,
shall be deemed given (x) on the date delivered, if delivered personally, (y)
on the first Trading Day following the deposit thereof with Federal Express or
another recognized overnight courier, if sent by Federal Express or another
recognized overnight courier, and (z) on the fourth Trading Day following the
mailing thereof with postage prepaid, if mailed by registered or certified mail
(return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) If to BJ, to:
BJ Services Company
5500 Northwest Central Drive
Houston, Texas 77092
Attention: President
(b) If to the Warrant Agent, to:
First Chicago Trust Company of New York
525 Washington Boulevard
Jersey City, New Jersey 07310
Attention: Joann Gorostiola
Assistant Vice President
(c) If to the holder of any Warrant Certificate, to the address
of such holder as shown on the registry books of BJ.
Section 25. Supplements and Amendments. (a) BJ and the
Warrant Agent may from time to time supplement or amend this Agreement without
the approval of any holders of BJ Warrant Certificates in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein, or to make any
other provisions with regard to matters or questions arising hereunder which BJ
and the Warrant Agent may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant Certificates.
(b) In addition to the foregoing, with the consent of holders
of not less than a majority in number of the then outstanding BJ Warrants, BJ
and the Warrant Agent may modify this Agreement for the purpose of adding any
provisions to or changing
21
<PAGE> 25
in any manner or eliminating any of the provisions of this Warrant Agreement or
modifying in any manner the rights of the holders of the BJ Warrant
Certificates; provided, however, that no modification of the terms (including
but not limited to the adjustments described in Section 10) upon which the BJ
Warrants are exercisable or reducing the percentage required for consent to
modification of this Agreement may be made without the consent of the holder of
each outstanding BJ Warrant affected thereby.
Section 26. Successors. All covenants and provisions of this
Agreement by or for the benefit of BJ or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
Section 27. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give any Person other than BJ, the Warrant
Agent and the registered holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of BJ, the Warrant Agent and the
registered holders of the Warrant Certificates.
Section 28. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to the conflicts
of law principles thereof.
Section 29. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 30. Captions. The caption of the sections of this
Agreement have been inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
22
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and their respective corporate seals to be hereunder
affixed and attested, all as of the day and year first above written.
BJ SERVICES COMPANY
By: /s/ J. W. STEWART
_____________________________________
J. W. Stewart, President
FIRST CHICAGO TRUST COMPANY
OF NEW YORK, as Warrant Agent
By: /s/ RALPH PERSICO
_______________________________________
Customer Service Officer
23
<PAGE> 27
Exhibit 1
[Form of Warrant Certificate]
Certificate No. M- _______________ Warrants
NOT EXERCISABLE AFTER APRIL 13, 2000
Warrant Certificate
BJ SERVICES COMPANY
This certifies that __________________________, or registered
assigns, is the registered owner of the number of BJ Warrants set forth above,
each of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Warrant Agreement dated as of April 13, 1995 (the "Warrant
Agreement") between BJ Services Company, a corporation organized under the laws
of the State of Delaware ("BJ"), and First Chicago Trust Company of New York, a
New York limited purpose trust company (the "Warrant Agent"), to purchase or
receive from BJ at any time after April 13, 1995 and prior to 5:00 P.M. (New
York City time) on April 13, 2000 at the principal office of the Warrant Agent,
or its successors as Warrant Agent, in New York City, the number of shares of
common stock, par value $.10 per share, of BJ ("BJ Common Stock") represented
hereby to be purchased at $30 per share of BJ Common Stock (the "Exercise
Price"), in each case upon presentation and surrender of this Warrant
Certificate with the Form of Election to Purchase duly executed. The number of
BJ Warrants evidenced by this Warrant Certificate (and the number of shares of
BJ Common Stock which may be purchased upon exercise thereof) set forth above
and the Exercise Price set forth above are the number and Exercise Price as of
April 13, 1995, based on the shares of BJ Common Stock as constituted at such
date. As provided in the Warrant Agreement, the Exercise Price and the number
of shares of BJ Common Stock which may be purchased upon the exercise of the BJ
Warrants evidenced by this Warrant Certificate are subject to modification and
adjustment upon the occurrence of certain events.
This Warrant Certificate is subject to all of the terms,
provisions and conditions of the Warrant Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Warrant Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Warrant Agent, BJ and the holders of the Warrant Certificates.
Copies of the Warrant Agreement are on file at the above-mentioned office of
the Warrant Agent.
<PAGE> 28
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender at the principal office of the Warrant Agent, may
be exchanged for another Warrant Certificate or Warrant Certificates of like
tenor and date evidencing BJ Warrants entitling the holder to purchase a like
aggregate number of shares of BJ Common Stock, in each case as the BJ Warrants
evidenced by the Warrant Certificate or Warrant Certificates surrendered shall
have entitled such holder to purchase or receive. If this Warrant Certificate
shall be exercised in part, the holder hereof shall be entitled to receive upon
surrender hereof another Warrant Certificate or Warrant Certificates for the
number of BJ Warrants not exercised.
BJ shall make a cash payment in lieu of issuing fractional BJ
Warrants or fractional shares of BJ Common Stock, as provided in the Warrant
Agreement.
No holder of this Warrant Certificate shall be entitled to vote,
receive dividends or distributions on, or be deemed for any purpose the holder
of, BJ Common Stock or of any other securities of BJ which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of BJ or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Warrant Agreement), or to receive dividends or subscription rights, or
otherwise, until the BJ Warrant or BJ Warrants evidenced by this Warrant
Certificate shall have been exercised as provided in the Warrant Agreement.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
2
<PAGE> 29
WITNESS the facsimile signature of the proper officers of BJ and
its corporate seal. Dated as of April 13, 1995.
ATTEST: BJ SERVICES COMPANY
_____________________________ By:___________________________
Secretary Name:_________________________
Title:________________________
Countersigned:
_____________________________
By___________________________
Authorized signature
3
<PAGE> 30
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Warrant Certificate.)
To First Chicago Trust Company of New York, as Warrant Agent:
The undersigned hereby irrevocably elects to exercise
___________________ BJ Warrants represented by this Warrant Certificate to
purchase the shares of BJ Common Stock issuable upon the exercise of such BJ
Warrants and requests that Certificates for such shares be issued in the name
of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
If such number of BJ Warrants shall not be all the BJ Warrants evidenced by
this Warrant Certificate, a new Warrant Certificate for the balance remaining
of such BJ Warrants shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
_______________________________________________________________________________
(Please print name and address)
_______________________________________________________________________________
Dated: ____________________
_______________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate)
Signature Guaranteed:
<PAGE> 31
Annex A
ASSIGNMENT FORM
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificates)
FOR VALUE RECEIVED, ________________________________________________
hereby sells, assigns and transfers unto
Name:__________________________________________________________________________
(please typewrite or print in block letters)
Address:_______________________________________________________________________
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer within the Warrant Certificate the same on the books of the Company,
with full power of substitution in the premises.
Date ________, 19__
Signature
____________________________________________
Signature Guaranteed:
Notice
The signature to the foregoing assignment must correspond to the
name as written upon the face of this Warrant Certificate in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE> 1
EXHIBIT 10.10
BJ SERVICES COMPANY
BJ SERVICES COMPANY, USA
BJ SERVICE INTERNATIONAL, INC.
BJ SERVICES COMPANY MIDDLE EAST
SECOND AMENDMENT TO NOTE AGREEMENT
Re: Note Agreement Dated as of August 1,1991
and
$30,000,000 9.20% Senior Notes
Due August 1, 1998
Dated as of
September 19, l995
Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0800
Connecticut Mutual Life Insurance Company
140 Garden Street
Hartford, Connecticut 06154
Ladies and Gentlemen:
Reference is made to the separate Note Agreements each dated as of
August 1, 1991, as amended to the date hereof (collectively, the "Note
Agreement"), between and among BJ Services Company, BJ Services Company, USA, BJ
Service International, Inc., BJ Services Company Middle East, each a Delaware
corporation (collectively, the "Constituent Companies"), and you, under and
pursuant to which $30,000,000 aggregate principal amount of Senior Notes Due
August 1, 1998 (the "Notes") were originally issued.
The Constituent Companies desire to amend certain provisions of the Note
Agreement in connection with the merger into BJ Services Company of The Western
Company of North
<PAGE> 2
America, a Delaware corporation, and the entry by the Constituent Companies
into the Credit Agreement dated as of April 13, 1995, among the Constituent
Companies, other Subsidiary Borrowers from time to time party thereto, Bank of
America National Trust and Savings Association, as Agent, Bank of America
Illinois, individually and as Letter of Credit Issuing Bank, The Chase
Manhattan Bank, N.A., individually and as Co-Agent, Credit Lyonnais Cayman
Island Branch, individually and as Co-Agent, First Interstate Bank of Texas,
N.A., individually and as Co-Agent, and the other financial institutions
parties thereto. The Constituent Companies hereby request that you accept the
amendments as set forth below in the manner herein provided.
SECTION 1. AMENDMENTS TO SECTION 5 OF THE NOTE AGREEMENT.
(a) Section 5 of the Note Agreement shall be and is hereby amended by
deleting therefrom the following Sections: Sections 5.5 through 5.14, both
inclusive.
(b) Section 5.1 of the Note Agreement shall be, and is hereby amended
to read, as follows:
Each of the Constituent Companies will preserve and keep in full
force and effect, and will cause each Restricted Subsidiary to preserve
and keep in full force and effect, its respective corporate existence
and all licenses and permits except where the failure to preserve or
keep such licenses and permits would not have a materially adverse
effect upon the properties, business or financial condition of the
Company and its Restricted Subsidiaries, taken as a whole, provided that
the foregoing shall not prevent any transaction otherwise permitted by
this Agreement.
(c) Section 5.3 of the Note Agreement shall be, and is hereby amended
to read, as follows:
Each of the Constituent Companies will promptly pay and
discharge, and will cause each Restricted Subsidiary promptly to pay and
discharge, all lawful taxes, assessments and governmental charges or
levies imposed upon such Constituent Company or such
-2-
<PAGE> 3
Restricted Subsidiary, respectively, or upon or in respect of all or any
part of the property or business of such Constituent Company or such
Restricted Subsidiary, all trade accounts payable in accordance with usual
and customary business terms, and all claims for work, labor or materials,
which if unpaid might become a Lien upon any property of such Constituent
Company or such Restricted Subsidiary; provided such Constituent Company or
such Restricted Subsidiary shall not be required to pay any such tax,
assessment, charge, levy, account payable or claim if (i) the validity,
applicability or amount thereof is being contested in good faith by
appropriate actions or proceedings which will prevent the forfeiture or sale
of any property of such Constituent Company or such Restricted Subsidiary or
any material interference with the use thereof by such Constituent Company
or such Restricted Subsidiary, and (ii) such Constituent Company or such
Restricted Subsidiary shall set aside on its books, reserves deemed by it to
be adequate with respect thereto. Each of the Constituent Companies will
promptly comply and will cause each Restricted Subsidiary to comply with all
laws, ordinances or governmental rules and regulations to which it is
subject including, without limitation, the Occupational Safety and Health
Act of 1970, as amended, ERISA and all laws, ordinances, governmental rules
and regulations relating to environmental protection in all applicable
jurisdictions, the violation of which could materially and adversely affect
the properties, business or financial condition of the Company and its
Restricted Subsidiaries, taken as a whole, or would result in any "Lien" (as
defined for purposes of Section 8.01 of the Bank Credit Agreement, which
Section 8.01 is incorporated into this Agreement by reference pursuant to
the Second Amendment to Note Agreement) not permitted by said Section 8.01.
SECTION 2. INCORPORATION OF CERTAIN COVENANTS.
The following provisions of the Bank Credit Agreement in the form
attached hereto are hereby incorporated by reference into the Note Agreement
with the same force and effect as
-3-
<PAGE> 4
though therein set forth in full, in each case together with all related
definitions set forth in the Bank Credit Agreement: Sections 8.01 through 8.05,
both inclusive, Sections 8.08, 8.09, 8.10(a)(i) and (ii) (but only as such
provisions pertain to the Western Indenture and the Western Subordinated
Debentures), and Sections 8.12 through 8.16, both inclusive; provided, however,
that the terms "Default" and "Event of Default" referred to in Section 8.03 and
Section 8.15 incorporated herein by reference shall refer to such terms as
defined in the Note Agreement. All provisions incorporated by reference shall
remain effective for purposes of the Note Agreement unless and until the Notes
shall no longer remain outstanding.
SECTION 3. AMENDMENTS TO SECTION 5.18 OF THE NOTE AGREEMENT.
Section 5.18(f) of the Note Agreement shall be and is hereby amended to
read as follows:
(f) Officer's Certificates. Within the periods provided in
paragraphs (a) and (b) above, a certificate of an authorized financial
officer of the Company stating that such officer has reviewed the
provisions of this Agreement and setting forth: (i) a compliance
certificate in the form attached to the Bank Credit Agreement, and (ii)
whether there existed as of the date of such financial statements and
whether, to the best of such officer's knowledge, there exists on the
date of the certificate or existed at any time during the period covered
by such financial statements any Default or Event of Default and, if any
such condition or event exists on the date of the certificate,
specifying the nature and period of existence thereof and the action the
Company is taking and proposes to take with respect thereto;
SECTION 4. AMENDMENTS TO SECTION 6.1 OF THE NOTE AGREEMENT.
(a) Sections 6.1(d) and (e) of the Note Agreement shall be and are
hereby revised to change the references therein to "$1,000,000" from
"$1,000,000" to "$10,000,000."
-4-
<PAGE> 5
(b) Section 6.1(f) of the Note Agreement shall be and is hereby
deleted, and the following language shall be substituted therefor:
(f)(i) The Constituent Companies or any other Borrower (as
defined in the Bank Credit Agreement) shall fail to perform or observe
any term, covenant or agreement contained in Sections 8.02, 8.03, 8.10,
8.12 through 8.16, both inclusive, of the Bank Credit Agreement and
incorporated herein by reference pursuant to that Second Amendment to
Note Agreement or (ii) the Constituent Companies or any other Borrower
shall fail to perform or observe any other term, covenant or agreement
contained in any of Sections 8.01, 8.04, 8.05, 8.08 or 8.09 of the Bank
Credit Agreement and incorporated herein by reference pursuant to that
Second Amendment to Note Agreement, and such default shall continue
unremedied for a period of 20 days after the earlier of (x) the date
upon which a Responsible Officer of the Constituent Companies reasonably
should have known of such default, or (y) the date upon which written
notice thereof is given to the Constituent Companies by any holder of
the Notes.
(c) Section 6.1(i) of the Note Agreement shall be and is hereby
revised to change the reference therein to "$500,000" from "$500,000" to
"$10,000,000."
SECTION 5. AMENDMENTS TO DEFINITIONS.
The following definitions shall be added to Section 8.1 of the Note
Agreement to read as follows:
"Bank Credit Agreement" shall mean that certain Credit Agreement
dated as of April 13, 1995 among the Constituent Companies, Bank of
America National Trust and Savings Association, as Agent, and the other
parties named therein in the form attached hereto (and without amendment
or modification, except as may be subsequently consented to in writing
by the holders of the Notes for purposes of this Agreement).
-5-
<PAGE> 6
"Second Amendment to Note Agreement" shall mean that certain
Second Amendment to Note Agreement dated as of September 19, 1995 by and
among the Constituent Companies and the Purchasers.
SECTION 6. MISCELLANEOUS.
Section 6.1. Effective Date; Ratification. The amendments
contemplated by this Second Amendment to Note Agreement shall be effective as of
September 19, 1995. Except as amended herein, the terms and provisions of the
Note Agreemen are hereby ratified, confirmed and approved in all respects.
Section 6.2. Ratification of Original Note Agreements;
Condition Precedent. Except as amended and restated herein, the terms and
provisions of the Note Agreement and the Notes are hereby ratified, confirmed
and approved in all respects.
Section 6.3. Successors and Assigns. This Second Amendment to
Note Agreement shall be binding upon the Constituent Companies and their
successors and assigns and shall inure to the benefit of the holders of the
Notes and to the benefit of their successors and assigns, including each
successive holder or holders of any Notes.
Section 6.4. Counterparts. This Second Amendment to Note
Agreement may be executed in any number of counterparts, each executed
counterpart constituting an original but all together one and the same
instrument.
Section 6.5. Fees and Expenses. The Constituent Companies agree
to pay all reasonable fees and expenses of the holders and special counsel to
the holders (in an amount not to exceed $1,000) in connection with the
preparation of this Second Amendment to Note Agreement.
Section 6.6. No Legend Required. Any and all notices, requests,
certificates and other instruments including, without limitation, the Notes, may
refer to the Note Agreement without
-6-
<PAGE> 7
making specific reference to this Second Amendment to Note Agreement, but
nevertheless all such references shall from and after the date hereof be
deemed to include this Second Amendment to Note Agreement unless the context
shall otherwise require.
Section 6.7. Governing Law. This Second Amendment to Note Agreement
shall be construed in accordance with and governed by the laws of the State of
Connecticut.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment to Note Agreement as of the day and year first above written.
BJ SERVICES COMPANY
By /s/ Taylor M. Whichard
---------------------------
Its Treasurer
By
---------------------------
Its
BJ SERVICES COMPANY, USA
By /s/ Taylor M. Whichard
---------------------------
Its Treasurer
By
--------------------------
Its
BJ SERVICE INTERNATIONAL, INC.
By /s/ Taylor M. Whichard
---------------------------
Its Treasurer
By
---------------------------
Its
BJ SERVICES COMPANY MIDDLE EAST
By /s/ Taylor M. Whichard
---------------------------
Its Treasurer
By
---------------------------
Its
-8-
<PAGE> 9
Accepted as of September 19, 1995
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ Shabnam B. Miglani
-----------------------------
Its Counsel
By /s/ Sarah J. Pitts
------------------------------
Its Counsel
Holder of $12,000,000 principal amount
of Notes outstanding
-9-
<PAGE> 10
Accepted as of September________, 1995
CONNECTICUT MUTUAL LIFE INSURANCE
COMPANY
By /s/ K.D. Anderson
-----------------------------
Its Vice President
Holder of $6,000,000 principal amount of
Notes outstanding
-10-
<PAGE> 1
EXHIBIT 10.11
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment")
dated as of April 25, 1995, is made and entered into among BJ SERVICES COMPANY,
a Delaware corporation (the "Company"), BJ SERVICES COMPANY, U.S.A.,a Delaware
corporation, BJ SERVICE INTERNATIONAL, INC., a Delaware corporation, BJ
SERVICES COMPANY MIDDLE EAST, a Delaware corporation (collectively and
including the Company, the Borrowers"); BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent; BANK OF AMERICA ILLINOIS, Individually and as
Letter of Credit Issuing Bank; THE CHASE MANHATTAN BANK, N.A., Individually and
as Co-Agent; CREDIT LYONNAIS CAYMAN ISLAND BRANCH, Individually and as
Co-Agent, FIRST INTERSTATE BANK OF TEXAS, N. A., Individually and as Co-Agent
and the other banks listed on the signature pages hereof.
W I T N E S S E T H:
WHEREAS, the parties hereto have heretofore entered into a
Credit Agreement dated as of April 13, 1995 (the "Credit Agreement") providing
for, among other things, (i) term loans to be made by the Banks to the Company
in the principal amount of $265,000,000, (ii) a revolving credit facility
(including revolving credit loans, swing loans and letters of credit) to be
made by the Banks to the Borrowers in a principal amount not to exceed
$175,000,000 in the aggregate at any time outstanding, and on the terms and
subject to the conditions thereon set forth; and
WHEREAS, the Credit Agreement provides that Term Loans (other
than the Debenture Related Loans) may be made from the Closing Date through
April 28, 1995;
WHEREAS, Company has requested that the Banks extend the
availability period for such term loans through May 1, 1995, and the Banks have
agreed so to do;
NOW, THEREFORE, in consideration of the premises and for other
good and valuable consideration, the parties hereto hereby agree to amend the
Credit Agreement as follows:
1. CREDIT AGREEMENT AMENDMENTS.
1.1 AMENDMENT OF CLAUSE (I) OF SUBSECTION 2.01
(A). Subsection 2.01(a) of the Credit Agreement is hereby amended by changing
clause (i) contained therein to be and to read in its entirety as follows:
<PAGE> 2
"(i) Term Loans in a maximum aggregate amount of
$225,0000,000 may be made from time to time on any Business
Day during the period from the Closing Date through May 1,
1995."
1.2. AMENDMENT OF CLAUSE (II) OF SUBSECTION
2.01(A). Subsection 2.01(a) of the Credit Agreement is hereby further amended
by changing subclause (y) contained within the parenthetical clause of clause
(ii) of Subsection 2.01(a) to be and to read in its entirety as follows:
"(y) the aggregate principal amount of Term Loans
made during the period from the Closing Date through May 1,
1995)."
1.3. GENERAl To the extent, if any, any
provision of the Credit Agreement or any of the other Loan Documents shall
conflict with the provisions of clause (i) of Subsection 2.01(a) of the Credit
Agreement as amended in the foregoing Paragraph 1.1, such provisions shall be
amended to the extent necessary so that no such conflict shall exist.
2. NO DEFAULT OR EVENTS OF DEFAULT; REPRESENTATIONS AND
WARRANTIES ARE TRUE. Each of the Borrowers hereby represents and warrants to
the Banks that no Event of Default or Default has occurred and is continuing.
The representations and warranties made by the Borrowers in Article VI of the
Credit Agreement are true and correct in all material respects as of the date
hereof (except such representations and warranties which expressly refer to an
earlier date, which representations and warranties are true and correct in all
material respects as of such earlier date).
3. RATIFICATION. The Credit Agreement shall continue in
full force and effect as amended hereby. The Credit Agreement and this
Amendment shall be read, taken and construed as one and the same instrument.
4. COUNTERPARTS. This Amendment may be signed in any
number of counterparts, and by different parties on separate counterparts, each
of which shall be construed as an original, but all of which together shall
constitute one and the same instrument.
5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS, EXCEPT SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK); PROVIDED THAT THE AGENT AND THE
BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
6. CERTAIN DEFINED TERMS. Capitalized terms used herein
(including in the recitals hereof) without definition shall have the meaning
assigned to them in the Credit Agreement.
-2-
<PAGE> 3
7. ENTIRE AGREEMENT. THIS AMENDMENT, THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed and delivered as of the date first above written.
BJ SERVICES COMPANY
By: /s/ Taylor M. Whichard III
--------------------------------
Taylor M. Whichard III
Treasurer
BJ SERVICES COMPANY, U.S.A.
By: /s/ Taylor M. Whichard III
-------------------------------
Taylor M. Whichard III
Treasurer
BJ SERVICES COMPANY MIDDLE EAST
By: /s/ Taylor M. Whichard III
-------------------------------
Taylor M. Whichard III
Treasurer
-3-
<PAGE> 4
BJ SERVICE INTERNATIONAL, INC.
By: /s/ Taylor M. Whichard
-------------------------------
Taylor M. Whichard III
Treasurer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, AS AGENT
By: /s/ Frank H. Woo
-------------------------------
Name: Frank H. Woo
Title: Assistant Vice President
BANK OF AMERICA ILLINOIS, AS A BANK AND
AS ISSUING BANK
By: /s/ C. Paige DiMaggio
------------------------------
Name: C. Paige DiMaggio
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.,
AS CO-AGENT AND AS A BANK
By: /s/ Richard S. Walker
------------------------------
Name: Richard S. Walker
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND BRANCH,
AS CO-AGENT AND AS A BANK
By: /s/ Xavier Ratouis
------------------------------
Name: Xavier Ratouis
Title: Authorized Signature
-4-
<PAGE> 5
FIRST INTERSTATE BANK OF TEXAS,
N.A., AS CO-AGENT AND AS A BANK
By: /s/ Frank W. Schageman
------------------------------
Name: Frank W. Schageman
Title: Vice President
BANK OF MONTREAL
By: /s/ Donald G. Skipper
------------------------------
Name: Donald G. Skipper
Title: Director
THE BANK OF NEW YORK
By: /s/ Gregory L. Batson
------------------------------
Name: Gregory L. Batson
Title: Vice President
CHRISTIANIA BANK OG KREDITKASSE
By: /s/ Niels Magnussen
------------------------------
Name: Niels Magnussen
Title: Senior Manager
By: /s/ Craig Axe
------------------------------
Name: Craig Axe
Title: Manager
CORESTATES BANK, N.A.
By: /s/ Roland B. Brown, Jr.
------------------------------
Name: Roland B. Brown, Jr.
Title: Vice President
-5-
<PAGE> 6
DEN NORSKE BANK AS
By: /s/ Edward L. Mete
------------------------------
Name: Edward L. Mete
Title: Senior Vice President
By: /s/ Fran Meyers
------------------------------
Name: Fran Meyers
Title: Vice President
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES
By: /s/ Deborah A. Slusarczyk
------------------------------
Name: Deborah A. Slusarczyk
Title: Vice President
By: /s/ B. Craig Erickson
------------------------------
Name: B. Craig Erickson
Title: Vice President
THE FUJI BANK, LIMITED
By: /s/ David Kelley
------------------------------
Name: David Kelley
Title: Vice President and
Senior Manager
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY
By: /s/ Robert W. Ramage, Jr.
-----------------------------
Name: Robert W. Ramage, Jr.
Title: Senior Vice President
-6-
<PAGE> 7
THE MITSUBISHI BANK, LTD.
HOUSTON AGENCY
By: /s/ Shoji Honda
------------------------------
Name: Shoji Honda
Title: General Manager
THE YASUDA TRUST AND BANKING
COMPANY LIMITED
By: /s/ Neil T. Chau
-------------------------------
Name: Neil T. Chau
Title: First Vice President
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Koii Fuiiwara
-------------------------------
Name: Koii Fuiiwara
Title: Assistant Vice President
FIRST NATIONAL BANK OF COMMERCE
By: /s/ Cory B. Armand
-------------------------------
Name: Cory B. Armand
Title: Assistant Vice President
-7-
<PAGE> 8
THE BANK OF TOKYO, LTD., DALLAS AGENCY
By: /s/ J. McIntyre
-------------------------------
Name: J. McIntyre
Title: Vice President
-8-
<PAGE> 1
EXHIBIT 11.1
BJ SERVICES COMPANY
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended September 30,
1995 1994 1993
------- -------- -------
<S> <C> <C> <C>
FULLY DILUTED EARNINGS PER SHARE
Earnings before cumulative effect of
accounting change $9,889 $10,770 $14,561
Cumulative effect of change in accounting
principle (10,400)
------ ------- -------
Net earnings $9,889 $370 $14,561
====== ======= =======
Average common and common equivalent
shares outstanding:
Common stock 21,376 15,665 15,456
Common stock equivalents from assumed
exercise of stock options 373 53 93
------ ------ ------
21,749 15,718 15,549
====== ====== ======
Fully diluted earnings per share:
Earnings before cumulative effect of
accounting change $0.46 $0.69 $0.94
Cumulative effect of change in accounting
principle (0.67)
------ ------ ------
Earnings per share $0.46 $0.02 $0.94
====== ====== ======
</TABLE>
<PAGE> 2
EXHIBIT 11.1
BJ SERVICES COMPANY
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Years Ended September 30,
1995 1994 1993
------ ------- ------
<S> <C> <C> <C>
PRIMARY EARNINGS PER SHARE
Earnings before cumulative effect of
accounting change $9,889 $10,770 $14,561
Cumulative effect of change in accounting
principle (10,400)
------ ------- -------
Net earnings $9,889 $370 $14,561
====== ======= =======
Average common and common equivalent
shares outstanding:
Common stock 21,376 15,665 15,456
Common stock equivalents from assumed
exercise of stock options 173 53 93
------ ------- -------
21,549 15,718 15,549
====== ======= =======
Primary earnings per share:
Earnings before cumulative effect of
accounting change $0.46 $0.69 $0.94
Cumulative effect of change in accounting
principle (0.67)
------ ------- -------
Earnings per share $0.46 $0.02 $0.94
====== ======= =======
</TABLE>
<PAGE> 1
EXHIBIT 21.1
BJ SERVICES COMPANY
SUBSIDIARIES
AS OF DECEMBER 20, 1995
<TABLE>
<CAPTION>
PERCENTAGE OWNED BY
-------------------------
NAME OF ENTITY/JURISDICTION OF ORGANIZATION REGISTRANT SUBSIDIARY
- -------------------------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
BJ Services Company Middle East (Delaware)............................................ 100%
Gulf Well Services Company (Kuwait) (Joint Venture)................................ 40%
BJ Services Company Overseas (Delaware)............................................... 100%
BJ Services Company, U.S.A. (Delaware)................................................ 100%
Western Petroleum Services, Incorporated (Delaware)................................. 100%
Western Petroleum Services International Company (Delaware)......................... 100%
Western Petroleum Services International Nigeria Ltd. (Nigeria) (Joint Venture).. 80%
P.T. Western Petroleum Servinco (Indonesia) (Joint Venture)...................... 64%
Western Rotary Petroleum Company Limited (Hungary) (Joint Venture)............... 50%
Western Oceanic (Nigeria) Limited (Nigeria) (Joint Venture)......................... 60%
Colony Drilling Company Limited (UK)................................................ 100%
Western Petroleum Services (U.K.) Ltd. (UK)...................................... 100%
Western Oceanic Services, Inc. (Delaware)........................................... 100%
Western Services International, Inc. (Delaware)..................................... 100%
Western Oilfield Supply & Rental, Inc. (Delaware)................................... 100%
Western Oceanic, Inc. (Delaware).................................................... 100%
Western Oceanic International, Inc. (Panama)................................... 100%
Altomar Perfuracoes Maritimas Ltda. (Brazil)................................ 99.99%
Saturn Energy Company (Delaware).................................................... 100%
Offshore International, LTD. (Delaware)............................................. 100%
WOI, Inc. (Delaware)................................................................ 100%
BJ Service International, Inc. (Delaware)............................................. 100%
BJ-Hughes C.I., Ltd. (Cayman Islands)............................................ 100%
BJ Oilwell Services (Malaysia) Sdn.Bhd.............................................. 65%
BJ Service International (Thailand) Ltd............................................. 100%
BJ Service Arabia Ltd. (Saudi Arabia) (Joint Venture)............................... 70%
BJ Services C.I., Ltd. (Cayman Islands)............................................. 100%
BJ Services Canada Inc. (Alberta)................................................... 100%
BJ Services Company B.V. (Netherlands).............................................. 100%
BJ Services Company GmbH (Germany)............................................... 100%
BJ Services AS (Norway).......................................................... 100%
BJ Services Company Italia S.r.1. (Italy)........................................ 100%
BJ Services Company Mexicana S.A. de C.V. (Mexico).................................. 100%
BJ Services Company Nigeria Limited (Nigeria) (Joint Venture)....................... 60%
BJ Services Company, S.A. (Panama).................................................. 100%
BJ Services Company Limited (Scotland).............................................. 100%
BJ Services Company (UK) Limited (Scotland)...................................... 100%
BJ Leasing Company Limited (Scotland-Vestfonn)................................... 100%
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C>
BJS Oilfield Technology Limited (Scotland)...................................... 100%
BJ Comtec AS (Norway)........................................................... 100%
BJ Services International Limited (Scotland)(Eastern Europe).................... 100%
BJ Services Company (Singapore) Pte. Ltd.......................................... 100%
BJ Services De Venezuela IV, C.A. (Venezuela)..................................... 100%
BJ Services de Venezuela, C.A. (Venezuela)...................................... 100%
BJ Services De Venezuela II, C.A. (Venezuela)................................. 100%
BJ Services De Venezuela III, C.A. (Venezuela).............................. 100%
BJ Services International S.A. (Panama)........................................... 100%
BJ Pumping Services Company S.A. (Panama) (Joint Venture)......................... 65%
BJ Services S.A. (Argentina)...................................................... 100%
Compania de Servicios Petroleros BJ Boliviana S.A.(Bolivia) (Joint Venture)....... 49%
Hughes Services Eastern Hemisphere S.A.R.L. (France).............................. 100%
International Specialty Chemicals Ltd. (Cayman Islands) (Joint Venture)........... 75%
P.T. BJ-Hughes Services Indonesia (Indonesia) (Joint Venture)..................... 75%
SEBEP (Servicios Brasileiros Especializados em Petroleo S.A.) (Brazil) (Joint
Venture)......................................................................... 40%
SEBEP Quimica Industria e Comercia Ltda. (Brazil).............................. 100%
SEBEX Oil Well Services, S.A. (Brazil)......................................... 100%
Societe Algerienne de Climentation ("ALCIM") (Algeria) (Joint Venture)............ 49%
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in the Registration Statement No.
33-36754 of BJ Services Company on Form S-8, in the Registration Statement No.
33-52506 of BJ Services Company on Form S-8, in the Registration Statement No.
33-62098 of BJ Services Company on Form S-8, in the Registration Statement No.
33-58637 of BJ Services Company on Form S-8, in the Registration Statement No.
33-58639 of BJ Services Company on Form S-8 and in the Registration Statement
No. 33-58017 of BJ Services Company on Form S-4 of our report dated November 21,
1995 appearing in this Annual Report on Form 10-K of BJ Services Company for the
year ended September 30, 1995.
DELOITTE & TOUCHE LLP
Houston, Texas
December 21, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> SEP-30-1994
<PERIOD-END> SEP-30-1995
<CASH> 1,842
<SECURITIES> 0
<RECEIVABLES> 168,771
<ALLOWANCES> 7,483
<INVENTORY> 66,851
<CURRENT-ASSETS> 256,935
<PP&E> 730,928
<DEPRECIATION> 314,118
<TOTAL-ASSETS> 989,683
<CURRENT-LIABILITIES> 204,271
<BONDS> 0
<COMMON> 2,795
0
0
<OTHER-SE> 464,000
<TOTAL-LIABILITY-AND-EQUITY> 989,683
<SALES> 0
<TOTAL-REVENUES> 633,660
<CGS> 0
<TOTAL-COSTS> 525,859
<OTHER-EXPENSES> 87,512
<LOSS-PROVISION> 1,399
<INTEREST-EXPENSE> 15,164
<INCOME-PRETAX> 8,758
<INCOME-TAX> (1,102)
<INCOME-CONTINUING> 9,889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,889
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
</TABLE>
