<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1995.
REGISTRATION NO. 33-____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BJ SERVICES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-0084140
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
5500 NORTHWEST CENTRAL DRIVE
HOUSTON, TEXAS 77092
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
BJ SERVICES COMPANY
1995 INCENTIVE PLAN
(FULL TITLE OF THE PLAN)
MARGARET BARRETT SHANNON, ESQ.
BJ SERVICES COMPANY
VICE PRESIDENT - GENERAL COUNSEL AND SECRETARY
5500 NORTHWEST CENTRAL DRIVE
HOUSTON, TEXAS 77092
(713) 462-4239
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
-----------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE
AND FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
-----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) FEE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Common Stock, $0.10 par value(3) 1,500,000 $21.38 $32,070,000 $11,059.00
==============================================================================================================
</TABLE>
(1) The number of Company's Shares of Common Stock registered herein is subject
to adjustment to prevent dilution resulting from stock splits, stock
dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) based on the average of the high and low prices of
the Company's Shares of Common Stock on the New York Stock Exchange
Composite Tape on April 10, 1995.
(3) Includes the preferred share purchase rights associated with the
Common Stock.
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
This Registration Statement on Form S-8 hereby incorporates by
reference the contents of the following documents filed by BJ Services Company
(the "Company") with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 (the "Exchange Act"):
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1994;
(b) The Company's Quarterly Report on Form 10-Q for the
quarter ended December 31, 1994 and Current Reports on Form 8-K dated March 7,
1995, and April 13, 1995; and
(c) The description of the Common Stock of the Company,
contained in the Registration Statement on Form 8-A (Registration No. 1-10570)
filed by the Company under the Exchange Act; the description of the Company's
preferred share purchase rights included in the Company's Registration
Statement on Form 8-A dated January 12, 1994, and the Company's Registration
Statements on Form 8-A/A dated August 26, 1994, and September 22, 1994; and the
description of the Series Two Junior Participating Preferred Stock of the
Company included in the Company's Registration Statement on Form 8-A dated
January 12, 1994, and the Company's Registration Statements on Form 8-A/A dated
August 26, 1994, and September 22, 1994.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in the registration statement and to be a part
thereof from the date of filing of the documents. Statements contained in the
foregoing documents incorporated by reference shall be deemed to be modified or
superseded hereby to the extent that statements contained in this Prospectus,
or in any subsequently filed documents that are amendments hereto or that are
incorporated herein by reference, shall modify or replace such statements.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Certain legal matters with respect to the Company's common stock
offered hereby will be passed upon for the Company by Andrews & Kurth L.L.P.,
Houston, Texas.
The financial statements and related financial statement schedules
incorporated in this Registration Statement by reference from the Company's
Annual Report on Form 10-K for the year ended September 30, 1994 have been
audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is governed by Section 145 of the General Corporation
Law of the State of Delaware (the "DGCL") which permits a corporation to
indemnify certain persons, including officers and directors, who are (or are
threatened to be made) parties to any threatened, pending or completed action
or suit (other than an action by or in the right of the corporation) by reason
of their being directors, officers or other agents of the corporation.
The Company's Certificate of Incorporation provides that no
director of the Company shall be held personally liable to the Company or its
stockholders for monetary damages for breach of
<PAGE> 3
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Company or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of the law, (iii) under Section 174 of the DGCL or (iv) for
any transaction from which the director derived an improper personal benefit.
The Company's Certificate of Incorporation also provides that if the DGCL is
amended to authorize further limitation or elimination of the personal
liability of directors, then the liability of the Company's directors shall be
limited or eliminated to the full extent permitted by the DGCL.
Section 16 of Article III of the Company's Bylaws provides as
follows: (a) The Company 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 Company or any
of its direct or indirect wholly owned subsidiaries or, while a director,
officer, employee or agent of the Company or any of its direct or indirect
wholly owned subsidiaries, is or was serving at the request of the Company 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
Company shall not be obligated to indemnify any such person against any such
action, suit or proceeding which is brought by such person against the Company
or any of its direct or indirect wholly owned subsidiaries or the directors of
the Company 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 Company shall
have previously approved the bringing of such action, suit or proceeding. The
Company 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 Company or any of its direct or indirect wholly
owned subsidiaries and, while acting in the course of such employment committed
or is alleged to have committed any negligent acts, errors or omissions in
rendering professional legal services at the request of the Company 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 Company 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.
(b) Expenses incurred by an officer or director of the Company
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 Company 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 Company 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 Company's Certificate
of Incorporation, the Certificate of Incorporation or Bylaws or other governing
documents of any direct or indirect wholly owned subsidiary of the Company, 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.
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<PAGE> 4
ITEM 8. LIST OF EXHIBITS.
4.1 Certificate of Designation of Series Two Junior Participating
Preferred Stock of BJ Services (filed as exhibit to the
Registration Statement of BJ Services Company ("BJ Services") on
Form 8-A dated January 12, 1994, and incorporated herein by
reference).
4.2 Stockholder Rights Agreement dated as of January 12, 1994,
between BJ Services and First Chicago Trust Company of New York,
as Rights Agent (filed as exhibit to BJ Services' Registration
Statement on Form 8-A dated January 12, 1994, and incorporated
herein by reference).
4.3 First Amendment to Stockholder Rights Agreement dated as of
June 22, 1994, between BJ Services and First Chicago Trust
Company of New York, as Rights Agent (filed as exhibit to BJ
Services' Registration Statement on Form 8-A/A dated August 26,
1994 and incorporated herein by reference).
4.4 Second Amendment to Stockholder Rights Agreement dated as of
June 22, 1994, between BJ Services and First Chicago Trust
Company of New York, as Rights Agent (filed as exhibit to BJ
Services' Registration Statement on Form 8-A/A dated September
22, 1994 and incorporated herein by reference).
4.5 The BJ Services Company 1995 Incentive Plan, dated as of
January 26, 1995.
5.1 Opinion of Andrews & Kurth L.L.P. as to the legality of the
securities being registered.
23.1 The consent of Andrews & Kurth L.L.P. to the use of their opinion
in this Registration Statement is contained in the opinion filed
as Exhibit 5.1.
23.2 The Consent of Deloitte & Touche LLP to the incorporation by
reference of their report regarding BJ Services.
24.1 A power of attorney, pursuant to which amendments to this
Registration Statement may be filed, is included on the signature
pages contained in Part II of this Registration Statement.
ITEM 9. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement;
II-3
<PAGE> 5
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement:
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or
Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described in Item 6 of
this Registration Statement, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-4
<PAGE> 6
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities
Act of 1933, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on the 14th day of April, 1995.
BJ SERVICES COMPANY
(Registrant)
By: /s/ J.W. Stewart
-----------------------------------
J.W. Stewart
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
Each person whose signature appears below appoints J. W. Stewart
and Margaret Barrett Shannon, and each of them acting alone, as his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, and grants unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or would do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute and substitutes, may
lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ J.W. Stewart Chairman of the Board, President April 14, 1995
- ------------------------------------------ and Chief Executive Officer; Director
J. W. Stewart (Principal Executive Officer)
/s/ Michael McShane Vice President-Finance April 14, 1995
- ------------------------------------------ and Chief Financial Officer; Director
Michael McShane (Principal Financial Officer)
/s/ Matthew D. Fitzgerald Controller
- ------------------------------------------ (Principal Accounting Officer) April 14, 1995
Matthew D. Fitzgerald
/s/ L. William Heiligbrodt Director April 14, 1995
- ------------------------------------------
L. William Heiligbrodt
/s/ John R. Huff Director April 14, 1995
- ------------------------------------------
John R. Huff
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Don D. Jordan Director April 14, 1995
- ------------------------------------------
Don D. Jordan
/s/ R.A. LeBlanc Director April 14, 1995
- ------------------------------------------
R.A. LeBlanc
/s/ James E. McCormick Director April 14, 1995
- ------------------------------------------
James E. McCormick
</TABLE>
II-6
<PAGE> 8
LIST OF EXHIBITS.
4.1 Certificate of Designation of Series Two Junior Participating
Preferred Stock of BJ Services (filed as exhibit to the
Registration Statement of BJ Services Company ("BJ Services") on
Form 8-A dated January 12, 1994, and incorporated herein by
reference).
4.2 Stockholder Rights Agreement dated as of January 12, 1994,
between BJ Services and First Chicago Trust Company of New York,
as Rights Agent (filed as exhibit to BJ Services' Registration
Statement on Form 8-A dated January 12, 1994, and incorporated
herein by reference).
4.3 First Amendment to Stockholder Rights Agreement dated as of
June 22, 1994, between BJ Services and First Chicago Trust
Company of New York, as Rights Agent (filed as exhibit to BJ
Services' Registration Statement on Form 8-A/A dated August 26,
1994 and incorporated herein by reference).
4.4 Second Amendment to Stockholder Rights Agreement dated as of
June 22, 1994, between BJ Services and First Chicago Trust
Company of New York, as Rights Agent (filed as exhibit to BJ
Services' Registration Statement on Form 8-A/A dated September
22, 1994 and incorporated herein by reference).
4.5 The BJ Services Company 1995 Incentive Plan, dated as of
January 26, 1995.
5.1 Opinion of Andrews & Kurth L.L.P. as to the legality of the
securities being registered.
23.1 The consent of Andrews & Kurth L.L.P. to the use of their opinion
in this Registration Statement is contained in the opinion filed
as Exhibit 5.1.
23.2 The Consent of Deloitte & Touche LLP to the incorporation by
reference of their report regarding BJ Services.
24.1 A power of attorney, pursuant to which amendments to this
Registration Statement may be filed, is included on the signature
pages contained in Part II of this Registration Statement.
<PAGE> 1
EXHIBIT 4.5
BJ SERVICES COMPANY
1995 INCENTIVE PLAN
ARTICLE I
INTRODUCTION
1. Purpose. The BJ SERVICES COMPANY 1995 INCENTIVE PLAN (the
"PLAN") is intended to promote the interests of BJ SERVICES COMPANY (the
"COMPANY") and its stockholders by encouraging employees of the Company, its
subsidiaries and affiliated entities and non-employee directors of the Company
to acquire or increase their equity interest in the Company and, with respect
to employees, to be able to relate cash bonuses to Company performance goals,
thereby giving them an added incentive to work toward the continued growth and
success of the Company. The Board of Directors of the Company (the "BOARD")
also contemplates that through the Plan, the Company, its subsidiaries and
affiliated entities will be better able to compete for the services of
personnel needed for the continued growth and success of the Company. However,
nothing in this Plan shall operate or be construed to prevent the Company from
granting bonuses and other stock awards outside of this Plan.
2. Shares Subject to the Plan. The aggregate number of shares of
Common Stock, $.10 par value per share, of the Company ("COMMON STOCK") that
may be issued under the Plan shall not exceed 1,500,000 shares; provided,
however, that in the event that at any time after the effective date of the
Plan the outstanding shares of Common Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company by reason
of merger, consolidation, recapitalization, reclassification, stock split,
stock dividend, combination of shares or the like, the aggregate number and
class of securities available under the Plan shall be ratably adjusted by the
Committee (as hereinafter defined), whose determination shall be final and
binding upon the Company and all other interested persons. In the event the
number of shares to be delivered upon the exercise in full of any option
granted under the Plan is reduced for any reason whatsoever or in the event any
option granted under the Plan can no longer under any circumstances be
exercised, the number of shares no longer subject to such option shall
thereupon be released from such option and shall thereafter be available under
the Plan. If shares of Performance Stock (as hereinafter defined) awarded
under the Plan are forfeited to the Company, such shares shall thereafter be
available for new grants and awards under the Plan unless the Employee Grantee
(as hereinafter defined) has received benefits of ownership with respect to
such shares of Performance Stock, such as dividends (but not including voting
rights). Shares issued pursuant to the Plan shall be fully paid and
nonassessable.
3. Administration of the Plan. The Plan shall be administered by a
committee (the "COMMITTEE") of two or more directors of the Company appointed
by the Board. Subject to the provisions of the Plan, the Committee shall
interpret the Plan and all awards under the Plan, shall make such rules as it
deems necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defect or supply any omission or reconcile any inconsistency
in the Plan or in any award under the Plan in the manner and to the extent that
the Committee deems desirable to effectuate the Plan. Any action taken or
determination made by the Committee pursuant to this and the other
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<PAGE> 2
paragraphs of the Plan shall be binding on all parties. The act or
determination of a majority of the Committee shall be deemed to be the act or
determination of the Committee.
Notwithstanding any provision in the Plan to the contrary, other than
options granted to Non-Employee Directors (as hereinafter defined) pursuant to
Article IV, no options, Performance Stock, Performance Units, Bonus Stock or
Cash Awards (collectively, "AWARDS") may be granted under the Plan to any
member of the Committee during the term of his membership on the Committee. No
person shall be eligible to serve on the Committee unless he is then a
"DISINTERESTED PERSON" within the meaning of Rule 16b-3 ("RULE 16B-3")
promulgated under the Securities Exchange Act of 1934, as amended (the "ACT"),
if and as such rule is then in effect and also an "OUTSIDE DIRECTOR" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"CODE").
4. Amendment and Discontinuance of the Plan. The Board may amend,
suspend or terminate the Plan; provided, however, that each such amendment of
the Plan (a) extending the period within which Awards may be made under the
Plan, (b) increasing the number of shares of Common Stock to be awarded under
the Plan, except as provided in Article I, Paragraph 2, (c) reducing the option
exercise prices per share provided in the Plan, (d) changing the class of
persons to whom Awards may be made under the Plan, (e) modifying the provisions
of Article IV, or (f) granting options to Non-Employee Directors other than
pursuant to Article IV, shall, in each case, be subject to approval by the
stockholders of the Company; provided, further, however, that no amendment,
suspension or termination of the Plan may cause the Plan to fail to meet the
requirements of Rule 16b-3 or may, without the consent of the holder of an
Award, terminate such Award or adversely affect such person's rights in any
material respect; provided, further, that the provisions of Article IV may not
be amended more than once every six months other than to comport with changes
in the Code, the Employee Retirement Income Security Act of 1974, as amended,
or the rules thereunder, unless otherwise permitted by Rule 16b-3.
5. Granting of Awards to Employees. The Committee shall have the
authority to grant, prior to the expiration date of the Plan, to such eligible
key employees and officers as may be selected by it (with respect to options,
"EMPLOYEE OPTIONEES" and, with respect to Performance Stock, Performance Units,
Bonus Stock and Cash Awards, "EMPLOYEE GRANTEES"), options to purchase shares
of Common Stock and awards of Performance Stock, Performance Units, Bonus Stock
and/or Cash Awards on the terms and conditions hereinafter set forth. Stock
issued with respect to an Award under the Plan may be authorized but unissued,
or reacquired, shares of Common Stock. The Committee shall also have the
authority to determine whether options granted to Employee Optionees are
granted pursuant to Article II or Article III, as hereinafter set forth.
Options granted to Employee Optionees under Article III shall be "INCENTIVE
STOCK OPTIONS" as defined in Section 422 of the Code, and are hereinafter
referred to as "INCENTIVE STOCK OPTIONS." All other options granted to
Employee Optionees under the Plan shall be granted pursuant to Article II and
shall be options which do not constitute incentive stock options ("NONQUALIFIED
OPTIONS"). In selecting Employee Optionees and Employee Grantees, and in
determining the number of shares to be covered by each Award granted to such
employee, the Committee may consider the office or position held by the
employee, the employee's degree of responsibility for and contribution to the
growth and success of the Company, the employee's length of service, age,
promotions, potential and any other factors which it may consider relevant.
-2-
<PAGE> 3
6. Granting of Options to Non-Employee Directors. All options
granted to Non-Employee Directors shall be options to purchase, on the terms
and conditions hereinafter set forth in Article IV, authorized but unissued, or
reacquired, shares of Common Stock and shall be nonqualified options.
Non-Employee Directors shall not be eligible to receive any other Award.
7. Term of Plan. This Plan shall be effective upon the date of its
adoption by the Board, provided the Plan is approved by the stockholders of the
Company within twelve months after the date of such adoption. In the event
that the Plan is not approved by the stockholders of the Company within twelve
months after the date of its adoption by the Board, the Plan shall be null and
void. No Award shall be exercisable or payable under the Plan prior to its
approval by the stockholders and, if the Plan is not approved by the
stockholders of the Company within such twelve month period, all Awards granted
under the Plan shall be automatically cancelled. Except with respect to Awards
then outstanding, if not sooner terminated under the provisions of Article I,
Paragraph 4, the Plan shall terminate upon and no further Awards shall be made
after December 31, 2004.
8. Miscellaneous. All references in the Plan to "ARTICLES,"
"PARAGRAPHS" and other subdivisions refer to the corresponding Articles,
Paragraphs, and subdivisions of the Plan.
9. Rule 16b-3 Compliance. The Company intends:
(a) that the Plan meet the requirements of Rule 16b-3;
(b) that participation by Non-Employee Directors
under Article IV of the Plan will not prohibit them from being
"DISINTERESTED PERSONS" within the meaning of Rule 16b-3 with respect
to administration of the Plan or with respect to administration of any
other plan of the Company;
(c) that transactions of the type specified in Rule 16b-3 by
Non-Employee Directors pursuant to Article IV of the Plan will be
exempt from the operation of Section 16(b) of the Act; and
(d) that transactions of the type specified in Rule 16b-3 by
officers of the Company (whether or not they are directors) pursuant to
the Plan will be exempt from the operation of Section 16(b) of the Act.
In all cases, the terms, provisions, conditions and limitations of the Plan
shall be construed and interpreted consistent with the Company's intent as
stated in this Article I, Paragraph 9.
10. Definition of the Term "Change of Control". As used in
the Plan, a "CHANGE OF CONTROL" shall be deemed to have occurred upon, and
shall mean (a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Act) (a "PERSON") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Act) of 25%
or more of either (i) the then outstanding shares of Common Stock of the
Company (the "OUTSTANDING COMPANY COMMON STOCK") or (ii) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "OUTSTANDING COMPANY VOTING
SECURITIES"); provided, however, that the following acquisitions shall not
constitute a Change of Control: (A) any acquisition directly from the Company
(excluding an acquisition by virtue of the exercise of a conversion privilege),
(B) any acquisition by the
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<PAGE> 4
Company, (C) any acquisition by any employee benefit plan(s) (or related
trust(s)) sponsored or maintained by the Company or any corporation controlled
by the Company (D) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if, immediately following such
reorganization, merger or consolidation, the conditions described in clause
(i), (ii) and (iii) of clause (b) of this Paragraph 10 are satisfied, or (E)
any acquisition by the stockholders of The Western Corporation of North America
("Western") in conjunction with the merger of Western into the Company or one
of its subsidiaries pursuant to the Agreement and Plan of Merger dated as of
November 17, 1994, as amended (the "Western Merger"); or (b) the approval by
the stockholders of the Company of a reorganization, merger or consolidation,
in each case, unless immediately following such reorganization, merger or
consolidation (other than the Western Merger) (i) more than 60% of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then beneficially
owned, directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding the Company, any employee benefit plan(s) (or related trust(s)) of
the Company and/or its subsidiaries or such corporation resulting from such
reorganization, merger or consolidation and any Person beneficially owning,
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 25% or more of the Outstanding Company Common Stock or Outstanding
Company Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board (as defined below) at the
time of the execution of the initial agreement providing for such
reorganization, merger or consolidation. The "INCUMBENT BOARD" shall mean
individuals who, as of the date the Plan is adopted by the Board, constitute
the Board; provided, however, that any individual becoming a director
subsequent to such date whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either (1) an actual or threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A promulgated under the Act), or an
actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board or (2) a plan or agreement to replace a majority of
the members of the Board then comprising the Incumbent Board.
ARTICLE II
NONQUALIFIED STOCK OPTIONS
1. Eligible Employees. Key employees and officers (whether or not
they are directors) of the Company, its subsidiaries and affiliated entities
shall be eligible to receive nonqualified options under this Article II;
provided, however, no such person may
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receive more than 250,000 nonqualified options and/or incentive stock options
hereunder during any calendar year.
2. Calculation of Exercise Price. The exercise price to be paid
for each share of Common Stock deliverable upon exercise of each nonqualified
option granted under Article II shall be determined by the Committee but shall
not be less than the lesser of (a) the per share price of the last sale of
Common Stock on the trading day prior to the grant of such option, based on the
composite transactions in the Common Stock as reported by The Wall Street
Journal, and (b) the arithmetic average of the closing prices per share of
Common Stock on all days on which such stock was traded during the 90-day
period before the date of grant, based on the composite transactions in the
Common Stock as reported by The Wall Street Journal. The exercise price for
each nonqualified option granted under Article II shall be subject to
adjustment as provided in Article II, Paragraph 3(e).
3. Terms and Conditions of Options. Nonqualified options granted
under Article II shall be in such form as the Committee may from time to time
approve. Options granted under Article II shall be subject to the following
terms and conditions and may contain such additional terms and conditions, not
inconsistent with Article II, as the Committee shall deem desirable:
(a) Option Period and Conditions and Limitations on
Exercise. Subject to Article II, Paragraphs 4 and 5, no nonqualified
option granted under Article II shall be exercisable with respect to
any of the shares subject to the option earlier than the date which is
six months from the date of grant nor later than the date which is ten
years after the date of grant (the "NONQUALIFIED OPTION EXPIRATION
DATE"). To the extent not prohibited by other provisions of the Plan,
each nonqualified option granted under Article II shall be exercisable
at such time or times as the Committee in its discretion may determine
at or prior to the time such option is granted; provided, however, that
unless the Committee determines otherwise, each nonqualified option
granted under Article II shall be exercisable from time to time, in
whole or in part, at any time after six months from the date of grant
and prior to the Nonqualified Option Expiration Date.
(b) Termination of Employment and Death. For purposes of
Article II and each nonqualified option granted under Article II, an
Employee Optionee's employment shall be deemed to have terminated at
the close of business on the day preceding the first date on which he
is no longer for any reason whatsoever (including his death) employed
by the Company or a subsidiary or affiliated entity of the Company.
Except as provided below, if an Employee Optionee's employment is
terminated for any reason whatsoever (including his death), each
nonqualified option granted to him under Article II and all of his
rights thereunder shall wholly and completely terminate:
(i) At the time the Employee Optionee's employment
is terminated if termination occurs within the six-month period
following the date of grant; or
(ii) At the time the Employee Optionee's employment
is terminated if his employment is terminated because he is
discharged for fraud, theft or embezzlement committed against
the Company or a subsidiary, affiliated entity or customer of
the Company (collectively CAUSE); or
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(iii) At the expiration of a period of one year after
the Employee Optionee's death (but in no event later than the
Nonqualified Option Expiration Date) if the Employee Optionee's
employment is terminated after the six-month period following
the date of grant by reason of his death. To the extent
exercisable, a nonqualified option granted under Article II may
be exercised by the Employee Optionee's estate or by the person
or persons who acquire the right to exercise his option by
bequest or inheritance with respect to any or all of the shares
remaining subject to his option at the time of his death; or
(iv) Unless it is otherwise provided in the option
agreement, at the expiration of a period of three years after
the Employee Optionee's employment is terminated if the
Employee Optionee's employment is terminated after the
six-month period following the date of grant because of
retirement or disability (but in no event later than the
Nonqualified Option Expiration Date); or
(v) Unless it is otherwise provided in the option
agreement (but in no event longer than one year after the
Employee Optionee's employment is terminated), at the
expiration of a period of three months after the Employee
Optionee's employment is terminated (but in no event later than
the Nonqualified Option Expiration Date) if the Employee
Optionee's employment is terminated after the six-month period
following the date of grant for any reason other than his
death, retirement, disability or Cause; or
(vi) Notwithstanding the above, with respect to all
options outstanding at the date of a Change of Control, if the
Employee Optionee's employment is terminated within the
one-year period following such Change of Control other than for
Cause, at the expiration of one year following the Employee
Optionee's date of termination, unless subparagraph (iii),
(iv), (v) or (vii) provides a longer period for the exercise of
such options (but in no event later than the Nonqualified
Option Expiration Date); or
(vii) Notwithstanding the foregoing, the Committee, in
its discretion, may extend the period for exercise of any
option upon an Employee Optionee's termination, but in no event
later than the Nonqualified Option Expiration Date.
As used in this Plan the term "RETIREMENT" means the termination of an
employee's employment with the Company, its subsidiaries and affiliated
entities (i) on or after reaching age 65 or (ii) on or after reaching
age 55 with the consent of the Board, for reasons other than death,
disability or Cause, and the term "DISABILITY" shall mean an employee
is suffering from a mental or physical disability, which, in the
opinion of the Board, prevents the employee from performing his regular
duties and is expected to be of long continued duration or to result
in death.
(c) Manner of Exercise. In order to exercise a nonqualified
option granted under Article II, the person or persons entitled to
exercise it shall deliver to the Company payment in full for the shares
being purchased, together with any required withholding tax as provided
in Article VIII. The payment of the exercise price for each option
granted under Article II shall be (i) in cash or check payable and
acceptable to the Company, (ii) through tendering to the Company shares
of Common Stock already owned by the person (provided that the Company
may, upon confirming that the person owns the number of shares being
tendered, issue a new
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certificate for the number of shares being acquired pursuant to the
exercise of the option less the number of shares being tendered upon
the exercise and return to the person (or not require surrender of) the
certificate for the shares being tendered upon the exercise), (iii) by
the person delivering to the Company a properly executed exercise
notice together with irrevocable instructions to a broker to promptly
deliver to the Company cash or a check payable and acceptable to the
Company to pay the option exercise price and any applicable withholding
taxes; provided that in the event the person chooses to pay the option
exercise price as provided in (iii) above, the person and the broker
shall comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure or (iv) by any combination of the
above. The value of each share of Common Stock tendered pursuant to
(ii) above shall be deemed to be equal to the per share price of the
last sale of Common Stock on the trading day prior to the date the
option is exercised, based on the composite transactions in the Common
Stock as reported in The Wall Street Journal. The date of sale of the
shares by the broker pursuant to a "cashless exercise" under (iii)
above shall be the date of exercise of the option. If the Committee so
requires, such person or persons shall also deliver a written
representation that all shares being purchased are being acquired for
investment and not with a view to, or for resale in connection with,
any distribution of such shares.
(d) Options not Transferable. No nonqualified option
granted under Article II shall be transferable otherwise than by will
or by the laws of descent and distribution and, during the lifetime of
the Employee Optionee to whom any such option is granted, it shall be
exercisable only by the Employee Optionee. Any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of, or to subject to
execution, attachment or similar process, any nonqualified option
granted under Article II, or any right thereunder, contrary to the
provisions hereof, shall be void and ineffective, shall give no right
to the purported transferee, and shall, at the sole discretion of the
Committee, result in forfeiture of the option with respect to the
shares involved in such attempt.
(e) Adjustment of Shares. In the event that at any time
after the effective date of the Plan the outstanding shares of Common
Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split, stock
dividend, combination of shares or the like, the Committee shall make
an appropriate and equitable adjustment in the number and kind of
shares as to which all outstanding nonqualified options granted under
Article II, or portions thereof then unexercised, shall be exercisable,
and with any necessary corresponding adjustment in exercise price per
share, to the end that after such event the shares subject to Article
II of the Plan and each Employee Optionee's proportionate interest
shall be maintained as before the occurrence of such event. Any such
adjustment made by the Committee shall be final and binding upon all
Employee Optionees, the Company, and all other interested persons.
(f) Listing and Registration of Shares. Each nonqualified
option granted under Article II shall be subject to the requirement
that if at any time the Committee determines, in its discretion, that
the listing, registration, or qualification of the shares subject to
such option under any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the
issue or purchase of shares thereunder, such option may not be
exercised in
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whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained and the same
shall have been free of any conditions not acceptable to the
Committee.
4. Amendment. The Committee may, with the consent of the person or
persons entitled to exercise any outstanding nonqualified option granted under
Article II, amend such nonqualified option; provided, however, that any such
amendment increasing the number of shares of Common Stock subject to such
option (except as provided in Article II, Paragraph 3(e)) or reducing the
exercise price per share of such option (except as provided in Article II,
Paragraph 3(e)) shall in each case be subject to approval by the stockholders
of the Company. The Committee may at any time or from time to time, in its
discretion, in the case of any nonqualified option previously granted under
Article II which is not then immediately exercisable in full, accelerate the
time or times at which such option may be exercised to any earlier time or
times. The Committee, in its absolute discretion, may grant to holders of
outstanding nonqualified options granted under Article II, in exchange for the
surrender and cancellation of such options, new options having exercise prices
lower (or higher) than the exercise price provided in the options so
surrendered and canceled and containing such other terms and conditions as the
Committee may deem appropriate.
5. Acceleration upon a Change of Control. Notwithstanding any
provision in Article II or in any document or instrument evidencing a
nonqualified option granted under Article II, upon the occurrence of a Change
of Control each nonqualified option previously granted under Article II which
is not then immediately exercisable in full shall be immediately exercisable in
full.
6. Other Provisions.
(a) The person or persons entitled to exercise, or who have
exercised, a nonqualified option granted under Article II shall not be entitled
to any rights as a stockholder of the Company with respect to any shares
subject to such option until he shall have become the holder of record of such
shares.
(b) No nonqualified option granted under Article II shall be
construed as limiting any right which the Company or any subsidiary or
affiliated entity of the Company may have to terminate at any time, with or
without cause, the employment of any person to whom such option has been
granted.
(c) Notwithstanding any provision of the Plan or the terms of any
nonqualified option granted under Article II, the Company shall not be required
to issue any shares hereunder if such issuance would, in the judgment of the
Committee, constitute a violation of any state or federal law or of the rules
or regulations of any governmental regulatory body.
ARTICLE III
INCENTIVE STOCK OPTIONS
1. Eligible Employees. Key employees and officers (whether or not
they are directors) of the Company or its Parent Corporation or any Subsidiary
Corporation of the Company shall be eligible to receive incentive stock options
under this Article III; provided, however, no such person may receive more than
250,000 incentive stock options and/or nonqualified options hereunder during
any calendar year. As used in
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Article III, the terms "PARENT CORPORATION" and "SUBSIDIARY CORPORATION" shall
have the meanings ascribed to them in Section 424 of the Code.
2. Calculation of Exercise Price. The exercise price to be paid
for each share of Common Stock deliverable upon exercise of each incentive
stock option granted under Article III shall be equal to the fair market value
per share of Common Stock at the time of grant as determined by the Committee,
based on the composite transactions in the Common Stock as reported by The Wall
Street Journal, and shall not be less than the per share price of the last sale
of Common Stock on the trading day prior to the grant of such option; provided,
however, than in the case of an Employee Optionee who, at the time such option
is granted, owns (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company
or of its Parent Corporation or any Subsidiary Corporation, then the exercise
price per share shall be at least 110% of the fair market value per share of
Common Stock at the time of grant. The exercise price for each incentive stock
option shall be subject to adjustment as provided in Article III, Paragraph
3(e).
3. Terms and Conditions of Options. Incentive stock options
granted under Article III shall be in such form as the Committee may from time
to time approve. Options granted under Article III shall be subject to the
following terms and conditions and may contain such additional terms and
conditions, not inconsistent with Article III, as the Committee shall deem
desirable:
(a) Option Period and Conditions and Limitations on
Exercise. Subject to Article III, Paragraphs 4 and 5, no incentive
stock option granted under Article III shall be exercisable with
respect to any of the shares subject to such option earlier than the
date which is six months from the date of grant nor later than the date
which is ten years after the date of grant; provided, however, that in
the case of an Employee Optionee who, at the time such option is
granted, owns (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of
the Company or of its Parent Corporation or any Subsidiary Corporation,
then such option shall not be exercisable with respect to any of the
shares subject to such option later than the date which is five years
after the date of grant. The date on which an incentive stock option
ultimately becomes unexercisable under the previous sentence is
hereinafter referred to as the "ISO EXPIRATION DATE." To the extent
not prohibited by other provisions of the Plan, each incentive stock
option granted under Article III shall be exercisable at such time or
times as the Committee in its discretion may determine at or prior to
the time such option is granted; provided, however, that unless the
Committee determines otherwise, each incentive stock option granted
under Article III shall be exercisable from time to time, in whole or
in part, at any time after six months from the date of grant and prior
to the ISO Expiration Date.
(b) Termination of Employment and Death. For purposes of
Article III and each incentive stock option granted under Article III,
an Employee Optionee's employment shall be deemed to have terminated at
the close of business on the day preceding the first date on which he
is no longer for any reason whatsoever (including his death) employed
by the Company or a subsidiary or affiliated entity of the Company.
Except as provided below, if an Employee Optionee's employment is
terminated by any reason whatsoever (including his death), each
incentive stock option granted to him and all of his rights thereunder
shall wholly and completely terminate:
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(i) At the time the Employee Optionee's employment
is terminated if termination occurs within the six-month period
following the date of grant; or
(ii) At the time the Employee Optionee's employment
is terminated if his employment is terminated due to Cause; or
(iii) At the expiration of a period of one year after
the Employee Optionee's death (but in no event later than the
ISO Expiration Date) if the Employee Optionee's employment is
terminated after the six-month period following the date of
grant by reason of his death. To the extent exercisable, an
incentive stock option granted under Article III of the Plan
may be exercised by the Employee Optionee's estate or by the
person or persons who acquire the right to exercise his option
by bequest or inheritance with respect to any or all of the
shares remaining subject to his option at the time of his
death; or
(iv) Unless it is otherwise provided in the option
agreement, at the expiration of a period of three years after
the Employee Optionee's employment is terminated if the
Employee Optionee's employment is terminated after the
six-month period following the date of grant because of
retirement or disability (but in no event later than the ISO
Expiration Date); or
(v) Unless it is otherwise provided in the option
agreement (but in no event longer than one year after the
Employee Optionee's employment is terminated), at the
expiration of a period of three months after the Employee
Optionee's employment is terminated (but in no event later than
the ISO Expiration Date) if the Employee Optionee's employment
is terminated after the six-month period following the date of
grant for any other reason than his death, retirement,
disability or Cause; or
(vi) Notwithstanding the above, with respect to all
options outstanding at the date of a Change of Control, if the
Employee Optionee's employment is terminated within the
one-year period following such Change of Control other than for
Cause, at the expiration of one year following the Employee
Optionee's date of termination, unless subparagraph (iii),
(iv), (v) or (vii) provides a longer period for the exercise of
such options (but in no event later than the ISO Expiration
Date); or
(vii) Notwithstanding the foregoing, the Committee, in
its discretion, may extend the period for exercise of any
option upon an Employee Optionee's termination, but in no event
later than the ISO Expiration Date.
In the event and to the extent that an incentive stock option granted
under Article III is not exercised (A) within three months after the
Employee Optionee's employment is terminated because of retirement or a
disability not within the meaning of Section 22(e)(3) of the Code or
(B) within one year after the Employee Optionee's employment is
terminated because of disability within the meaning of Section 22(e)(3)
of the Code, such option shall be taxed as a nonqualified option and
shall be subject to the manner of exercise provisions described in
Article II, Paragraph 3(c). Further, in the event that an Employee
Optionee's employment is not terminated in accordance with the first
sentence of Article III, Paragraph 3(b), but such Employee Optionee
ceases to be employed by the Company, its Parent
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Corporation or any Subsidiary Corporation, then, to the extent an
incentive stock option granted under Article III is not exercised
within three months after the date of such cessation, such option shall
be taxed as a nonqualified option and shall be subject to the manner of
exercise provisions described in Article II, Paragraph 3(c).
(c) Manner of Exercise. In order to exercise an incentive
stock option granted under Article III, the person or persons entitled
to exercise it shall deliver to the Company payment in full for the
shares being purchased. The payment of the exercise price for each
option granted under Article III shall be in (i) cash or check payable
and acceptable to the Company, (ii) through tendering to the Company
shares of Common Stock already owned by the person (provided that the
Company may, upon confirming that the person owns the number of shares
being tendered, issue a new certificate for the number of shares being
acquired pursuant to the exercise of the option less the number of
shares being tendered upon the exercise and return to the person (or
not require surrender of) the certificate for the shares being tendered
upon the exercise), (iii) by the person delivering to the Company a
properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a
check payable and acceptable to the Company to pay the option exercise
price; provided that in the event the person chooses to pay the option
exercise price as provided in (iii) above, the person and the broker
shall comply with such procedures and enter into such agreements of
indemnity and other agreements as the Committee shall prescribe as a
condition of such payment procedure or (iv) by any combination of the
above. The value of each share of Common Stock tendered pursuant to
(ii) above shall be deemed to be equal to the per share price of the
last sale of Common Stock on the trading day prior to the date the
option is exercised, based on the composite transactions in the Common
Stock as reported in The Wall Street Journal. The date of sale of the
shares by the broker pursuant to a "cashless exercise" under (iii)
above, shall be the date of exercise of the option. If the Committee
so requires, such person or persons shall also deliver a written
representation that all shares being purchased are being acquired for
investment and not with a view to, or for resale in connection with,
any distribution of such shares.
(d) Options not Transferable. No incentive stock option
granted under Article III shall be transferable otherwise than by will
or by the laws of descent and distribution and, during the lifetime of
the Employee Optionee to whom any option is granted, it shall be
exercisable only by such Employee Optionee. Any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of, or to subject to
execution, attachment or similar process, any incentive stock option
granted under Article III, or any right thereunder, contrary to the
provisions hereof, shall be void and ineffective, shall give no right
to the purported transferee, and shall, at the sole discretion of the
Committee, result in forfeiture of the option with respect to the
shares involved in such attempt.
(e) Adjustment of Shares. In the event that at any time
after the effective date of the Plan the outstanding shares of Common
Stock are changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split, stock
dividend, combination of shares or the like, the Committee shall make
an appropriate and equitable adjustment in the number and kind of
shares as to which all outstanding incentive stock options granted
under Article III, or portions thereof then unexercised, shall be
exercisable, and with any necessary corresponding adjustment in
exercise price per share, to the end that after such
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event the shares subject to Article III of the Plan and each Employee
Optionee's proportionate interest shall be maintained as before the
occurrence of such event. Any such adjustment made by the Committee
shall be final and binding upon all Employee Optionees, the Company,
and all other interested persons. Any adjustment of an incentive stock
option under this paragraph shall be made in such manner as not to
constitute a "MODIFICATION" within the meaning of Section 424(h)(3) of
the Code.
(f) Listing and Registration of Shares. Each incentive
stock option granted under Article III shall be subject to the
requirement that if at any time the Committee determines, in its
discretion, that the listing, registration, or qualification of the
shares subject to such option upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the issue or purchase of shares thereunder, such
option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained and the same shall have been free of any
conditions not acceptable to the Committee.
(g) Limitation on Amount. Notwithstanding any other
provision of the Plan, to the extent that the aggregate fair market
value (determined as of the time the respective incentive stock option
is granted) of the Common Stock with respect to which incentive stock
options are exercisable for the first time by an Employee Optionee
during any calendar year under all incentive stock option plans of the
Company and its Parent Corporation and Subsidiary Corporations exceeds
$100,000, such incentive stock options shall be taxed as nonqualified
options and shall be subject to the manner of exercise provisions
described in Article II, Paragraph 3(c). The Committee shall
determine, in accordance with applicable provisions of the Code,
Treasury Regulations and other administrative pronouncements, which of
an Employee Optionee's incentive stock options will be treated as
nonqualified options because of such limitation and shall notify the
Employee Optionee of such determination as soon as practicable after
such determination.
4. Amendment. The Committee may, with the consent of the person or
persons entitled to exercise any outstanding incentive stock option granted
under Article III, amend such incentive stock option; provided, however, that
any such amendment increasing the number of shares of Common Stock subject to
such option (except as provided in Article III, Paragraph 3(e)) or reducing the
exercise price per share of such option (except as provided in Article III,
Paragraph 3(e)) shall in each case be subject to approval by the stockholders
of the Company. Subject to Article III, Paragraph 3(g), the Committee may at
any time or from time to time, in its discretion, in the case of any incentive
stock option previously granted under Article III which is not then immediately
exercisable in full, accelerate the time or times at which such option may be
exercised to any earlier time or times.
5. Acceleration upon a Change of Control. Notwithstanding any
provision in Article III or in any document or instrument evidencing an
incentive stock option granted under Article III, but subject to the provisions
of Article III, Paragraph 3(g), upon the occurrence of a Change of Control,
each incentive stock option previously granted under Article III which is not
then immediately exercisable in full shall be immediately exercisable in full.
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6. Other Provisions.
(a) The person or persons entitled to exercise, or who have
exercised, an incentive stock option granted under Article III shall not be
entitled to any rights as a stockholder of the Company with respect to any
shares subject to such option until he shall have become the holder of record
of such shares.
(b) No incentive stock option granted under Article III shall be
construed as limiting any right which the Company or any subsidiary or
affiliated entity of the Company may have to terminate at any time, with or
without cause, the employment of any person to whom such option has been
granted.
(c) Notwithstanding any provision of the Plan or the terms of any
incentive stock option granted under Article III, the Company shall not be
required to issue any shares hereunder if such issuance would, in the judgment
of the Committee, constitute a violation of any state or federal law or of the
rules or regulations of any governmental regulatory body.
(d) The Committee may require any person who exercises an incentive
stock option to give prompt notice to the Company of any disposition of shares
of Common Stock acquired upon exercise of an incentive stock option within two
years after the date of grant of such option or within one year after the
transfer of shares to such person.
ARTICLE IV
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
1. Eligible Persons. Persons who are members of the Board but are
neither employees nor officers of the Company, its subsidiaries or affiliated
entities ("NON-EMPLOYEES DIRECTORS") shall receive options under, and solely
under, this Article IV.
2. Initial Granting of Options to Non-Employee Directors After the
1990 Plan Termination. Subject to stockholder approval of the Plan pursuant to
Article I, Paragraph 7, and to the limitation of the number of shares of Common
Stock set forth in Article I, Paragraph 2, each Non-Employee Director who is
first elected to the Board on or after the date director options may no longer
be granted under the terms of the Company's 1990 Stock Incentive Plan (the
"1990 PLAN TERMINATION"), is hereby granted, effective on the date of his
initial election (which date shall be the date of grant for purposes hereof), a
nonqualified option to purchase 1,000 shares of Common Stock (subject to
adjustment in the same manner provided in Article IV, Paragraph 5(e) with
respect to shares of Common Stock subject to options then outstanding).
3. Annual Granting of Options to Non-Employee Directors. Subject to
stockholder approval of the Plan pursuant to Article I, Paragraph 7, and to the
limitation of the number of shares of Common Stock set forth in Article I,
Paragraph 2, a nonqualified option to purchase 1,000 (increased to 3,000 after
the 1990 Plan Termination) shares of Common Stock (subject to adjustment in the
same manner provided in Article IV, Paragraph 5(e) with respect to shares of
Common Stock subject to options then outstanding) is hereby granted, effective
the fourth Thursday of October of 1995 and each year thereafter until the
expiration of the Plan, to each person who is a Non-Employee Director on each
such date (which date shall be the date of grant for purposes hereof).
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4. Calculation of Exercise Price. The exercise price to be paid
for each share of Common Stock deliverable upon exercise of each option granted
under Article IV shall be equal to the lesser of (a) the per share price of the
last sale of Common Stock on the trading day prior to the date of grant
relating to such option, based on the composite transactions in the Common
Stock as reported by The Wall Street Journal, and (b) the arithmetic average of
the closing price per share of Common Stock on all days in which such stock was
traded during the 90-day period before the date of grant, based on the
composite transactions in the Common Stock as reported by The Wall Street
Journal. The exercise price for each option granted under Article IV shall be
subject to adjustment as provided in Article IV, Paragraph 5(e).
5. Terms and Conditions of Options. Options granted under Article
IV shall be subject to the following terms and conditions:
(a) Option Period and Conditions and Limitations on
Exercise. Each option granted under Article IV shall be exercisable
from time to time, in whole or in part, at any time after six months
from the date of grant and prior to the date which is ten years after
the date of grant (the "OPTION EXPIRATION DATE"). Notwithstanding the
foregoing or any provision in any document or instrument evidencing an
option granted under Article IV, upon the occurrence of a Change of
Control, each option previously granted under Article IV which is not
then immediately exercisable in full shall be immediately exercisable
in full.
(b) Termination of Directorship and Death. For purposes of
Article IV and each option granted under Article IV, a Non-Employee
Director's directorship shall be deemed to have terminated at the close
of business on the day preceding the first date on which he ceases to
be a member of the Board for any reason whatsoever (including his
death). If a Non-Employee Director's directorship is terminated for any
reason whatsoever (including his death), each option granted to him
under Article IV and all of his rights thereunder shall wholly and
completely terminate:
(i) At the time the Non-Employee Director's
directorship is terminated if termination occurs within the
six-month period following the date of grant; or
(ii) At the time the Non-Employee Director's
directorship is terminated if his directorship is terminated as
a result of his removal from the Board for cause (other than
disability or in accordance with the provisions of the
Company's Bylaws regarding automatic termination of directors'
terms of office); or
(iii) At the expiration of a period of one year after
the Non-Employee Director's death (but in no event later than
the Option Expiration Date) if the Non-Employee Director's
directorship is terminated after the six-month period following
the date of grant by reason of his death. To the extent
exercisable, an option granted under Article IV may be
exercised by the Non-Employee Director's estate or by the
person or persons who acquire the right to exercise his option
by bequest or inheritance with respect to any or all of the
shares remaining subject to his option at the time of his
death; or
(iv) At the expiration of a period of three years
after the Non-Employee Director's directorship is terminated if
such person's directorship is
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terminated after the six-month period following the date of
grant as a result of such person's resignation or removal from
the Board because of disability or in accordance with the
provisions of the Company's Bylaws regarding automatic
termination of directors' terms of office (but in no
event later than the Option Expiration Date); or
(v) At the expiration of a period of three months
after the Non-Employee Director's directorship is terminated
(but in no event later than the Option Expiration Date) if the
Non-Employee Director's directorship is terminated after the
six-month period following the date of grant for any reason
other than the reasons specified in Article IV, Paragraphs
5(b)(ii) through 5(b)(iv).
(c) Manner of Exercise. In order to exercise a nonqualified
option granted under Article II, the person or persons entitled to
exercise it shall deliver to the Company payment in full for the shares
being purchased, together with any required withholding tax as provided
in Article VII. The payment of the exercise price for each option
granted under Article II shall be (i) in cash or check payable and
acceptable to the Company, (ii) through tendering to the Company shares
of Common Stock already owned by the person (provided that the Company
may, upon confirming that the person owns the number of shares being
tendered, issuef a new certificate for the number of shares being
acquired pursuant to the exercise of the option less the number of
shares being tendered upon the exercise and return to the person (or
not require surrender of) the certificate for the shares being tendered
upon the exercise), (iii) by the person delivering to the Company a
properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company cash or a
check payable and acceptable to the Company to pay the option exercise
price and any applicable withholding taxes; provided that in the event
the person chooses to pay the option exercise price as provided in
(iii) above, the person and the broker shall comply with such
procedures and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of such
payment procedure or (iv) by any combination of the above. The value
of each share of Common Stock tendered pursuant to (ii) above shall be
deemed to be equal to the per share price of the last sale of Common
Stock on the trading day prior to the date the option is exercised,
based on the composite transactions in the Common Stock as reported in
The Wall Street Journal. The date of sale of the shares by the broker
pursuant to a "cashless exercise" under (iii) above shall be the date
of exercise of the option. If the Committee so requires, such person
or persons shall also deliver a written representation that all shares
being purchased are being acquired for investment and not with a view
to, or for resale in connection with, any distribution of such shares.
(d) Options Not Transferable. No option granted under
Article IV shall be transferable otherwise than by will or by the laws
of descent and distribution and, during the lifetime of the
Non-Employee Director to whom any such option is granted, it shall be
exercisable only by such Non-Employee Director. Any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of, or to
subject to execution, attachment or similar process, any option granted
under Article IV, or any right thereunder, contrary to the provisions
hereof, shall be void and ineffective and shall give no right to the
purported transferee.
(e) Adjustment of Shares. In the event that at any time
after the effective date of the Plan the outstanding shares of Common
Stock are changed into or
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exchanged for a different number or kind of shares or other securities
of the Company by reason of merger, consolidation, recapitalization,
reclassification, stock split, stock dividend, combination of shares or
the like, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares as to which all outstanding
nonqualified options granted under Article II, or portions thereof then
unexercised, shall be exercisable, and with any necessary corresponding
adjustment in exercise price per share, to the end that after such
event the shares subject to Article II of the Plan and each
Non-Employee Director's proportionate interest shall be maintained as
before the occurrence of such event. Any adjustment provided for in
the preceding provisions of this Paragraph 5(e) shall be subject
to any required stockholder action.
(f) Listing and Registration of Shares. Each option granted
under Article IV shall be subject to the requirement that if at any
time the Committee determines, in its discretion, that the listing,
registration, or qualification of the shares subject to such option
under any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the issue or
purchase of shares thereunder, such option may not be exercised in
whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained and the same
shall have been free of any conditions not acceptable to the Committee.
6. Other Provisions.
(a) The person or persons entitled to exercise, or who have
exercised, an option granted under Article IV shall not be entitled to any
rights as a stockholder of the Company with respect to any shares subject to
such option until he shall have become the holder of record of such shares.
(b) No option granted under Article IV shall be construed as
limiting any right which either the stockholders of the Company or the Board
may have to remove at any time, with or without cause, any person to whom such
option has been granted from the Board.
(c) Notwithstanding any provision of the Plan or the terms of any
option granted under Article IV, the Company shall not be required to issue any
shares hereunder if such issuance would, in the judgment of the Committee,
constitute a violation of any state or federal law or of the rule or
regulations of any governmental regulatory body.
(d) If, as of any date that the Plan is in effect, there are not
sufficient shares of Common Stock available under the Plan to allow for the
grant to each Non-Employee Director of an option for the number of shares
provided for in Article IV, each Non-Employee Director shall receive an option
for his pro-rata share of the total number of shares of Common Stock then
available under the Plan.
ARTICLE V
PERFORMANCE STOCK AND PERFORMANCE UNITS
1. Eligible Employees. Key employees and officers (whether or not
they are directors) of the Company, its subsidiaries and affiliated entities
shall be eligible to receive awards of Performance Stock and/or Performance
Units (as hereinafter defined)
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under this Article V; provided, however, no such individual may receive more
than 250,000 Performance Stock and/or Performance Unit awards hereunder during
any calendar year.
2. Terms and Conditions of Performance Awards. Shares of
Performance Stock and Performance Units granted under Article V to an eligible
employee (an "EMPLOYEE GRANTEE") shall be, with respect to Performance Stock,
shares of Common Stock and, with respect to Performance Units, a unit shall
represent a phantom share of Common Stock. Both types of Awards shall be
subject to the following terms and conditions and may contain such additional
terms and conditions, not inconsistent with Article V, as the Committee shall
deem desirable:
(a) Performance Period and Vesting. Subject to Article V,
Paragraphs 3 and 4, no shares of Performance Stock or Performance Units
granted under Article V shall be subject to becoming vested; i.e.,
earned and nonforfeitable, earlier than the date which is six months
from the date of grant nor later than the date which is ten years after
the date of grant (the "PERFORMANCE PERIOD"). To the extent not
prohibited by other provisions of the Plan, each share of Performance
Stock and each Performance Unit granted under Article V shall be
subject to becoming vested upon the achievement of such performance
goals (Company and/or individual) over such Performance Period as the
Committee in its discretion may determine at or prior to the grant of
such performance Award. The Committee shall also designate, at the
date of grant, whether a performance Award is intended to meet the
requirements of Section 162(m) of the Code. With respect to any
Performance Stock or Performance Unit grant that is intended to meet
the requirements of Section 162(m) of the Code, the performance goal or
goals for such Award shall be with respect to one or more of the
following: earnings per share; earnings before interest, taxes,
depreciation and amortization expenses ("EBITDA"); earnings before
interest and taxes ("EBIT"); EBITDA, EBIT or earnings before taxes and
unusual or nonrecurring items as measured either against the annual
budget or as a ratio to revenue; market share; sales; costs; return on
equity; operating cash flow; return on net capital employed ("RONCE")
and/or stock price performance. The goals can be applied, where
appropriate, with respect to an individual, a business unit or the
Company as a whole and need not be based on increases or positive
results, but can be based on maintaining the status quo or limiting
economic losses, for example. Which goals to use with respect to a
performance Award, the weighting of the goals if more than one is used,
and whether the goal is to be measured against a Company-established
budget or target, an index or a peer group of companies, shall also be
determined by the Committee at the time of grant of the Award.
(b) Termination of Employment and Death. For purposes of
Article V, and each share of Performance Stock and each Performance
Unit granted hereunder, an Employee Grantee's employment shall be
deemed to have terminated at the close of business on the day preceding
the first date on which he is no longer for any reason whatsoever
(including his death) employed by the Company or a subsidiary or an
affiliated entity of the Company. If an Employee Grantee's employment
is terminated for any reason whatsoever (including his death), all of
his rights with respect to each share of Performance Stock and each
Performance Unit granted to him under Article V which is not then
vested shall wholly and completely terminate:
(i) At the time the Employee Grantee's employment is
terminated if termination is for any reason other than
retirement, disability or death; or
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(ii) If the Employee Grantee's employment is
terminated due to retirement, disability or death, at the time
of such termination but only with respect to that portion of
the Award which is equal to the fraction, the numerator of
which is the number of full calendar months remaining in the
Performance Period and the denominator of which is the total
number of calendar months in the Performance Period; provided,
however, the remaining, nonforfeited portion of the Award shall
continue to be subject to the terms and conditions of the
Performance Period and at the end of such Performance Period
shall be forfeited and/or paid as unrestricted stock to the
Employee Grantee depending on the achievement of the goals for
such Performance Period; provided further, however, with
respect to any performance Award not intended on its date of
grant to meet the requirements of Section 162(m) of the Code,
the Committee may, in its sole discretion, deem the terms and
conditions have been met at the date of such termination for
all or part of such remaining, nonforfeited portion of the
Performance Stock award or Performance Unit award.
(c) Performance Awards not Transferable. No shares of
Performance Stock or Performance Units granted under Article V shall be
transferable during a Performance Period otherwise than by will or by
the laws of descent and distribution. Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of, or to subject to
execution, attachment or similar process, any shares of Performance
Stock or Performance Units granted under Article V, or any right
thereunder, contrary to the provisions hereof, shall be void and
ineffective, shall give no right to the purported transferee, and
shall, at the sole discretion of the Committee, result in forfeiture of
the shares of the Performance Stock or Performance Units involved in
such attempt.
3. Amendment. With respect to any outstanding Performance Stock or
Performance Unit that does not qualify as performance based compensation under
Section 162(m) of the Code, the Committee may, at any time or times, amend the
performance objectives and/or the Performance Period for earning such Award.
However, with respect to any Performance Stock or Performance Unit Award that
is intended on its date of grant to qualify as performance based compensation
under Section 162(m) of the Code, the Committee, in its sole discretion and
without the consent of the Employee-Grantee, may amend the Award only to
reflect a change in corporate capitalization, such as a stock split or
dividend, or a corporate transaction, such as a corporate merger, a corporate
consolidation, any corporate separation (including a spinoff or other
distribution of stock or property by a corporation), any corporate
reorganization (whether or not such reorganization comes within the definition
of such term in section 368), or any partial or complete corporate liquidation.
4. Acceleration upon a Change of Control. Notwithstanding any
provision in Article V or in any document or instrument evidencing Performance
Stock or Performance Units granted under Article V, upon the occurrence of a
Change of Control each share of Performance Stock and each Performance Unit
previously granted under Article V which is not then immediately vested in full
shall be immediately vested in full, all performance goals shall be deemed to
have been met to the fullest extent under the terms of such grant, and the
Performance Periods shall immediately end.
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<PAGE> 19
5. Other Provisions.
(a) No grant of Performance Stock or Performance Units under
Article V shall be construed as limiting any right which the Company or
any subsidiary or affiliated entity of the Company may have to
terminate at any time, with or without cause, the employment of any
person to whom such Award has been granted.
(b) Each certificate representing Performance Stock awarded
under the Plan shall be registered in the name of the Employee Grantee
and, during the Performance Period, shall be left in deposit with the
Company and a stock power endorsed in blank. The grantee of
Performance Stock shall have all the rights of a stockholder with
respect to such shares including the right to vote and the right to
receive dividends or other distributions paid or made with respect to
such shares. Any certificate or certificates representing shares of
Performance Stock shall bear a legend similar to the following:
The shares represented by this certificate have been
issued pursuant to the terms of the BJ Services Company 1995
Incentive Plan and may not be sold, pledged, transferred,
assigned or otherwise encumbered in any manner except as is set
forth in the terms of such award dated ____________.
After certification by the Committee as to the satisfaction of
the terms and conditions set by the Committee with respect to an Award
of (i) Performance Stock, a certificate, without the legend set forth
above, for the number of shares of Common Stock that are no longer
subject to such restrictions, terms and conditions shall be delivered
to the employee and (ii) Performance Units, a certificate for the
number of shares of Common Stock equal to the number of Performance
Units vested shall be delivered to the employee. The remaining
unearned shares of Performance Stock issued with respect to such Award,
if any, or unearned Performance Units, as the case may be, shall either
be forfeited back to the Company or, if appropriate under the terms of
the Award applicable to such shares or units, shall continue to be
subject to the restrictions, terms and conditions set by the Committee
with respect to such Award.
ARTICLE VI
BONUS STOCK
The Committee may, from time to time and subject to the provisions of
the Plan, grant shares of Bonus Stock to key employees and officers (whether or
not they are directors) of the Company, its subsidiaries and affiliated
entities. Bonus Stock shall be shares of Common Stock that are not subject to
a Performance Period under Article V.
ARTICLE VII
CASH AWARDS
1. Eligible Employees. Officers (whether or not they are
directors) of the Company, its subsidiaries and affiliated entities shall be
eligible to receive Cash Awards, which may be Tandem Cash Tax Rights,
Performance Cash Awards or Bonus Cash Awards (as hereinafter defined) under
this Article VII.
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<PAGE> 20
2. Tandem Cash Tax Rights. The Committee may grant a Tandem Cash
Tax Right with respect to a Performance Stock or Performance Unit Award that,
subject to the further provisions hereof, entitles the Employee Grantee to
receive from the Company, upon the later of the vesting of the Performance
Stock or Performance Unit Award or the date such Performance Stock or
Performance Unit Award is taxable to the Employee Grantee, an amount of cash
such that the "net" benefit received by the Employee Grantee, after paying all
applicable federal, state and other taxes (assuming for this purpose, the
highest marginal income tax rate for individuals applies) on the Performance
Stock or Performance Unit Award and this Tandem Cash Tax Right, shall be equal
to the value of the Performance Stock or Performance Unit Award payment
received by the Employee Grantee before any such taxes thereon.
3. Terms and Conditions of Performance Cash Awards. Performance
Cash Awards granted an Employee Grantee shall be subject to the following terms
and conditions and may contain such additional terms and conditions, not
inconsistent with Article VII, as the Committee shall deem desirable:
(a) Performance Period and Vesting. Subject to Article VII,
Paragraphs 4 and 5, no Performance Cash Awards granted under Article
VII shall be subject to becoming vested; i.e., earned and
nonforfeitable, earlier than the date which is six months from the date
of grant nor later than the date which is ten years after the date of
grant (the "PERFORMANCE PERIOD"). To the extent not prohibited by
other provisions of the Plan, each Performance Cash Award granted under
Article VII shall be subject to becoming vested upon the achievement of
such performance goals (Company and/or individual) over such
Performance Period as the Committee in its discretion may determine at
or prior to the grant of such Performance Cash Award. The Committee
shall also designate, at the date of grant, whether a Performance Cash
Award is intended to meet the requirements of Section 162(m) of the
Code. With respect to any Performance Cash Award grant that is
intended to meet the requirements of Section 162(m) of the Code, the
performance goal or goals for such Award shall be with respect to one
or more of the following: earnings per share; earnings before
interest, taxes, depreciation and amortization expenses ("EBITDA");
earnings before interest and taxes ("EBIT"); EBITDA, EBIT or earnings
before taxes and unusual or nonrecurring items as measured either
against the annual budget or as a ratio to revenue; market share;
sales; costs; return on equity; operating cash flow; return on net
capital employed ("RONCE") and/or stock price performance. The goals
can be applied, where appropriate, with respect to an individual, a
business unit or the Company as a whole and need not be based on
increases or positive results, but can be based on maintaining the
status quo or limiting economic losses, for example. Which goals to use
with respect to a Performance Cash Award, the weighting of the goals if
more than one is used, and whether the goal is to be measured against a
Company-established budget or target, an index or a peer group of
companies, shall also be determined by the Committee at the time of
grant of the Award.
(b) Termination of Employment and Death. For purposes of
Article VII and each Performance Cash Award granted hereunder, an
Employee Grantee's employment shall be deemed to have terminated at the
close of business on the day preceding the first date on which he is no
longer for any reason whatsoever (including his death) employed by the
Company or a subsidiary or an affiliated entity of the Company. If an
Employee Grantee's employment is terminated for any reason whatsoever
(including his death), all of his rights with respect to each
Performance Cash Award granted to him under Article VII which is not
then vested shall wholly and completely terminate:
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(i) At the time the Employee Grantee's employment is
terminated if termination is for any reason other than
retirement, disability or death; or
(ii) If the Employee Grantee's employment is
terminated due to retirement, disability or death, at the time
of such termination but only with respect to that portion of
the Award which is equal to the fraction, the numerator of
which is the number of full calendar months remaining in the
Performance Period and the denominator of which is the total
number of calendar months in the Performance Period; provided,
however, the remaining, nonforfeited portion of the Award shall
continue to be subject to the terms and conditions of the
Performance Period and at the end of such Performance Period
shall be forfeited and/or paid in cash to the Employee Grantee
depending on the achievement of the goals for such Performance
Period;
provided, however, notwithstanding the foregoing, with respect to any
Performance Cash Award not intended on its date of grant to meet the
requirements of Section 162(m) of the Code, the Committee may, in its sole
discretion, deem the terms and conditions of an Employee Grantee's Performance
Cash Award(s) to have been met in full or in part on the date of such Employee
Grantee's termination of employment, regardless of the reason for such
termination of employment.
(c) Performance Cash Awards not Transferable. No
Performance Cash Awards granted under Article VII shall be transferable
during a Performance Period otherwise than by will or by the laws of
descent and distribution. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of, or to subject to execution,
attachment or similar process, any Performance Cash Awards granted
under Article VII, or any right thereunder, contrary to the provisions
hereof, shall be void and ineffective, shall give no right to the
purported transferee, and shall, at the sole discretion of the
Committee, result in forfeiture of the Performance Cash Awards involved
in such attempt.
(d) Maximum Award. With respect to a Performance Cash Award
that is intended to qualify as performance based compensation under
Section 162(m) of the Code, the maximum aggregate of such awards that
may be granted to any one Employee Grantee during any calendar year
shall not exceed $2 million.
4. Amendment. With respect to any outstanding Performance Cash
Awards that does not qualify as performance based compensation under Section
162(m) of the Code, the Committee may, at any time or times, amend the
performance objectives and/or the Performance Period for earning such Award.
However, with respect to any Performance Cash Award that is intended on its
date of grant to qualify as performance based compensation under Section 162(m)
of the Code, the Committee, in its sole discretion and without the consent of
the Employee-Grantee, may amend the Award only to reflect a change in corporate
capitalization, such as a stock split or dividend, or a corporate transaction,
such as a corporate merger, a corporate consolidation, any corporate separation
(including a spinoff or other distribution of stock or property by a
corporation), any corporate reorganization (whether or not such reorganization
comes within the definition of such term in section 368), or any partial or
complete corporate liquidation.
5. Acceleration upon a Change of Control. Notwithstanding any
provision in Article VII or in any document or instrument evidencing
Performance Cash Awards
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<PAGE> 22
granted under Article VII, upon the occurrence of a Change of Control each
Performance Cash Award previously granted under Article VII which is not then
immediately vested in full shall be immediately vested and payable in cash in
full, all performance goals shall be deemed to have been met to the fullest
extent under the terms of such grant, and the Performance Periods shall
immediately end.
6. Other Provisions.
(a) No grant of a Performance Cash Award under Article VIII
shall be construed as limiting any right which the Company or any
subsidiary or affiliated entity of the Company may have to terminate at
any time, with or without cause, the employment of any person to whom
such Award has been granted.
(b) After certification by the Committee as to the
satisfaction of the terms and conditions set by the Committee with
respect to a Performance Cash Award, the portion of such Award that is
no longer subject to such restrictions, terms and conditions shall be
paid (in cash) to the Employee Grantee. The remaining unearned portion
of such Performance Award, if any, shall either be forfeited or, if
appropriate under the terms applicable to such Award, shall continue to
be subject to the restrictions, terms and conditions set by the
Committee with respect to such Award.
7. Bonus Cash Awards. The Committee may, from time to time and
subject to the provisions of the Plan, grant Bonus Cash Awards to key employees
and officers (whether or not they are directors) of the Company, its
subsidiaries and affiliated entities. Bonus Cash Awards shall be cash payments
that are not subject to a Performance Period under Article VII.
ARTICLE VIII
WITHHOLDING FOR TAXES
Notwithstanding anything in the Plan to the contrary, any issuance of
Common Stock pursuant to the exercise of an option or payment of any other
Award under the Plan shall not be made until appropriate arrangements
satisfactory to the Company have been made for the payment of any tax amounts
(federal, state, local or other) that may be required to be withheld or paid by
the Company with respect thereto. Such arrangements may, at the discretion of
the Committee, include allowing the optionee or grantee to tender to the
Company shares of Common Stock owned by the optionee or grantee, or to request
the Company to withhold a portion of the shares of Common Stock being acquired
pursuant to the Award, whether through the exercise of an option or as a
distribution of earned Performance Stock, payment of earned Performance Units
or as Bonus Stock, which have a fair market value per share as of the date of
such withholding that is not greater than the sum of all tax amounts to be
withheld with respect thereto, together with payment of any remaining portion
of such tax amounts in cash or by check payable and acceptable to the Company;
provided, however, with respect to any Employee Optionee or Employee Grantee
who is subject to Rule 16b-3 at the time withholding is required with respect
to an Award payable in Common Stock, the Company shall automatically withhold
from such Award, to the extent such withholding is not satisfied by a Tandem
Cash Tax Right, a number of shares of Common Stock having an aggregate fair
market value per share equal to the amount of tax required to be withheld.
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ARTICLE IX
PARACHUTE TAX GROSS-UP
To the extent that the grant, payment, or acceleration of vesting or
payment, whether in cash or stock, of any Award made to a participant under the
Plan (a "Benefit") is subject to a golden parachute excise tax under Section
4999(a) of the Code (a "Parachute Tax"), the Company shall pay such person an
amount of cash (the "Gross-up Amount") such that the 'net' Benefit received by
the person under this Plan, after paying all applicable Parachute Taxes
(including those on the Gross-up Amount) and any federal or state income taxes
on the Gross-up Amount, shall be equal to the Benefit that such person would
have received if such Parachute Tax had not been applicable.
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<PAGE> 1
EXHIBIT 5.1
APRIL 13, 1995
Board of Directors
BJ Services Company
5500 Northwest Central Drive
Houston, Texas 77092
Re: Registration Statement on Form S-8
BJ Services Company 1995 Incentive Plan
Gentlemen:
We have acted as special counsel for BJ Services Company, a
Delaware corporation (the "Company"), in connection with the Company's
Registration Statement on Form S-8, dated April 13, 1995 (the "Registration
Statement"), relating to the registration under the Securities Act of 1933, as
amended, of the offering of up to 1,500,000 shares of common stock (the
"Shares"), par value $0.10 per share, of the Company pursuant to the BJ
Services Company 1995 Incentive Plan (the "Plan").
As the basis for the opinion hereinafter expressed, we have
examined such statutes, regulations, corporate records and documents,
certificates of corporate and public officials and other instruments as we have
deemed necessary or advisable for the purposes of this opinion. In such
examination we have assumed the authenticity of all documents submitted to us
as originals and the conformity with the original documents of all documents
submitted to us as copies. In this opinion, the Shares include the associated
preferred share purchase rights that may be issued with the Shares pursuant to
the Stockholder Rights Agreement dated as of January 12, 1994, as amended on
June 22, 1994, and on September 22, 1994, between the Company and First Chicago
Trust Company of New York as rights agent.
Based on the foregoing and on such legal considerations as we
deem relevant, we are of the opinion that:
(1) The Shares have been duly and validly authorized by the
Company.
(2) Upon the issuance by the Company of the Shares and the
payment therefor pursuant to the Plan, the Shares will be validly issued, fully
paid and non-assessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and the reference to our Firm in the Registration
Statement under the heading "Interests of Named Experts and Counsel."
Very truly yours,
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of BJ Services Company on Form S-8 of our report dated November 22,
1994, appearing in the Annual Report on Form 10-K of BJ Services Company for
the year ended September 30, 1994.
DELOITTE & TOUCHE LLP
Houston, Texas
April 13, 1995
