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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________ TO ________ .
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COMMISSION FILE NUMBER 1-10570
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BJ SERVICES COMPANY
(Exact name of registrant as specified in its charter)
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DELAWARE 63-0084140
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5500 NORTHWEST CENTRAL DRIVE, HOUSTON, TEXAS 77092
(Address of principal executive offices) (Zip Code)
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 462-4239
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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COMMON STOCK $.10 PAR VALUE NEW YORK STOCK EXCHANGE
PREFERRED SHARE PURCHASE RIGHTS NEW YORK STOCK EXCHANGE
WARRANTS TO PURCHASE COMMON STOCK NEW YORK STOCK EXCHANGE
12 7/8% SENIOR NOTES DUE DECEMBER 1, 2002 NEW YORK STOCK EXCHANGE
7% SERIES B NOTES DUE 2006 NEW YORK STOCK EXCHANGE
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Securities Registered Pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____ .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (sec.229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K
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At December 6, 1996, the registrant had outstanding 38,243,478 shares of
Common Stock, $.10 par value per share. The aggregate market value of the Common
Stock on such date (based on the closing prices in the daily composite list for
transactions on the New York Stock Exchange) held by nonaffiliates of the
registrant was approximately $1,883,526,134.
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DOCUMENTS INCORPORATED BY REFERENCE:
Portions of Registrant's Proxy Statement for the Annual Meeting of
Stockholders to be held January 23, 1997 are incorporated by reference into Part
III.
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PART I
ITEM 1. BUSINESS
GENERAL
BJ Services Company (the "Company"), whose operations trace back to the
Byron Jackson Company (which was founded in 1872), was organized in 1990 under
the corporate laws of the state of Delaware. The Company is a leading provider
of pressure pumping and other oilfield services serving the petroleum industry
worldwide. The Company's pressure pumping services consist of well stimulation,
cementing, sand control and coiled tubing services used in the completion of new
oil and natural gas wells and in remedial work on existing wells, both onshore
and offshore. Other oilfield services include casing and tubular services
provided to the oil and gas exploration and production industry, commissioning
and inspection services provided to refineries, pipelines and offshore platforms
and specialty chemical services.
In April 1995, the Company completed the acquisition of The Western Company
of North America ("Western" and the "Western Acquisition") for a total purchase
price of $511.4 million (including transaction costs of $7.2 million),
consisting of 12.0 million shares of Common Stock, cash of $247.9 million from
borrowings under the Company's then existing bank credit facility and Warrants
to purchase 4.8 million shares of Common Stock. The Western Acquisition has
provided the Company with a greater critical mass with which to compete in both
domestic and international markets and the realization of significant
consolidation benefits. The Western Acquisition increased the Company's then
existing total revenue base by approximately 75% and more than doubled the
Company's existing domestic revenue base beginning in the June 1995 quarter. In
addition, in excess of $40 million in overhead and redundant operating costs
have been eliminated annually by combining the two companies.
In June 1996, the Company completed the acquisition of Nowsco Well Service
Ltd. ("Nowsco" and the "Nowsco Acquisition") for a total purchase price of
$582.6 million (including transaction costs of $6.2 million). Nowsco's
operations were conducted primarily in Canada, the United States, Europe,
Southeast Asia and Argentina and included oil and gas pressure pumping, coiled
tubing, commissioning and pipeline service businesses. Including the results of
Nowsco's operations prior to the acquisition, pro forma revenues during 1996
were $1.2 billion.
During the year ended September 30, 1996, the Company generated
approximately 85% of its revenue from pressure pumping services and 15% from
product and equipment sales and other oilfield services. Over the same period,
the Company generated approximately 57% of its revenue from domestic operations
and 43% from international operations.
CEMENTING SERVICES
The Company's cementing services, which accounted for approximately 35% of
the Company's total revenue during 1996, consist of blending cement and water
with various solid and liquid additives to create a slurry that is pumped into a
well between the casing and the wellbore. The additives and the properties of
the slurry are designed to ensure the proper pump time, compressive strength and
fluid loss control, and vary depending upon the well depth, downhole
temperatures and pressures, and formation characteristics.
The Company provides regional laboratory testing services to evaluate
slurry properties, which vary with cement supplier and local water properties.
Job design recommendations are developed by the Company's field engineers to
achieve desired porosity and bonding characteristics.
There are a number of specific applications for cementing services used in
oilfield operations. The principal application is the cementing between the
casing pipe and the wellbore during the drilling and completion phase of a well
("primary cementing"). Primary cementing is performed to (i) isolate fluids
behind the casing between productive formations and other formations which would
damage the productivity of hydrocarbon producing zones or damage the quality of
freshwater aquifers, (ii) seal the casing from corrosive formation fluids, and
(iii) provide structural support for the casing string. Cementing services are
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also utilized when recompleting wells from one producing zone to another and
when plugging and abandoning wells.
STIMULATION SERVICES
The Company's stimulation services, which accounted for approximately 49%
of the Company's total revenue during 1996, consist of fracturing, acidizing,
sand control, nitrogen and coiled tubing services. These services are designed
to improve the flow of oil and gas from producing formations and are summarized
as follows:
Fracturing. Fracturing services are performed to enhance the production of
oil and gas from formations having such low permeability that the natural flow
is restricted. The fracturing process consists of pumping a fluid gel into a
cased well at sufficient pressure to "fracture" the formation. Sand, bauxite or
synthetic proppant which is suspended in the gel is pumped into the fracture to
prop it open. The size of a fracturing job is generally expressed in terms of
the pounds of proppant. The main pieces of equipment used in the fracturing
process are the blender, which blends the proppant and chemicals into the
fracturing fluid, and the pumping unit, which is capable of pumping significant
volumes at high pressures. The Company's fracturing pump units are capable of
pumping slurries at pressures of up to 14,000 pounds per square inch at rates of
up to four barrels per minute. In some cases, fracturing is performed by an acid
solution pumped under pressure without a proppant or with small amounts of
proppant.
An important element of fracturing services is the design of the fracturing
treatment, which includes determining the proper fracturing fluid, proppants and
injection program to maximize results. The Company's field engineering staff
provides technical evaluation and job design recommendations as an integral
element of its fracturing service for the customer. Technological developments
in the industry over the past three to four years have focused on proppant
concentration control (i.e., proppant density), liquid gel concentrate
capabilities, computer design and monitoring of jobs and cleanup properties for
fracturing fluids. Over the past decade, the Company has successfully introduced
equipment to respond to these technological advances. During 1991, the Company
introduced a patented, borate-based fracturing fluid, Spectra Frac G(R). During
1993, the Company introduced two additional fracturing fluids, Medallion
Frac(SM) and Spartan Frac(SM). These fracturing fluids are now used in most of
the Company's fracturing treatments. During 1994, the Company commercialized a
proprietary enzyme treatment used in conjunction with the three fracturing
fluids. These "enzyme breakers" can significantly enhance the production of oil
and gas in a wide range of wells.
Acidizing. Acidizing services are performed to enhance the flow rate of oil
and gas from wells with reduced flow caused by formation damage due to drilling
or completion fluids, or the buildup over time of various materials that block
the formation. Acidizing entails pumping large volumes of specially formulated
acids into reservoirs to dissolve barriers and enlarge crevices in the
formation, thereby eliminating obstacles to the flow of oil and gas. The Company
maintains a fleet of mobile acid transport and pumping units to provide
acidizing services for the onshore market.
Sand Control. Sand control services involve the pumping of gravel to fill
the cavity created around the wellbore during drilling. The gravel provides a
filter for the exclusion of formation sand from the producing pathway. Oil and
gas is then free to move through the gravel into the wellbore to be produced.
These services are primarily provided in the Gulf of Mexico, the North Sea,
Venezuela, Trinidad and Indonesia.
Nitrogen. There are a number of uses for nitrogen, an inert gas, in
pressure pumping operations. Used alone, it is effective in displacing fluids in
various oilfield applications. However, nitrogen services are used principally
in applications which support the Company's coiled tubing, cementing and
fracturing services.
Coiled Tubing. Coiled tubing services involve the injection of coiled
tubing into wells to perform various applications and functions for use
principally in well-servicing operations. The application of coiled tubing to
drilling operations has increased in recent years due to improvements in coiled
tubing technology. Coiled tubing is a flexible steel pipe with a diameter of
less than five inches manufactured in lengths of thousands of feet and wound or
coiled along a large reel on a truck or skid-mounted unit. Due to the small
diameter of coiled tubing, it can be inserted through production tubing and used
to perform workovers without using a
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larger, more costly workover rig. The other principal advantages of employing
coiled tubing in a workover include (i) not having to "shut-in" the well during
such operations, thereby allowing production to continue and reducing the risk
of formation damage to the well, (ii) the ability to reel continuous coiled
tubing in and out of a well significantly faster than conventional pipe, which
must be jointed and unjointed, (iii) the ability to direct fluids into a
wellbore with more precision, allowing for localized stimulation treatments and
providing a source of energy to power a downhole motor or manipulate downhole
tools and (iv) enhanced access to remote or offshore fields due to the smaller
size and mobility of a coiled tubing unit. Recent technological improvements to
coiled tubing have increased its dependability and durability, expanding coiled
tubing's potential uses and markets.
The Company participates in the offshore stimulation market through the use
of skid-mounted pumping units and through operation of several stimulation
vessels including one in the North Sea, four in the Gulf of Mexico and five in
South America.
The Company believes that as production continues to decline in key
producing fields of the U.S. and certain international regions, the demand for
fracturing and stimulation services is likely to increase. The Company has
recently increased its pressure pumping capabilities in certain international
markets.
OTHER SERVICES
The Company's other services, including product and equipment sales for
cementing and stimulation services, as well as the following services, accounted
for approximately 15% of the Company's total revenue in 1996. Such products and
equipment sales to customers are generally made in the course of providing
cementing and stimulation services to certain customers and, other than the
specialty chemical business, the Company generally does not sell proprietary
products to other companies involved in well servicing.
Casing and Tubular Services. Casing services principally consist of
installing (or "running") pipe in a wellbore to protect the structural integrity
of the wellbore and to seal various zones in the well. These services are
primarily provided during the drilling and completion phases of a well. Tubular
services, which consist of running pipe inside the casing through which the oil
and gas is produced, are principally provided during workovers. The Company
expects that workover activity and the demand for tubular services in the North
Sea should increase during at least the next several years as operators there
attempt to mitigate the decline in production from the North Sea's mature
fields.
Process and Pipeline Services. Process and pipeline services involve the
inspection and testing of the integrity of pipe connections in offshore drilling
and production platforms, onshore and offshore pipelines and industrial plants,
and are provided during the commissioning, decommissioning, installation or
construction stages of these infrastructures, as well as during routine
maintenance checks. Historically, hydrocarbon storage and production facilities
have been tested for leaks using either water under pressure or a "live" system
whereby oil, gas or water was introduced at operating pressure. At remote
locations such as offshore facilities, the volume of fresh water required to
test the facility made its use impractical and the use of flammable or toxic
fluids created a risk of explosion or other health hazards. Commission leak
testing, or CLT, uses a nitrogen and helium gas mixture in conjunction with
certain specialized equipment to detect very small leaks in joints, instruments
and valves that form the components of such facilities. Although the process is
safer and more practical than traditional leak detection methods, it may in some
instances be more expensive. Accordingly, its use is restricted to those
instances where environmental and safety concerns are particularly acute.
Pipeline services include pipeline testing and commissioning services
including filling, pressure testing, de-watering, purging and vacuum drying of
pipelines. Other services include grouting and insulating of pipeline bundles,
abandonment of pipelines and tank desludging services for large storage tanks.
Nowsco had been involved in the development of pipeline gels, both hydrocarbon
and aqueous, for pipeline cleaning and transport as well as plugs used for
isolation purposes. Nowsco had also developed high friction pig trains and
freezing techniques for the isolation of pipelines.
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Intelligent pigs are pipeline monitoring vehicles which, together with
interpretational software, offer to pipeline operators, constructors and
regulators measurement of pipeline geometry, determination of pipeline location
and orientation and examination of pipeline internal condition. In addition, the
client can develop a structural analysis using the measured pipeline geometry
information. The operator's planning is improved by the capability of
efficiently analyzing the data to determine the pipeline's status, estimate
current and future reliability and provide recommendations on remedial or
maintenance requirements which consider the severity of the problem identified.
Analysis work using intelligent pigs can be routinely performed with maintenance
monitoring programs implemented as a method for increasing safety for people,
property and the environment.
Specialty Chemical Services. Specialty chemical services, provided through
the Company's Unichem division acquired from Western, include the sale of
corrosion and scale inhibitors, as well as process chemicals and paraffin
control for the treatment of oil wells and for refinery, gas processing plant
and petrochemical facility maintenance and flow improvement.
OPERATIONS
Pressure pumping services are provided to both land-based and offshore
customers on a 24-hour, on-call basis, through regional and district facilities
in over 100 locations worldwide, utilizing complex, truck- or skid-mounted
equipment designed and constructed for the particular pressure pumping service
furnished. After such equipment is moved to a well location, it is configured
with appropriate connections to perform the specific services required. The
mobility of this equipment permits the Company to provide pressure pumping
services to changing geographic areas. Management believes that the Company's
pressure pumping equipment is adequate to service both current and projected
levels of market activity in the near term.
The Company maintains a fleet of mobile cement blending and pumping
equipment for onshore operations. Offshore operations are performed with
skid-mounted cement pumping units. The Company has successfully utilized its
patented RAM (Recirculating Averaging Mixer) both for onshore applications and
as an offshore skid. In 1991, the Company introduced a sand control blender, the
Cyclone, which also has pressure pumping and fracturing applications. Responding
to its customers' monitoring needs, in 1992 the Company introduced a
computerized monitor which allows for real-time monitoring and control of the
cementing process.
Principal materials utilized in the pressure pumping business include
cement, fracturing proppants, acid and bulk chemical additives. Generally, these
items are available from several suppliers, and the Company utilizes more than
one supplier for each item. The Company also produces certain of its specialized
products through company-owned blending facilities in Germany, Singapore and
Canada. Sufficient material inventories are maintained to allow the Company to
provide on-call services to its customers to whom the materials are resold in
the course of providing pressure pumping services. Repair parts and maintenance
items for pressure pumping equipment are carried in inventory to ensure
continued operations without significant downtime caused by parts shortages. The
Company has not experienced significant difficulty in obtaining necessary
supplies of these materials or replacing equipment parts and does not anticipate
a shortage in the foreseeable future.
The Company believes that coiled tubing and other materials utilized in
performing coiled tubing services are and will continue to be widely available
from a number of manufacturers. Although there are only three principal
manufacturers of the reels around which the coiled tubing is wrapped, the
Company is not aware of any difficulty in obtaining coiled tubing reels in the
past, and the Company anticipates no such difficulty in the future.
ENGINEERING AND SUPPORT SERVICES
The Company maintains two manufacturing and research and development
centers -- one near Houston, Texas and the other in Calgary, Alberta. The
Company's research and development organization is divided into four distinct
areas -- Petroleum Engineering, Instrumentation Engineering, Mechanical
Engineering and Coiled Tubing Engineering.
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Petroleum Engineering. The Petroleum Engineering laboratory specializes in
designing fluids with enhanced performance characteristics in the fracturing,
acidizing and cementing operations (i.e., "frac fluids" and "cement slurries").
As fluids must perform under a wide range of downhole pressures, temperatures
and other conditions, this design process is a critical element in developing
products to meet customer needs.
In addition to fluids technology, the Company's Petroleum Engineering group
develops and supports a wide range of proprietary software utilized in the
monitoring of both cement and stimulation job parameters. This software,
combined with the Company's internally developed monitoring hardware, allows for
real-time job control as well as post-job analysis.
Instrumentation Engineering. The pumping services industry utilizes an
array of both monitoring and control instrumentation as an integral element of
providing cementing and stimulation services. The Company's monitoring and
control instrumentation, developed by its Instrumentation Engineering group,
complements its products and equipment and provides customers with desired
real-time monitoring of critical applications.
Mechanical Engineering. Though similarities exist between the major
competitors in the general design of their pumping equipment, the actual
engine/transmission configurations as well as the mixing and blending systems
differ significantly. Additionally, different approaches to the integrated
control systems result in equipment designs which are usually distinct in
performance characteristics for each competitor. The Company's Mechanical
Engineering group is responsible for the design and manufacturing of virtually
all of the Company's primary pumping and blending equipment. However, some
peripheral support equipment which is generic to the industry is purchased
externally. The Company's Mechanical Engineering group provides new product
design as well as support to the rebuilding and field maintenance functions.
Coiled Tubing Engineering. The coiled tubing engineering group is located
in Calgary, Alberta and was part of the operations acquired from Nowsco. This
group provides most of the support and research and development activities for
the Company's coiled tubing services. Development work for drilling applications
(DUCT(TM)) involves using coiled tubing directional drilling technology for
completions and directional underbalanced drilling. The Company is also actively
involved in the ongoing development of downhole tools that may be run on coiled
tubing, including rotary jetting equipment and through tubing inflatable packer
systems. The Company has developed insulated concentric coiled tubing string
(ICCT(TM), a steam injection medium) for use in improving the reserve recovery
of heavy oil wells. The Company's SandVac system is a licensed jet pump system
that is used with concentric coiled tubing to clean unwanted sand from
horizontal wells. The tool and coiled tubing configuration allow sand to be
drawn into the system and brought to surface through a cleaning process
analogous to a vacuum.
MANUFACTURING
In addition to the engineering facility, the Company's technology and
research center near Houston houses its main equipment and instrumentation
manufacturing facility. This operation currently occupies approximately 65,000
square feet and includes complete fabrication, engine and transmission
rebuilding, pump manufacturing and assembly capabilities. The Company also has
ancillary manufacturing facilities in Singapore, Scotland and Canada. The
Company employs outside vendors for manufacturing of its coiled tubing units and
certain fabrication work, but is not dependent on any one source.
COMPETITION
Pressure Pumping Services. There are two primary companies with which the
Company competes in pressure pumping services, Halliburton Energy Services, a
division of Halliburton Company, and Dowell, a division of Schlumberger Ltd.
These companies have operations in most areas of the U.S. in which the Company
participates and in most international regions. Several smaller companies
compete with the Company in certain areas of the U.S. and in certain foreign
countries. The principal methods of competition which apply to the Company's
business are its prices, service record and reputation in the industry. While
Halliburton Energy Services and Dowell are larger in terms of overall revenues,
the Company has a number
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one or a number two share position in several markets, including many regions in
the United States, the North Sea, Latin America and Canada.
Other Services: The Company believes that it is one of the largest
suppliers of casing and tubular services in the U.K. North Sea and is expanding
such services in Latin America. The largest provider of casing and tubular
services in Europe is Weatherford Enterra, Inc. In the U.K., casing and tubular
services are typically provided under long-term contracts which limit the
opportunities to compete for business until the end of the contract term. In
continental Europe, shorter-term contracts are typically available for bid by
the provider of casing and tubular services. The Company believes it is the
largest provider of commissioning and leak detection services and one of the
largest providers of pipeline inspection services. In specialty chemical
services, there are several major chemical suppliers significantly larger than
the Company's Unichem division.
MARKETS AND CUSTOMERS
Demand for the Company's services and products depends primarily upon the
number of oil and gas wells being drilled, the depth and drilling conditions of
such wells, the number of well completions and the level of workover activity
worldwide.
The Company's principal customers consist of major and independent oil and
gas producing companies. During 1996, the Company provided oilfield services to
over 2,500 customers, none of which accounted for more than 5% of consolidated
revenues. While the loss of certain of the Company's largest customers could
have a material adverse effect on Company revenues and operating results in the
near term, management believes the Company would be able to obtain other
customers for its services in the event it lost any of its largest customers.
United States. The Company provides its pumping services to its U.S.
customers through a network of over 50 locations throughout the U.S., a majority
of which offer both cementing and stimulation services. Demand for the Company's
services in the U.S. is primarily driven by oil and natural gas drilling
activity, which is affected by the current and anticipated prices of oil and
natural gas. Due to aging oilfields and lower-cost sources of oil
internationally, drilling activity in the U.S. has declined more than 75% from
its peak in 1981. Record low drilling activity levels were experienced in 1986
and 1992. As a result, pumping service companies have been unable to
recapitalize their aging U.S. fleets due to the inability, under current market
conditions, to generate adequate returns on new capital investments. Management
believes it is important to operate with a greater "critical mass" in the key
U.S. markets to improve returns in this environment. This conclusion led to the
decision to consolidate the Company's operations with those acquired from
Western, which had a larger presence in the U.S., and Nowsco. Due to relatively
stronger oil and natural gas prices, U.S. drilling activity levels have recently
reached their highest levels since 1993.
International. The Company operates in over 40 countries in the major
international oil and natural gas producing areas of Latin America, Europe,
Africa, Southeast Asia, Canada and the Middle East. The Company generally
provides services to its international customers through wholly-owned foreign
subsidiaries. Additionally, the Company holds certain controlling and minority
interests in several joint venture companies, through which it conducts a
portion of its international operations. For geographic information, see Note 9
of the Notes to Consolidated Financial Statements.
The international market is somewhat less volatile than the U.S. market
despite energy price fluctuations. Due to the significant investment and
complexity in international projects, management believes drilling decisions
relating to such projects tend to be evaluated and monitored with a longer-term
perspective with regard to oil and gas pricing. Additionally, the international
market is dominated by major oil companies and national oil companies which tend
to have different objectives and more operating flexibility than the typical
independent producer in the U.S. International activities have been increasingly
important to the Company's results of operations since 1992, when it implemented
a strategy to expand its international presence.
In general, the Company operates in those international markets where it
can achieve and maintain both a significant share position and an attractive
return on its investment. The Company's major international revenue and income
producing operations are in the North Sea in the European market; Indonesia and
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Malaysia in the Southeast Asian market; Canada; and Argentina, Venezuela,
Ecuador and Colombia in the Latin American market. Foreign operations are
subject to special risks that can materially affect the sales and profits of the
Company, including currency exchange rate fluctuations, the impact of inflation,
governmental expropriation, exchange controls, political instability and other
risks.
EMPLOYEES
At September 30, 1996, the Company had a total of 7,440 employees.
Approximately 49% of the Company's employees are employed outside the United
States.
GOVERNMENTAL AND ENVIRONMENTAL REGULATION
The Company's business is affected both directly and indirectly by
governmental regulations relating to the oil and gas industry in general, as
well as environmental and safety regulations which have specific application to
the Company's business.
The Company, through the routine course of providing its services, handles
and stores bulk quantities of hazardous materials. In addition, leak detection
services involve the inspection and testing of facilities for leaks of hazardous
or volatile substances. If leaks or spills of hazardous materials handled,
transported or stored by the Company occur, the Company may be responsible under
applicable environmental laws for costs of remediating damage to the surface,
sub-surface or aquifers incurred in connection with such occurrence.
Accordingly, the Company has implemented and continues to implement various
procedures for the handling and disposal of hazardous materials. Such procedures
are designed to minimize the occurrence of spills or leaks of these materials.
The Company has implemented and continues to implement various procedures
to further assure its compliance with environmental regulations. Such procedures
generally pertain to the operation of underground storage tanks, disposal of
empty chemical drums, improvement to acid and wastewater handling facilities and
cleaning of certain areas at the Company's facilities. The estimated cost for
such procedures is $11.5 million which will be incurred over a period of several
years, for which the Company has provided appropriate reserves. In addition, the
Company maintains insurance for certain environmental liabilities which the
Company believes is reasonable based on its knowledge of the industry.
The Comprehensive Environmental Response, Compensation and Liability Act,
also known as "Superfund," imposes liability without regard to fault or the
legality of the original conduct, on certain classes of persons that contributed
to the release of a "hazardous substance" into the environment. Certain disposal
facilities used by the Company or its predecessors have been investigated under
state and federal superfund statutes, and the Company is currently named as a
potentially responsible party for cleanup at 8 such sites. Although the
Company's level of involvement varies at each site, in general, the Company is
one of numerous parties named and will be obligated to pay an allocated share of
the cleanup costs. While it is not feasible to predict the outcome of these
matters with certainty, management is of the opinion that their ultimate
resolution should not have a material effect on the Company's operations or
financial position.
RESEARCH AND DEVELOPMENT; PATENTS
Research and development activities for pressure pumping services are
directed primarily toward improvement of existing products and services and the
design of new products and processes to meet specific customer needs. The
Company currently holds numerous patents relating to products and equipment used
in its pumping services business. While such patents, in the aggregate, are
important to maintaining the Company's competitive position, no single patent is
considered to be of a critical or essential nature.
To remain competitive, the Company devotes significant resources to
developing technological improvements to its pumping services products. In 1991,
the Company introduced a borate based fracturing fluid, Spectra Frac G(R), which
is being widely used in the U.S. stimulation market and the North Sea. In 1993,
this product was complemented with two additional fracturing fluids, Spartan
Frac(SM) and Medallion Frac(SM), which have expanded the Company's services line
offering to cover a broader range of economic and downhole
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design variables. These products replaced several products previously made
available to customers. During 1994, the Company commercialized a proprietary
enzyme process used in conjunction with the three fracturing fluids. These
"enzyme breakers" significantly enhance the production of oil and gas in a wide
range of wells. In 1991, the Company introduced its "Cyclone" blender which,
along with Western's completion tool technology, have helped address the growing
sand control and frac pack markets in the Gulf of Mexico and the North Sea. The
Company believes that these products and equipment have enabled the Company to
maintain or increase its market share in the United States, the Gulf of Mexico
and the North Sea.
In 1995, the Company developed Sandstone Acid(TM), a matrix acidizing
chemistry used in sandstone formations. Management believes this product, while
still in the early stages of implementation, offers significant advantages over
conventional acidizing methods in sandstone reservoirs. The Company intends to
continue to devote significant resources to its research and development
efforts.
The testing and development of new products is an integral part of the
Company's coiled tubing and pipeline inspection businesses. Recent developments
by Nowsco include a prototype corrosion inspection tool, insulated concentric
coiled tubing (ICCT(TM), a steam injection medium, patents pending), Rotojet(TM)
(a tool licensed by the Company for use in wellbore scale removal) and drilling
using coiled tubing (DUCT(TM)).
Additionally, the Company operates under other various license
arrangements, generally ranging from 10 to 20 years in duration, relating to
certain products or techniques. None of these license arrangements is material.
For information regarding the amounts of research and development expenses
for each of the three fiscal years ended September 30, 1996, see Note 12 of the
Notes to Consolidated Financial Statements.
EXECUTIVE OFFICERS OF THE REGISTRANT
The current executive officers of the Company and their positions and ages
are as follows:
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OFFICE
HELD
NAME AGE POSITION WITH THE COMPANY SINCE
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<S> <C> <C> <C>
J. W. Stewart................. 52 Chairman of the Board, President and Chief
Executive Officer 1986
Michael McShane............... 42 Vice President -- Finance and Chief
Financial Officer 1987
David Dunlap.................. 35 Vice President -- International Operations 1995
Thomas H. Koops............... 50 Vice President -- Technology and Logistics 1988
Margaret B. Shannon........... 47 Vice President -- General Counsel 1994
Kenneth A. Williams........... 46 Vice President -- North American
Operations 1991
Matthew D. Fitzgerald......... 39 Controller 1989
Taylor M. Whichard............ 38 Treasurer 1992
Stephen A. Wright............. 49 Director of Human Resources 1987
</TABLE>
Mr. Stewart joined Hughes Tool Company in 1969 as Project Engineer. He
served as Vice President -- Legal and Secretary of Hughes Tool Company and as
Vice President -- Operations for a predecessor of the Company prior to being
named President of the Company in 1986.
Mr. McShane joined the Company in 1987 from Reed Tool Company, an oilfield
tool company, where he was employed for seven years. At Reed Tool Company he
held various financial management positions including Corporate Controller and
Regional Controller of Far East Operations.
Mr. Dunlap joined the Company in 1984 as a District Engineer and was named
Vice President -- International Operations in December 1995. He has previously
served as Vice President -- Sales for the Coastal Division of North America and
U.S. Sales and Marketing Manager.
Mr. Koops joined the Company as Manager -- Products and Technical Services
in 1976, prior to being named Vice President -- Manufacturing and Logistics of
the Company in 1988 and to his current position in 1992.
9
<PAGE> 10
Ms. Shannon joined the Company in 1994 as Vice President -- General Counsel
from the law firm of Andrews & Kurth L.L.P. where she had been a partner since
1984.
Mr. Williams joined the Company in 1973 and has since held various
positions in the U.S. operations. Prior to being named Vice President -- North
American Operations in 1991, he served as Region Manager -- Western U.S. and
Canada.
Mr. Fitzgerald joined the Company as Controller in 1989 from Baker Hughes
Incorporated, an oil service company, where he was the Director of Corporate
Audit. Prior thereto, he was a Senior Manager with the certified public
accounting firm of Ernst & Whinney.
Mr. Whichard joined the Company as Tax and Treasury Manager in 1989 from
Weatherford International, an oil service company, where he was the Tax Manager.
Prior to being named Treasurer in 1992, he served in various positions including
Tax Director and Assistant Treasurer.
Mr. Wright joined the Company as Manager of Compensation and Benefits in
1985 from Global Marine Inc., an offshore drilling company, and assumed his
current position with the Company in 1987.
ITEM 2. PROPERTIES
The Company's properties consist primarily of pressure pumping and blending
units and related support equipment such as bulk storage and transport units.
The Company's pressure pumping and blending fleet is unencumbered. The Company's
tractor fleet, more than half of which are leased, is used to transport the
pumping and blending units. The Company's domestic light duty truck fleet is
also leased, whereas a majority of vehicles in the international operations are
owned by the Company.
The Company both owns and leases regional and district facilities from
which pressure pumping services and other oilfield services are provided to
land-based and offshore customers. The Company's principal executive offices in
Houston, Texas are leased. The technology and research centers located near
Houston, Texas and Calgary, Alberta are owned by the Company, as are blending
facilities located in Germany, Singapore and Canada. The Company operates
several stimulation vessels, including one in the North Sea and five in South
America which are owned, and four in the Gulf of Mexico on which the hulls are
leased. For additional information with respect to the Company's lease
commitments, see Note 11 of the Notes to Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
The Company, through performance of its service operations, is sometimes
named as a defendant in litigation, usually relating to claims for bodily
injuries or property damage (including claims for well or reservoir damage). The
Company maintains insurance coverage against such claims to the extent deemed
prudent by management. The Company believes that there are no existing claims of
a potentially material adverse nature for which it has not already provided.
As a result of the Western Acquisition and the Nowsco Acquisition, the
Company assumed responsibility for certain claims and proceedings made against
Western and Nowsco in connection with their businesses. Some, but not all, of
such claims and proceedings will continue to be covered under insurance policies
of the Company's predecessors that were in place at the time of the
acquisitions. Although the outcome of the claims and proceedings against the
Company (including Western and Nowsco) cannot be predicted with certainty,
management believes that there are no existing claims or proceedings that are
likely to have a materially adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted for stockholders' vote during the fourth quarter
of the fiscal year ended September 30, 1996.
10
<PAGE> 11
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Common Stock of the Company began trading on The New York Stock
Exchange in July 1990 under the symbol "BJS". Warrants to purchase common stock
("Warrants") were issued in April 1995 and trade under the symbol "BJSW". At
December 6, 1996 there were approximately 722 holders of record of the Company's
Common Stock and 1,287 holders of record of the Warrants.
The following table sets forth for the periods indicated the high and low
sales prices per share for the Company's Common Stock and Warrants reported on
the NYSE composite tape.
<TABLE>
<CAPTION>
COMMON STOCK WARRANT PRICE
PRICE RANGE RANGE
----------------- -----------------
HIGH LOW HIGH LOW
------ ------ ------ ------
<S> <C> <C> <C> <C>
Fiscal 1995
1st Quarter................................... $21.00 $16.25 $ $
2nd Quarter................................... 20.50 15.50
3rd Quarter................................... 26.00 20.38 5.63 3.63
4th Quarter................................... 27.38 22.63 6.88 4.13
Fiscal 1996
1st Quarter................................... 29.50 20.50 7.88 3.00
2nd Quarter................................... 33.63 25.13 11.50 5.38
3rd Quarter................................... 39.38 31.38 15.75 10.00
4th Quarter................................... 39.38 32.00 16.50 10.63
Fiscal 1997
1st Quarter (through December 6, 1996)........ 50.50 36.38 26.00 14.00
</TABLE>
Since its initial public offering in 1990, BJ Services has not paid any
cash dividends to its stockholders. The Company expects that, for the
foreseeable future, any earnings will be retained for the development of the
Company's business and, accordingly, no dividends will be declared on the Common
Stock.
The Company has a committed, unsecured credit facility (the "New Bank
Credit Facility") which prohibits any dividend payments when the Company's debt
to capitalization ratio exceeds 35% immediately prior to and after giving effect
to the declaration of any dividend, except the Company may declare and make
dividend payments solely in its capital stock. See Financial
Condition -- Capital Resources and Liquidity and Note 6 of the Notes to
Consolidated Financial Statements.
The Company has a Stockholder Rights Plan (the "Rights Plan") designed to
deter coercive takeover tactics and to prevent an acquirer from gaining control
of the Company without offering a fair price to all of the Company's
stockholders. Under this plan, each outstanding share of the Company's Common
Stock includes one preferred share purchase right ("Right") which becomes
exercisable under certain circumstances, including when beneficial ownership of
the Company's Common Stock by any person, or group, equals or exceeds 15% of the
Company's outstanding Common Stock. Each Right entitles the registered holder to
purchase from the Company one one-hundredth of a share of Series A Junior
Participating Preferred Stock at a price of $150, subject to adjustment under
certain circumstances. Upon the occurrence of certain events specified in the
Rights Plan, each holder of a Right (other than an Acquiring Person) will have
the right, upon exercise of such Right, to receive that number of shares of
common stock of the Company (or the surviving corporation) that, at the time of
such transaction, would have a market price of two times the purchase price of
the Right. No shares of Series A Junior Participating Preferred Stock have been
issued by the Company at September 30, 1996.
11
<PAGE> 12
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth certain selected historical financial data
of the Company. The selected operating and financial position data as of and for
each of the five years in the period ended September 30, 1996 have been derived
from the audited consolidated financial statements of the Company. This
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and Notes thereto which are included elsewhere herein.
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------------
1996(1) 1995(1) 1994 1993 1992
---------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenue........................... $ 965,261 $633,660 $434,476 $394,363 $330,028
Operating expenses, excluding
unusual charges and goodwill
amortization................... 875,022 592,905 414,493 373,934 316,305
Goodwill amortization............. 7,910 3,266 1,298 691
Unusual charges(2)................ 7,425 17,200 15,700
Operating income (loss)........... 74,904 20,289 18,685 19,738 (1,977)
Interest expense.................. (26,948) (15,164) (7,383) (5,414) (2,977)
Other income -- net............... 3,321 2,763 745 1,330 (140)
Income tax expense (benefit)...... 12,105 (1,102) 2,006 1,593 (3,657)
Income (loss) before cumulative
effect of accounting change.... 40,486 9,889 10,770 14,561 (1,104)
Cumulative effect of change in
accounting principle,
net of tax(3).................. (10,400)
Net income (loss)................. 40,486 9,889 370 14,561 (1,104)
Earnings (loss) per share before
cumulative effect of accounting
change:
Primary........................ 1.29 0.46 0.68 0.94 (0.08)
Fully diluted.................. 1.26 0.45 0.68 0.94 (0.08)
Depreciation and amortization..... 66,050 42,064 25,335 24,170 12,742
Capital expenditures(4)........... 54,158 30,966 39,345 37,350 26,197
FINANCIAL POSITION DATA
(AT END OF PERIOD):
Property, net..................... $ 558,156 $416,810 $198,844 $183,962 $171,420
Total assets...................... 1,709,160 989,683 410,066 369,531 328,799
Long-term debt, excluding current
maturities..................... 523,004 259,566 74,700 84,500 55,500
Stockholders' equity.............. 841,703 466,795 189,927 187,132 134,794
</TABLE>
- - ---------------
(1) Includes the effect of the acquisitions of Nowsco in 1996 and Western in
1995, both of which were accounted for as purchases in accordance with
generally accepted accounting principles. See Note 3 of the Notes to
Consolidated Financial Statements.
(2) Unusual charges represent nonrecurring costs associated with the
acquisitions of Nowsco in 1996 and Western in 1995. Unusual charges for 1992
primarily represent a provision for restructuring the Company's North
American operations. See Note 4 of the Notes to Consolidated Financial
Statements.
(3) In 1994, the Company changed its method of accounting for postretirement
benefits other than pensions. See Note 10 of the Notes to Consolidated
Financial Statements.
(4) Excluding acquisitions of businesses.
12
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company's operations are primarily driven by the number of oil and gas
wells being drilled, the depth and drilling conditions of such wells, the number
of well completions and the level of workover activity worldwide. Drilling
activity, in turn, is largely dependent on the price of oil and natural gas.
This is especially true in the United States, where the Company is expected to
generate approximately one-half of its revenues during the next twelve months.
Due to "aging" oilfields and lower-cost sources of oil internationally,
drilling activity in the United States has declined more than 75% from its peak
in 1981. Record low drilling activity levels were experienced in 1986 and 1992.
As a result, pumping service companies have been unable to recapitalize their
aging U.S. fleets due to the inability, under current market conditions, to
generate adequate returns on new capital investments. The Company believes it is
important to operate with a greater "critical mass" in the key U.S. markets to
improve returns in this environment. This conclusion led to the decision in
April 1995, to consolidate its U.S. operations with those of The Western Company
of North America ("Western"), which had a larger presence in the United States.
The Company's U.S. critical mass was further increased through the acquisition
of Nowsco Well Service Ltd. ("Nowsco") in June 1996 which added operations in
the mid-continental and northeastern U.S., the latter being an area in which the
Company did not have an existing presence.
The rig count in the United States averaged 759 active drilling rigs during
the year ended September 30, 1996. While lower than 1994 drilling levels, the
rig count increased by 3% from 1995 due to increased natural gas related
drilling. Drilling for natural gas increased by 13% during 1996 after declining
by 5% during 1995. Oil related drilling activity declined in both 1996 and 1995.
Due to relatively stronger oil and natural gas prices currently being realized,
however, management expects U.S. drilling activity levels for fiscal 1997 to be
above 1996 levels.
With the exception of Canada, international drilling activity has
historically been less volatile than domestic drilling activity. Active
international drilling rigs increased by 1% and 4% during 1995 and 1996,
respectively, on the strength of development work in Latin America, especially
Venezuela, and renewed exploration programs in the U.K. North Sea.
In both the United States and internationally, there has been a continuing
trend by oil and gas companies toward "alliances" with the service companies.
These alliances take various forms including packaged or integrated services,
single source suppliers and turnkey agreements. Approximately 20% of the
Company's revenues were generated under such alliances during fiscal 1996.
EXPANSIONS AND ACQUISITIONS
The Company's expansion and acquisition efforts over the past several years
have been focused on adding critical mass to its U.S. operations and
international geographic expansions of its existing product lines. The Company
has completed two major acquisitions during this period -- the acquisition of
Western in April 1995 (the "Western Acquisition") and the acquisition of Nowsco
in June 1996 (the "Nowsco Acquisition").
The Western Acquisition was completed for a total purchase price of $511.4
million (including transaction costs of $7.2 million), which was paid
approximately half in cash and half in shares of the Company's common stock and
warrants to purchase common stock. The Western Acquisition has provided the
Company with a greater critical mass with which to compete in domestic and
international markets and the realization of significant consolidation benefits.
The Western Acquisition increased the Company's existing total revenue base by
approximately 75% and more than doubled the Company's domestic revenue base
beginning in the June 1995 quarter. In addition, in excess of $40 million of
overhead and redundant operating costs have been eliminated annually by
combining the two companies.
The Nowsco Acquisition was completed for a total purchase price of $582.6
million (including transaction costs of $6.2 million) in cash. The Nowsco
Acquisition accomplished three primary objectives:
13
<PAGE> 14
(i) it gives the Company the number one pumping services market position in
Canada, where the Company has not operated since 1992, and adds to the Company's
existing market positions in several key U.S. and international markets; (ii) it
provides a technological leadership position in the high-growth coiled tubing
service line; and (iii) it provides the opportunity for further cost savings
through consolidation of redundant overhead and operating bases. The Nowsco
Acquisition has added approximately 40% to the Company's existing revenue base.
The Company's other expansion efforts during the past three years have
included the expansion of pumping services into several key markets including
Brazil (through acquisition of shares from its joint venture partner), Saudi
Arabia, Qatar and Vietnam; expanding tubular services and process and pipeline
services into geographic regions outside the North Sea, and adding additional
pumping service capacity in key Latin American markets.
RESULTS OF OPERATIONS
The following table sets forth selected key operating statistics reflecting
industry rig count and the Company's financial results:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Average active rigs:(1)
U. S................................................... 759 739 784
International.......................................... 1032 996 990
Revenue per rig (in thousands)........................... $539.0 $365.2 $244.9
Revenue per employee (in thousands)...................... $173.0 $168.3 $160.4
Percentage of gross profit to revenue(2)................. 17.4% 15.1% 13.1%
Percentage of marketing expense to revenue............... 4.1% 4.2% 3.3%
Percentage of general and administrative expense to
revenue................................................ 4.0% 4.5% 5.2%
</TABLE>
- - ---------------
(1) Industry estimate of average active rigs.
(2) Gross profit represents revenue less cost of sales and services and research
and engineering expenses.
Revenue: The Company's revenue increased for the fourth consecutive year,
increasing by 46% and 52% in 1995 and 1996, respectively. Such increases were
driven primarily by the Company's Western Acquisition in 1995 and the Nowsco
Acquisition in 1996, international expansions and increased activity in Latin
America, the U.K. North Sea and Southeast Asia.
U.S. revenue increased by 66% and 58% in 1995 and 1996, respectively. The
1995 increase was primarily due to the addition of the Western operations
beginning April 1995. During the first six months of 1995 (prior to the
acquisition of Western), the Company's revenues increased 5% over the same
period of 1994 due primarily to the increased placement of cementing units and
the addition of a stimulation vessel in the Gulf of Mexico. With the acquisition
of Western, the Company's U.S. revenues more than doubled, accounting for the
remainder of the 66% increase for 1995. The 1996 U.S. revenue increase reflects
the continued benefit of the Western Acquisition, as well as the effects of the
Nowsco Acquisition which has added approximately 15-20% to the Company's U.S.
revenues beginning in the fourth fiscal quarter. The revenue also increased due
to stronger natural gas drilling activity in 1996, most significantly in the
Company's South Texas and Gulf of Mexico operations.
While management believes the Company has retained most of the key
customers of Western and Nowsco in the U.S., some market share loss may be
experienced as Nowsco's prices were generally below the Company's in the U.S.
Overall pricing for the Company's U.S. pumping services has remained relatively
stable for the past two years. However, pricing may improve somewhat during
fiscal 1997 if the expected increase in drilling activity results in a
tightening of capacity in the industry. The Company implemented a 6% price book
increase in the U.S. effective July 1, 1996.
14
<PAGE> 15
International revenues increased by 27% and 45% during 1995 and 1996,
respectively. The increases were primarily attributable to three factors: (a)
the continued geographic expansion of the Company's service lines; (b) a
significant increase in Latin America, the U.K. North Sea and Southeast Asia
business; and (c) acquisitions. Pressure pumping international expansions
included Qatar and Vietnam in 1995 and Saudi Arabia and Azerbaijan in 1996. The
tubular services and commissioning and leak detection service lines have now
been expanded into over 14 countries, including parts of the Middle East,
Africa, South America, the Far East and Australia. Most of the revenue growth in
Latin America (up 46% and 28% in 1995 and 1996, respectively) was a result of
increased cementing and stimulation activity with both private and national oil
and gas companies in Argentina, the addition of a stimulation vessel in 1994 and
coiled tubing barges in 1995 and 1996 to service the Lake Maracaibo, Venezuela
market and the acquisition of the remaining 60% of the Company's joint venture
in Brazil in November 1995. The growth in Latin America, however, is expected to
slow somewhat during 1997 as a result of a recent activity decline in Argentina.
The acquisitions which contributed to the Company's international revenue growth
were acquisitions by the Company of the remaining interests in its joint
ventures in Egypt and Brazil in 1994 and 1996, respectively, the Western
Acquisition, which added international operations in Nigeria, Indonesia and
Hungary, and the Nowsco Acquisition, which generated approximately two-thirds of
its revenue outside the U.S. As a result of the Nowsco Acquisition, the Company
currently has the largest pressure pumping operation in Canada, where the
Company had not operated since 1992.
Operating Income: Operating income increased by $1.6 million and $54.6
million in 1995 and 1996, respectively. Such increases were due to the revenue
increases described above, partially offset by unusual charges of $17.2 million
in 1995 and $7.4 million in 1996. The unusual charges were taken in conjunction
with consolidation programs associated with the acquisitions of Western and
Nowsco, respectively. Included in the unusual charges were adjustments to the
carrying value of duplicate operating facilities, severance and related benefit
costs, benefits due under agreements covering the Company's executives that were
triggered as a result of the Western Acquisition, and legal and other costs that
would not have been incurred had the acquisitions not occurred. The unusual
charge associated with the Nowsco Acquisition was significantly lower than that
of the Western Acquisition as the Company had fewer overlapping operations with
Nowsco. See also Note 4 of the Notes to Consolidated Financial Statements.
The cost of sales and services as a percentage of revenue has declined in
each of the last two years, from 84.9% in 1994 to 83.0% and 80.8% in 1995 and
1996, respectively, primarily as a result of cost reduction efforts after the
acquisitions of Western and Nowsco and the economies of scale of having larger
operating bases after combining the respective operations. Other operating
expenses, excluding the unusual charges, increased in both 1995 and 1996
primarily as a result of the addition of the Western and Nowsco operations. In
addition, marketing expenses increased somewhat due to international expansions
and higher revenues in operations which require agency commission payments, and
in the U.S. as a result of an expansion of a program which places the Company's
engineers in customer offices. The acquisitions of Western and Nowsco resulted
in additional annual goodwill amortization of $4.4 million and $10.1 million,
respectively. Each of these operating expenses is expected to increase in 1997
to reflect a full year of adding the Nowsco operations.
Other: Interest expense increased by $7.8 million and $11.8 million in 1995
and 1996, respectively. Both increases were a result of increased borrowing to
fund acquisitions, Western in 1995 and Nowsco in 1996. The Company's effective
interest rates on borrowing remained relatively constant during each of the
periods presented. See also "Financial Condition -- Capital Resources and
Liquidity" and Notes 3 and 6 of the Notes to Consolidated Financial Statements.
Other income was a net gain in both 1995 and 1996 due to nonrecurring gains on
asset sales and royalty income in both years. Royalty income declined to $.8
million in 1996 from $1.4 million in 1995 due to a reduction in use by the
licensee.
Primarily as a result of profitability in international jurisdictions where
the statutory tax rate is below the U.S. rate, the availability of certain
nonrecurring tax benefits and the availability of tax benefits from the
Company's reorganization pursuant to its initial public offering in 1990, the
Company's effective tax rate remained below the U.S. statutory rate during 1994
through 1996. The nonrecurring benefits which have reduced the Company's
effective tax rate include $1.9 million in 1994 from a change in the valuation
reserve for net operating losses, and $1.5 million in 1995 and $1.9 million in
1996 from the favorable settlement of tax
15
<PAGE> 16
audits and tax losses attributable to foreign exchange fluctuations in certain
international jurisdictions. See Note 8 of the Notes to Consolidated Financial
Statements.
Results in 1994 include a $16.0 million ($10.4 million after tax) charge
for the cumulative effect of an accounting change for retiree health benefits.
See Note 10 of the Notes to Consolidated Financial Statements.
CAPITAL RESOURCES AND LIQUIDITY
Cash flows from operating activities increased by $13.1 million in 1995 and
$11.8 million in 1996. Both increases were primarily a result of larger and more
profitable operations due to acquisitions. Partially offsetting such increased
profitability in 1996 were higher receivable balances and the payment of merger
related items.
Management strives to maintain low cash balances while utilizing available
credit facilities to meet the Company's capital needs. Any excess cash generated
is used to pay down outstanding borrowings. In June 1996, the Company replaced
its existing credit facility with a committed, unsecured credit facility ("New
Bank Credit Facility") executed to accommodate the acquisition of Nowsco. The
borrowers and guarantors under the New Bank Credit Facility, which was amended
and restated in August, are the Company and three of its subsidiaries, BJ
Services Company, U.S.A., BJ Service International, Inc. and BJ Services Company
Middle East. Nowsco Well Service Ltd., the Company's Canadian Subsidiary, is a
borrower in Canadian dollars. The New Bank Credit Facility consists of a
Canadian $320 million (approximately U.S. $234 million) six-year term loan,
which is repayable in 22 quarterly installments beginning in March 1997, and a
five year U.S. $325 million revolving facility. At September 30, 1996,
borrowings outstanding under the New Bank Credit Facility totaled $416.4
million, consisting of the $234.5 million term loan and $181.9 borrowed under
the revolver.
On February 20, 1996, in a transaction exempt from the registration
requirements of the Securities Act of 1933, the Company issued $125.0 million of
unsecured 7% Notes due 2006. Three of the Company's subsidiaries that are
obligors with respect to the New Bank Credit Facility and the Company's 9.2%
Notes Due August 1, 1998 (the "9.2% Notes"), BJ Services Company, U.S.A., BJ
Service International, Inc. and BJ Services Company Middle East, are guarantors
of the 7% Notes. In August 1996, the 7% Notes were exchanged for 7% Series B
Notes due 2006 (the "7% Series B Notes"). The form and terms of the 7% Series B
Notes are identical in all material respects to the form and terms of the 7%
Notes except that the 7% Series B Notes were issued in a transaction registered
under the Securities Act. The net proceeds from the issuance of the 7% Notes
($123.3 million) were used by the Company to repay indebtedness outstanding
under the term loan portion of the Company's then existing bank credit facility.
The outstanding balance of the 9.2% Notes, issued in 1991, was $12.0
million at September 30, 1996. Principal reductions of $6.0 million are required
annually each August until maturity on August 1, 1998.
As a result of borrowings to fund the Nowsco Acquisition, the Company's
interest-bearing debt represented 39.8% of its total capitalization at September
30, 1996, compared to 38.9% at September 30, 1995. The New Bank Credit Facility
and 9.2% Notes include various customary covenants and other provisions that are
substantially similar to those under the previous bank credit facility including
the maintenance of certain profitability and solvency ratios and restrictions on
dividend payments. The 9.2% Notes have been amended to conform to terms of the
New Bank Credit Facility. Management believes that the New Bank Credit Facility,
combined with other discretionary credit facilities and cash flow from
operations, provides the Company with sufficient capital resources and liquidity
to manage its routine operations and fund projected capital expenditures.
Excluding acquisitions, capital expenditures during the year ended
September 30, 1996 were $54.2 million, or $23.2 million and $14.8 million higher
than capital spending in 1995 and 1994, respectively. The current year's
spending related primarily to international expansion opportunities (primarily
in Latin America), offshore cementing skids and a normal level of replacement
capital. Other investing activities in 1996 included the acquisition of the
remaining 60% interest in the Company's joint venture in Brazil for total
consideration of $5.4 million (consisting of $3.7 million of cash and $1.7
million of debt assumed by the
16
<PAGE> 17
Company) and the Nowsco Acquisition for $582.6 million in cash. The Nowsco
Acquisition was financed with the proceeds from the sale of 9.8 million shares
of common stock in July 1996, which generated net proceeds of $323.1 million,
with the remainder from borrowings under its New Bank Credit Facility. Investing
activities in 1995 included the Western Acquisition for $203.3 million in cash
and $5.4 million of proceeds from the sale of a duplicate facility and other
disposals of assets.
At September 30, 1996, the Company had approximately $585 million of United
States tax net operating loss carryforwards expiring between 2000 and 2011. With
the Nowsco Acquisition, the Company acquired approximately $30 million of U.S.
tax net operating loss carryforwards, subject to certain limitations, expiring
between 2000 and 2011; approximately $75 million of non-U.S. tax net operating
loss carryforwards expiring in varying amounts beginning in 1997; and
approximately $7 million in non-U.S. tax credits which expire in varying amounts
between 1999 and 2009. Under Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" ("SFAS 109"), the Company is required to
record a deferred tax asset for the future tax benefit of these tax net
operating loss carryforwards, as well as other items, if realization is "more
likely than not." The 1995 Western Acquisition provided the Company with a
greater critical mass with which to compete in the United States as it more than
doubled the Company's United States revenue base. In addition, with the
combination of Nowsco and Western, the Company has realized significant
consolidation benefits. Management estimates that in excess of $64 million of
overhead and redundant operating costs have been eliminated annually as a result
of the combination of the three companies. Management has concluded that the
Company's future taxable income will be sufficient over the remaining
carryforward periods to realize the tax benefits represented by approximately
$450 million of tax net operating loss carryforwards acquired with the
acquisitions of Nowsco and Western and generated by the Company's operations
prior to such acquisitions. Net tax benefits resulting from the acquisitions
approximate $120 million and have been included as a deferred tax asset
recognized in the purchase price allocation. Valuation allowances have been
established for the benefits of the tax net operating loss carryforwards that
are estimated to expire prior to their utilization.
Capital expenditures for fiscal 1997 are projected to be approximately
$75-80 million, excluding acquisitions, and are expected to include spending for
continued geographic expansions of all service lines, construction of an
additional coiled tubing vessel, additional capacity in certain high-margin
locations and normal levels of replacement capital. In December 1996, the
Company completed the acquisition of the remaining 51% interest in the Company's
joint venture in Argentina for $13.5 million. The actual amount of fiscal 1997
capital expenditures will be primarily dependent upon the availability of
expansion opportunities and will be funded by cash flows from operating
activities and available credit facilities. Management believes cash flow from
operating activities and available lines of credit, if necessary, will be
sufficient to fund projected capital expenditures.
This document contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 concerning, among other things,
the Company's prospects, developments and business strategies for its
operations, all of which are subject to certain risks, uncertainties and
assumptions. These forward-looking statements are identified by their use of
terms and phrases such as "expect," "estimate," "project," "believe," and
similar terms and phrases. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those expected, estimated or projected.
17
<PAGE> 18
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
Stockholders of BJ Services Company:
We have audited the accompanying consolidated statements of financial
position of BJ Services Company and subsidiaries as of September 30, 1996 and
1995, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the three years in the period ended September
30, 1996. Our audits also included the financial statement schedule listed at
Item 14. These financial statements and the financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of BJ Services Company and
subsidiaries at September 30, 1996 and 1995, and the results of their operations
and their cash flows for each of the three years in the period ended September
30, 1996 in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
As described in Note 10 to the consolidated financial statements, the
Company changed its method of accounting for postretirement benefits other than
pensions effective October 1, 1993 to conform with statement of Financial
Accounting Standards No. 106.
DELOITTE & TOUCHE LLP
Houston, Texas
November 26, 1996
18
<PAGE> 19
BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
----------------------------------
1996 1995 1994
-------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Revenue.................................................... $965,261 $633,660 $434,476
Operating Expenses:
Cost of sales and services............................... 780,046 525,859 368,994
Research and engineering................................. 17,094 12,299 8,621
Marketing................................................ 39,309 26,429 14,169
General and administrative............................... 38,573 28,318 22,709
Goodwill amortization.................................... 7,910 3,266 1,298
Unusual charges.......................................... 7,425 17,200
-------- -------- --------
Total operating expenses......................... 890,357 613,371 415,791
-------- -------- --------
Operating income........................................... 74,904 20,289 18,685
Interest expense........................................... (26,948) (15,164) (7,383)
Interest income............................................ 1,314 899 729
Other income -- net........................................ 3,321 2,763 745
-------- -------- --------
Income before income taxes and cumulative effect of
accounting change........................................ 52,591 8,787 12,776
Income tax expense (benefit)............................... 12,105 (1,102) 2,006
-------- -------- --------
Income before cumulative effect of accounting change....... 40,486 9,889 10,770
Cumulative effect of change in accounting principle, net of
tax benefit of $5,600,000................................ (10,400)
-------- -------- --------
Net income................................................. $ 40,486 $ 9,889 $ 370
======== ======== ========
Earnings Per Share:
Primary:
Income per share before cumulative effect of
accounting
change.............................................. $ 1.29 $ .46 $ .68
Cumulative effect of change in accounting principle,
net of tax.......................................... (.66)
-------- -------- --------
Primary earnings per share............................ $ 1.29 $ .46 $ .02
======== ======== ========
Fully diluted:
Income per share before cumulative effect of
accounting
change.............................................. $ 1.26 $ .45 $ .68
Cumulative effect of change in accounting principle,
net of tax.......................................... (.66)
-------- -------- --------
Fully diluted earnings per share...................... $ 1.26 $ .45 $ .02
======== ======== ========
Weighted average shares outstanding:
Primary.................................................. 31,381 21,550 15,893
Fully diluted............................................ 32,159 21,749 15,893
</TABLE>
See Notes to Consolidated Financial Statements
19
<PAGE> 20
BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------
1996 1995
---------- --------
(IN THOUSANDS)
<S> <C> <C>
Current Assets:
Cash and cash equivalents.......................................... $ 2,897 $ 1,842
Receivables, less allowance for doubtful accounts: 1996,
$6,223,000; 1995, $7,483,000.................................... 271,583 168,771
Inventories:
Finished goods.................................................. 59,926 46,242
Work in process................................................. 9,479 2,392
Raw materials................................................... 17,696 18,217
---------- --------
Total inventories.......................................... 87,101 66,851
Deferred income taxes........................................... 19,349 9,370
Other current assets............................................ 37,217 10,101
---------- --------
Total current assets....................................... 418,147 256,935
Property:
Land............................................................... 18,509 13,031
Buildings.......................................................... 134,862 83,205
Machinery and equipment............................................ 795,891 634,692
---------- --------
Total property............................................. 949,262 730,928
Less accumulated depreciation...................................... 391,106 314,118
---------- --------
Property -- net.................................................... 558,156 416,810
Goodwill, net of amortization........................................ 567,260 193,263
Deferred income taxes................................................ 132,666 107,889
Investments and other assets......................................... 32,931 14,786
---------- --------
$1,709,160 $989,683
========== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable -- trade.......................................... $ 141,966 $ 85,675
Short-term borrowings.............................................. 2,488 2,000
Current portion of long-term debt.................................. 31,870 35,600
Accrued employee compensation and benefits......................... 32,227 24,885
Income taxes....................................................... 8,544 5,915
Taxes other than income............................................ 5,154 5,460
Accrued insurance.................................................. 13,282 12,867
Other accrued liabilities.......................................... 56,494 31,869
---------- --------
Total current liabilities.................................. 292,025 204,271
Long-term debt....................................................... 523,004 259,566
Deferred income taxes................................................ 11,740 11,496
Accrued postretirement benefits...................................... 26,067 25,146
Minority interest and other long-term liabilities.................... 14,621 22,409
Commitments and contingencies
Stockholders' Equity:
Preferred stock (authorized 5,000,000 shares)
Common stock, $.10 par value (authorized 80,000,000 shares; issued
and outstanding 1996 -- 38,088,781 shares, 1995 -- 27,951,784
shares)......................................................... 3,809 2,795
Capital in excess of par........................................... 748,712 415,242
Retained earnings.................................................. 93,991 53,505
Cumulative translation adjustment.................................. (1,623) (4,747)
Unearned compensation.............................................. (3,186)
---------- --------
Total stockholders' equity................................. 841,703 466,795
---------- --------
$1,709,160 $989,683
========== ========
</TABLE>
See Notes to Consolidated Financial Statements
20
<PAGE> 21
BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
CAPITAL CUMULATIVE
COMMON IN EXCESS UNEARNED RETAINED TRANSLATION
STOCK OF PAR COMPENSATION EARNINGS ADJUSTMENT TOTAL
------ --------- ------------ -------- ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1993....... $1,561 $ 149,889 $ (2,355) $ 43,246 $ (5,209) $187,132
Net income........................ 370 370
Issuance of stock for:
Stock options................... 2 294 296
Stock purchase plan............. 4 680 684
Stock performance awards........ 944 (944)
Buyback of stock rights........... (155) (155)
Recognition of unearned
compensation.................... 524 524
Revaluation of stock performance
awards.......................... (312) 312
Cumulative translation
adjustment...................... 1,076 1,076
------ -------- ------- ------- ------- --------
BALANCE, SEPTEMBER 30, 1994....... 1,567 151,340 (2,463) 43,616 (4,133) 189,927
Net income........................ 9,889 9,889
Issuance of stock for:
Business acquisition............ 1,204 262,347 263,551
Stock options................... 2 535 537
Stock purchase plan............. 5 733 738
Stock performance awards........ 17 287 1,803 2,107
Recognition of unearned
compensation.................... 660 660
Cumulative translation
adjustment...................... (614) (614)
------ -------- ------- ------- ------- --------
BALANCE, SEPTEMBER 30, 1995....... 2,795 415,242 53,505 (4,747) 466,795
Net income........................ 40,486 40,486
Issuance of stock for:
Business acquisition............ 978 322,086 323,064
Stock options................... 31 5,985 6,016
Stock purchase plan............. 5 908 913
Stock performance awards........ 4,491 (4,491)
Recognition of unearned
compensation.................... 1,305 1,305
Cumulative translation
adjustment...................... 3,124 3,124
------ -------- ------- ------- ------- --------
BALANCE, SEPTEMBER 30, 1996....... $3,809 $ 748,712 $ (3,186) $ 93,991 $ (1,623) $841,703
====== ======== ======= ======= ======= ========
</TABLE>
See Notes to Consolidated Financial Statements
21
<PAGE> 22
BJ SERVICES COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------
1996 1995 1994
--------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................. $ 40,486 $ 9,889 $ 370
Adjustments to reconcile net income to cash provided
from operating activities:
Cumulative effect of accounting change............... 10,400
Depreciation and amortization........................ 66,050 42,064 25,335
Net gain on disposal of assets....................... (2,271) (830) (346)
Recognition of unearned compensation................. 1,305 2,463 524
Deferred income tax benefit.......................... (136) (8,861) (4,959)
Unusual charge (noncash)............................. 4,300 3,646
Minority interest.................................... 519 (29) 132
Changes in:
Receivables.......................................... (32,475) (1,091) (9,235)
Accounts payable-trade............................... 8,620 7,707 8,417
Inventories.......................................... (3,717) (8,078) (621)
Other current assets and liabilities................. (29,438) (1,170) (1,960)
Other, net........................................... (2,037) (6,326) (1,802)
--------- --------- --------
Net cash flows provided from operating activities......... 51,206 39,384 26,255
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions........................................ (54,158) (30,966) (39,345)
Proceeds from disposal of assets.......................... 4,805 5,393 2,588
Acquisitions of businesses, net of cash acquired.......... (586,282) (203,313) (2,000)
--------- --------- --------
Net cash used for investing activities.................... (635,635) (228,886) (38,757)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock.................... 323,064
Proceeds from exercise of stock options and stock purchase
grants.................................................. 6,929 1,275 980
Proceeds from borrowings-net.............................. 261,491 192,851 19,120
Principal payment on long-term notes...................... (6,000) (6,000) (6,000)
--------- --------- --------
Net cash flows provided from financing activities......... 585,484 188,126 14,100
Increase (decrease) in cash and cash equivalents.......... 1,055 (1,376) 1,598
Cash and cash equivalents at beginning of year............ 1,842 3,218 1,620
--------- --------- --------
Cash and cash equivalents at end of year.................. $ 2,897 $ 1,842 $ 3,218
========= ========= ========
</TABLE>
See Notes to Consolidated Financial Statements
22
<PAGE> 23
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
BJ Services Company is a leading provider of pressure pumping and other
oilfield services to the petroleum industry. The consolidated financial
statements include the accounts of BJ Services Company and its majority-owned
subsidiaries (the "Company"). All significant intercompany balances and
transactions have been eliminated in consolidation.
Certain amounts for 1995 and 1994 have been reclassified in the
accompanying consolidated financial statements to conform to the current year
presentation.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Earnings per share: Primary earnings per share are based on the weighted
average number of shares outstanding during each period and the assumed exercise
of dilutive stock options and warrants less the number of treasury shares
assumed to be purchased from the proceeds using the average market price of the
Company's common stock for each of the periods presented.
Fully diluted earnings per share are based on the weighted average number
of shares outstanding during each period and the assumed exercise of dilutive
stock options and warrants less the number of treasury shares assumed to be
purchased from the proceeds using the closing market price of the Company's
common stock for each of the periods presented.
Use of estimates: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from these estimates.
Cash and cash equivalents: The Company considers all highly liquid debt
instruments purchased with original maturities of three months or less to be
cash equivalents.
Inventories: Inventories, which consist principally of (a) products which
are consumed in the Company's services provided to customers, (b) spare parts
for equipment used in providing these services and (c) manufactured components
and attachments for equipment used in providing services, are stated primarily
at the lower of average cost or market.
Property: Property is stated at cost less amounts provided for permanent
impairments and includes capitalized interest of $200,000, $216,000 and $541,000
for the years ended September 30, 1996, 1995 and 1994, respectively, on funds
borrowed to finance the construction of capital additions. Depreciation is
generally provided using the straight-line method over the estimated useful
lives of individual items. Leasehold improvements are amortized on a
straight-line basis over the shorter of the estimated useful life or the lease
term.
Goodwill: Goodwill represents the excess of cost over the fair value of the
net assets of companies acquired in purchase transactions. Goodwill is being
amortized on a straight-line method over periods ranging from 5 to 40 years.
Accumulated amortization at September 30, 1996 and 1995 was $13,084,000 and
$5,174,000, respectively. The Company utilizes undiscounted estimated cash flows
to evaluate any possible impairment of goodwill.
Investments: Investments in companies in which the Company's ownership
interest ranges from 20 to 50 percent and the Company exercises significant
influence over operating and financial policies are accounted for using the
equity method. Other investments are accounted for using the cost method.
Foreign currency translation: Gains and losses resulting from financial
statement translation of foreign operations where the U.S. dollar is the
functional currency are included in the consolidated statement of
23
<PAGE> 24
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
operations. Gains and losses resulting from financial statement translation of
foreign operations where a foreign currency is the functional currency are
included as a separate component of stockholders' equity. Except in Canada, the
Company's foreign operations primarily use the U.S. dollar as the functional
currency.
Foreign exchange contracts: From time to time, the Company enters into
forward foreign exchange contracts to hedge the impact of foreign currency
fluctuations on certain assets and liabilities denominated in foreign
currencies. Changes in market value are offset against foreign exchange gains or
losses on the related assets or liabilities and are included in cost of sales
and services. There were no foreign exchange contracts outstanding at September
30, 1996.
Environmental remediation and compliance: Environmental remediation and
compliance costs are accrued based on estimates of known environmental
exposures. Liabilities are recorded when environmental assessments and/or
remedial efforts are probable, and the cost can be reasonably estimated.
Impairment of long-lived assets: In fiscal 1996, the Company adopted the
Financial Accounting Standards Board Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
("SFAS 121"). This statement requires impairment losses to be recognized for
long-lived assets used in operations when indicators of impairment are present
and the undiscounted cash flows estimated to be generated by those assets are
less than the assets' carrying amount. SFAS 121 also addresses the accounting
for long-lived assets that are expected to be disposed of. SFAS 121's
methodology of accounting is not materially different than the Company's
previous policy; therefore, the adoption of SFAS 121 did not have a material
impact on the Company's financial statements. In January 1996, the Company
decided to decommission a stimulation vessel acquired from Western, the
Renaissance. The vessel's hull will be sold in January 1997 with the proceeds to
be used to reduce outstanding debt, while the vessel's stimulation equipment
will be removed and redeployed to other of the Company's operating locations.
The carrying value of the vessel of $20.4 million is recorded as an asset held
for sale and is included in other current assets. The Company does not expect to
record a loss on the sale of the hull and redeployment of the equipment from
this vessel.
Employee Stock-Based Compensation: In October 1995, Financial Accounting
Standards Board Statement No. 123, "Accounting for Stock Based Compensation"
("SFAS 123") was issued. Under SFAS 123, the Company is permitted to either
record expenses for stock options and other stock-based employee compensation
plans based on their fair value at the date of grant or to continue to apply its
current accounting policy under Accounting Principles Board Opinion No. 25 ("APB
25") and recognize compensation expense, if any, based on the intrinsic value of
the equity instrument at the measurement date. The Company currently follows APB
25; therefore, no compensation expense is recognized because the exercise price
of employee stock options equals the market price of the underlying stock on the
date of grant. In fiscal 1997, when SFAS 123 is adopted, the Company will elect
to continue to follow the current APB 25 accounting policies.
3. ACQUISITIONS OF BUSINESSES
Nowsco: In June 1996, the Company completed the acquisition of Nowsco Well
Service Ltd. ("Nowsco") for a total purchase price of $582.6 million (including
transaction costs) in cash. The transaction may be summarized as follows (in
thousands):
<TABLE>
<S> <C>
Cash...................................................................... $576,361
Transaction costs......................................................... 6,221
--------
Total consideration............................................. 582,582
Net assets acquired....................................................... 188,587
--------
Goodwill........................................................ $393,995
========
</TABLE>
24
<PAGE> 25
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
This acquisition was accounted for using the purchase method of accounting.
Accordingly, the results of Nowsco's operations are included in the statement of
operations beginning July 1, 1996. The assets and liabilities of Nowsco have
been recorded in the Company's statement of financial position at estimated fair
market value on June 30, 1996 with the remaining purchase price reflected as
goodwill, which is being amortized on a straight line basis over 40 years.
Western: In April 1995, the Company acquired The Western Company of North
America ("Western") for total consideration, including $7.2 million of
transaction costs, of $511.4 million in cash, Company common stock and warrants
to purchase Company common stock. The transaction may be summarized as follows
(in thousands, except warrant and share amounts):
<TABLE>
<S> <C>
Cash...................................................................... $247,880
Stock issued (12,036,393 shares).......................................... 239,551
Warrants issued (4,800,037 warrants)...................................... 24,000
--------
Total consideration............................................. 511,431
Net assets acquired....................................................... 335,891(1)
--------
Goodwill........................................................ $175,540
========
</TABLE>
- - ---------------
(1) Includes cash acquired of $44.5 million.
This acquisition was accounted for using the purchase method of accounting.
Accordingly, the results of Western are included in the statement of operations
beginning April 1, 1995. The assets and liabilities of Western have been
recorded in the statement of financial position at estimated fair market value
on April 1, 1995 with the remaining purchase price reflected as goodwill, which
is being amortized on a straight-line basis over 40 years.
The following unaudited pro forma summary presents the consolidated results
of operations, excluding estimated consolidation savings, of the Company for the
years ended September 30, 1996 and 1995 as if the Nowsco and Western
acquisitions and the related issuance of common stock discussed in Note 14 had
occurred at the beginning of 1995 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Revenue..................................................... $1,228,032 $1,146,851
Net income.................................................. 31,458 3,861
Earnings per share:
Primary................................................... .81 .10
Fully diluted............................................. .80 .10
</TABLE>
Other:
Effective December 1, 1995, the Company acquired the remaining 60%
ownership of its previously unconsolidated joint venture in Brazil, for total
consideration of $5.4 million consisting of $3.7 million in cash and $1.7
million in debt assumed by the Company. The consolidated statement of operations
includes operating results of the subsidiary acquired since the date of
acquisition.
On February 9, 1994, the Company acquired the remaining 50% ownership of
its joint venture in Egypt, Hughes Services C.I., Ltd., for $2.0 million. Prior
to the acquisition, this joint venture was accounted for using the equity method
of accounting.
Each of these "other" acquisitions have been accounted for using the
purchase method of accounting and, accordingly, any excess of the total
consideration over the estimated fair value of the net assets acquired has been
recorded as goodwill and is being amortized over periods ranging from 10 to 40
years. These
25
<PAGE> 26
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
acquisitions are not material to the Company's financial statements and
therefore pro forma information is not presented.
4. UNUSUAL CHARGES
During 1996, the Company recorded an unusual charge of $7.4 million ($.15
per share after-tax) for costs incurred in connection with the acquisition of
Nowsco. The components of the unusual charge were as follows (in thousands):
<TABLE>
<CAPTION>
BALANCE AT
1996 EXPENDED SEPTEMBER 30,
PROVISION TO DATE 1996
--------- -------- -------------
<S> <C> <C> <C>
Interest........................................... $ 1,917 $1,917 $
Writeoff of bank fees (noncash).................... 1,622 1,622
Asset writeoffs (noncash).......................... 1,212 1,212
Severance and relocation........................... 1,357 499 858
Legal and other.................................... 1,317 709 608
------ ------ ------
Total.................................... $ 7,425 $5,959 $ 1,466
====== ====== ======
</TABLE>
The interest charge represents the incremental interest accrued from the
date of financing the Nowsco acquisition (June 13, 1996) to the date Nowsco's
results were consolidated for financial reporting purposes (July 1, 1996). The
bank fees represent a writeoff of the unamortized portion of the Company's prior
credit facility which was replaced by the current credit facility to finance the
Nowsco acquisition. Asset writeoffs include computer systems, inventory and
other assets purchased in previous years which will not be used subsequent to
the acquisition. The remaining portion of the unusual charge reflects severance
costs of terminated BJ Services employees, relocation of personnel and
equipment, legal fees and other costs which would not have been incurred had the
acquisition of Nowsco not occurred.
During 1995, the Company recorded an unusual charge of $17.2 million ($.52
per share after-tax) for costs incurred in connection with the acquisition of
Western. The components of the unusual charge were as follows (in thousands):
<TABLE>
<CAPTION>
1995
PROVISION
---------
<S> <C>
Facility closings.................................................. $ 5,596(1)
Change in control costs............................................ 5,381
Legal and other.................................................... 4,047
Severance costs.................................................... 2,176
-------
Total.................................................... $ 17,200
=======
</TABLE>
- - ---------------
(1) Includes $3,646 noncash impairment of facilities.
The Company and Western both operated facilities in many of the same
locations. Management made the decision to close the duplicate facilities
previously operated by BJ Services and retain those operated by Western. A
provision was recorded to adjust the carrying value of these duplicate
facilities to estimated net realizable value and accruals were recorded for the
estimated costs associated with their closings, including maintenance of the
facilities until their ultimate sale and relocation of assets. Substantially all
of the duplicate facilities were closed as of September 30, 1995.
The consummation of the Western acquisition triggered the change in control
provision under the Company's 1990 Stock Incentive Plan. As a result, 168,547
performance units previously granted to the
26
<PAGE> 27
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Company's executive officers became fully vested and 168,547 shares of common
stock were subsequently issued. The 1995 unusual charge includes an amount for
the excess of the value of the performance units on the date of issuance over
the estimated amount which otherwise was earned had the acquisition not
occurred.
The 1995 unusual charge also includes legal, severance of BJ employees and
other merger-related costs that would not have been incurred had the acquisition
of Western not occurred. All expenditures for such costs have been made as of
September 30, 1996.
5. EARNINGS PER SHARE
The following table presents information necessary to calculate earnings
per share for the three years ended September 30, 1996 (in thousands, except per
share amounts):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Net income............................................ $40,486 $ 9,889 $ 370
Average primary common and common equivalent shares
outstanding:
Common stock........................................ 30,594 21,376 15,665
Common stock equivalents from assumed exercise of
stock options.................................... 613 174 228
Common stock equivalents from assumed exercise of
warrants......................................... 174
------- ------- -------
31,381 21,550 15,893
------- ------- -------
Primary earnings per share............................ $ 1.29 $ .46 $ .02
======= ======= =======
Average fully diluted common and common equivalent
shares outstanding:
Common stock........................................ 30,594 21,376 15,665
Common stock equivalents from assumed exercise of
stock options.................................... 739 373 228
Common stock equivalents from assumed exercise of
warrants......................................... 826
------- ------- -------
32,159 21,749 15,893
------- ------- -------
Fully diluted earnings per share...................... $ 1.26 $ .45 $ .02
======= ======= =======
</TABLE>
6. LONG-TERM DEBT AND BANK CREDIT FACILITIES
Long-term debt at September 30, 1996 and 1995 consisted of the following
(in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Notes payable, banks........................................... $416,413 $275,000
9.2% notes due August 1998..................................... 12,000 18,000
7% Series B Notes due 2006, net of discount.................... 124,288
Other.......................................................... 2,173 2,166
-------- --------
554,874 295,166
Less current maturities of long-term debt...................... 31,870 35,600
-------- --------
Long-term debt................................................. $523,004 $259,566
======== ========
</TABLE>
27
<PAGE> 28
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In June 1996, the Company canceled its existing credit facility and the
outstanding borrowings were repaid with funds from a committed, unsecured credit
facility ("New Bank Credit Facility") executed to accommodate the acquisition of
Nowsco. The borrowers and guarantors under the New Bank Credit Facility, which
was amended and restated in August, are the Company and three of its
subsidiaries, BJ Services Company, U.S.A., BJ Service International, Inc. and BJ
Services Company Middle East. Nowsco Well Service Ltd., the Company's Canadian
subsidiary, is a borrower in Canadian dollars. The New Bank Credit Facility
consists of a Canadian $320 million (approximately U.S. $234 million) six year
term loan, which is repayable in 22 quarterly installments beginning in March
1997, and a five year U.S. $325 million revolving facility. Interest on
outstanding borrowings is charged based on prevailing market rates. The Company
is charged various fees in connection with the New Bank Credit Facility,
including a commitment fee based on the average daily unused portion of the
commitment. Commitment fees under the Company's credit facilities were $366,000,
$207,000 and $16,000 for 1996, 1995 and 1994, respectively. At September 30,
1996, approximately $143 million was available to borrow under the revolver.
Principal reductions of the term loan are due in aggregate installments of
$25,870,000, $34,493,000, $44,102,000, $47,305,000 and $229,165,000 in the years
ended September 30, 1997, 1998, 1999, 2000 and 2001, respectively.
In addition to the committed facility, the Company had $100.0 million in
various unsecured, discretionary lines of credit at September 30, 1996 which
expire at various dates in 1997. There are no requirements for commitment fees
or compensating balances in connection with these lines of credit. Interest on
borrowings is based on prevailing market rates. At September 30, 1996 and 1995,
there were $2.5 million and $2.0 million, respectively, in outstanding
borrowings under these lines of credit.
The weighted average interest rates on short-term borrowings outstanding as
of September 30, 1996 and 1995 was 5.8% and 6.4%, respectively.
In February 1996, in a transaction exempt from the registration
requirements of the Securities Act of 1933, the Company issued $125.0 million of
unsecured 7% Notes due 2006. Three of the Company's subsidiaries that are
obligors with respect to the New Bank Credit Facility and the Company's 9.2%
Notes due August 1, 1998, BJ Services Company, U.S.A., BJ Service International,
Inc. and BJ Services Company Middle East (collectively, the "Guarantor
Subsidiaries"), were guarantors of the 7% Notes. In August 1996, the 7% Notes
were exchanged for 7% Series B Notes due 2006 (the "7% Series B Notes"). The
form and terms of the 7% Series B Notes are identical, in all material respects,
to the form and terms of the 7% Notes except that the 7% Series B Notes were
issued in a transaction registered under the Securities Act of 1933. The net
proceeds from the issuance of the 7% Notes ($123.3 million) were used by the
Company to repay indebtedness outstanding under the term loan portion of the
Company's then existing bank credit facility.
In August 1991, the Company placed $30.0 million of unsecured notes (the
"Notes") with private investors. The Notes bear interest at a fixed rate of 9.2%
with principal payments due in five annual installments of $6.0 million the
first of which was paid in August 1994. From October 1991 to May 1995, the
Company entered into interest rate swap agreements which effectively converted
the Notes from fixed rate debt with an interest rate of 9.2% to floating rate
debt. The swap agreement was liquidated in May 1995 at a loss of $679,000. The
agreements resulted in an average annual effective interest rate of 11.5%
(excluding the loss) and 9.3% on the Notes for 1995 and 1994, respectively.
At September 30, 1996, the Company had outstanding letters of credit and
performance related bonds totaling $16.2 million and $21.5 million,
respectively. The letters of credit are issued to guarantee various trade and
insurance activities.
The Company's debt agreements contain various customary covenants including
maintenance of certain profitability and solvency ratios and restrictions on
dividend payments, as defined in the New Bank Credit Facility. At September 30,
1996, the Company's debt to capitalization ratio exceeded 35%. As a result, the
Company is prohibited, under its New Bank Credit Facility from making any
dividend payments until such time as the ratio drops below 35%.
28
<PAGE> 29
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.
Cash and Cash Equivalents, Trade Receivables and Trade Payables: The
carrying amount approximates fair value because of the short maturity of those
instruments.
Long-term Debt: Fair value is based on the rates currently available to the
Company for debt with similar terms and average maturities. Other long-term debt
consists of borrowings under the Company's Bank Credit Facility. The carrying
amount of such borrowings approximates fair value as the individual borrowings
bear interest at current market rates.
The fair value of financial instruments which differed from their carrying
value at September 30, 1996 and 1995 was as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- -------
<S> <C> <C> <C> <C>
9.2% Notes................................ $ 12,000 $ 12,460 $ 18,000 $19,100
7.0% Series B Notes....................... 124,288 117,900
</TABLE>
8. INCOME TAXES
The geographical sources of income (loss) before income taxes for the three
years ended September 30, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- -------- --------
<S> <C> <C> <C>
United States....................................... $(8,369) $(31,879) $(12,793)
Foreign............................................. 60,960 40,666 25,569
------- -------- --------
Income before income taxes and cumulative effect of
accounting change................................. $52,591 $ 8,787 $ 12,776
======= ======== ========
</TABLE>
The provision (benefit) for income taxes for the three years ended
September 30, 1996 is summarized below (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Current:
United States....................................... $ $ $
Foreign............................................. 12,241 7,759 6,965
------- ------- -------
Total current............................... 12,241 7,759 6,965
Deferred:
United States....................................... (1,616) (8,336) (2,831)
Foreign............................................. 1,480 (525) (2,128)
------- ------- -------
Total deferred.............................. (136) (8,861) (4,959)
------- ------- -------
Income tax expense (benefit).......................... $12,105 $(1,102) $ 2,006
======= ======= =======
</TABLE>
The 1994 income tax provision included $1,867,000 of deferred foreign tax
benefits related to the recognition of foreign net operating loss carryforwards
which was reserved for in the valuation account at September 30, 1993.
29
<PAGE> 30
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The consolidated effective income tax rates (as a percent of income (loss)
before income taxes and cumulative effect of accounting change) for the three
years ended September 30, 1996 varied from the United States statutory income
tax rate for the reasons set forth below:
<TABLE>
<CAPTION>
1996 1995 1994
---- ----- -----
<S> <C> <C> <C>
Statutory rate............................................... 35.0% 35.0% 35.0%
Foreign earnings at varying rates............................ (9.5) (79.8) (17.4)
Amortization of excess tax basis over book basis resulting
from separation from former parent......................... (2.2) (20.4) (13.8)
Changes in valuation reserve................................. (14.5)
Changes in tax laws and tax rates............................ (1.3)
Foreign income recognized domestically....................... 1.0 37.2 25.6
Goodwill amortization........................................ 4.8 10.3 1.3
Nondeductible expenses....................................... 1.6 6.1 1.0
Other -- net................................................. (6.4) (0.9) (1.5)
---- ----- -----
23.0% (12.5)% 15.7%
==== ===== =====
</TABLE>
Deferred tax assets and liabilities are recognized for the estimated future
tax effects of temporary differences between the tax basis of an asset or
liability and its reported amount in the financial statements. The measurement
of deferred tax assets and liabilities is based on enacted tax laws and rates
currently in effect in each of the jurisdictions in which the Company has
operations. Generally, deferred tax assets and liabilities are classified as
current or noncurrent according to the classification of the related asset or
liability for financial reporting. The estimated deferred tax effect of
temporary differences and carryforwards as of September 30, 1996 and 1995 were
as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Assets:
Expenses accrued for financial reporting purposes, not yet
deducted
for tax................................................... $ 49,313 $ 45,469
Net operating loss carryforwards............................. 243,304 181,400
Valuation allowance.......................................... (65,750) (54,420)
-------- --------
Total deferred tax asset............................. 226,867 172,449
======== ========
Liabilities:
Differences in depreciable basis of property................. (77,558) (60,520)
Income accrued for financial reporting purposes, not yet
reported
for tax................................................... (9,034) (6,166)
-------- --------
Total deferred tax liability................................... (86,592) (66,686)
-------- --------
Deferred tax asset............................................. $140,275 $105,763
======== ========
</TABLE>
The net change in the deferred tax asset valuation allowance reflects
purchase accounting adjustments made to reflect the anticipated future benefit
of the combined net operating loss carryforwards of BJ Services and Nowsco. In
1996, the deferred tax valuation allowance was decreased by $20.0 million based
on an increase in the projected taxable income following the combination of
Western and BJ Services' U.S. operations. This decrease in the deferred tax
valuation has been, and any subsequent decrease will be recorded as a reduction
to goodwill.
30
<PAGE> 31
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At September 30, 1996, the Company had approximately $585 million of U.S.
tax net operating loss carryforwards expiring in varying amounts between 2000
and 2011. As a result of Western and Nowsco having experienced changes in
control as defined in Internal Revenue Code Section 382 in prior years, and as a
result of the merger of their U.S. operations with BJ Services, the usage of
approximately $429 million of the tax net operating loss carryforwards is
subject to an annual limitation. The Company does not believe, based on the
information currently available, that it experienced a change of control as a
result of the mergers. However, if the Company should determine at a later date
that a change of control did occur, the effect, if any, of an annual limitation
on the usage of BJ Services' tax net operating loss carryforwards would be
immaterial. The potential impact that the annual limitation may have on the
usage of the Western and Nowsco tax net operating loss carryforwards has been
reflected in the deferred tax asset valuation allowance balance as of September
30, 1996.
The Company also had approximately $81.5 million of foreign tax net
operating loss carryforwards and approximately $7.0 million of foreign
investment tax credit carryforwards as of September 30, 1996. $28.6 million of
the foreign tax net operating loss carryforwards are not subject to an annual
limitation and will carryforward indefinitely. The foreign investment tax credit
carryforward and the remaining loss carryforward, if not used, will expire
beginning in 1997. The potential impact of the expiration of foreign net
operating loss and investment tax credit carryforwards has been reflected in the
deferred tax asset valuation allowance balance as of September 30, 1996.
The Company does not provide federal income taxes on the undistributed
earnings of its foreign subsidiaries that the Company considers to be
permanently reinvested in foreign operations. The cumulative amount of such
undistributed earnings was approximately $208 million at September 30, 1996. If
these earnings were to be remitted to the Company, any U.S. income taxes payable
would be substantially reduced by foreign tax credits generated by the
repatriation of the earnings.
9. GEOGRAPHIC INFORMATION
The Company operates primarily in one business segment -- the oilfield
services industry. Summarized information concerning geographic areas in which
the Company operated at September 30, 1996, 1995 and 1994 and for each of the
years then ended is shown as follows (in thousands):
<TABLE>
<CAPTION>
UNITED LATIN
STATES AMERICA EUROPE OTHER TOTAL
---------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
1996:
Revenue.................... $ 547,620 $140,390 $127,111 $150,140 $ 965,261
Operating income........... 19,979 26,824 13,897 14,204 74,904
Identifiable assets........ 1,212,149 104,993 166,829 225,189 1,709,160
1995:
Revenue.................... $ 345,922 $111,447 $104,840 $ 71,451 $ 633,660
Operating income (loss).... (13,683) 22,095 4,942 6,935 20,289
Identifiable assets........ 624,545 88,655 201,838 74,645 989,683
1994:
Revenue.................... $ 208,279 $ 75,745 $ 95,181 $ 55,271 $ 434,476
Operating income (loss).... (2,634) 9,590 4,560 7,169 18,685
Identifiable assets........ 127,561 72,558 156,594 53,353 410,066
</TABLE>
Corporate general and administrative expense, research and engineering
expense and certain other expenses related to worldwide manufacturing and other
support functions benefit both domestic and international operations. An
allocation of these expenses has been made to foreign areas based on total
31
<PAGE> 32
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
revenues. The expenses allocated totaled $10,853,000, $8,357,000 and $6,847,000
for the years ended September 30, 1996, 1995 and 1994, respectively.
10. EMPLOYEE BENEFIT PLANS
The Company has a thrift plan whereby eligible employees elect to
contribute from 2% to 12% of their base salaries to an employee benefit trust.
Employee contributions are matched by the Company at the rate of $.50 per $1.00
up to 6% of the employee's base salary. In addition, the Company contributes
between 2% and 5% of each employee's base salary depending on their age as of
January 1 each year as a base contribution. Company matching contributions vest
immediately while base contributions become fully vested after five years of
employment. The Company's U.S. employees formerly employed by Western are
covered under a thrift plan which was merged into the Company's thrift plan
effective December 31, 1995. The Company's U.S. employees formerly employed by
Nowsco are covered under a thrift plan which was merged into the Company's
thrift plan effective October 1, 1996. The Company's contributions to these
thrift plans amounted to $5,095,000, $2,862,000 and $2,551,000 in 1996, 1995 and
1994, respectively.
The Company's U.S. employees formerly employed by Western with at least one
year of service are also covered under a defined benefit pension plan as a
carryover from the Western acquisition. Pension benefits are based on years of
service and average compensation for each employee's five consecutive highest
paid years during the last ten years worked. Benefits under the Western plan
were frozen effective December 31, 1995 at which time all earned benefits were
vested. Management has not yet made a decision on when to terminate the plan and
therefore will fund the amounts necessary to meet minimum funding requirements
under the Employees' Retirement Income Security Act, as amended. The funded
status of this plan at September 30, 1996 and 1995 was as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Vested benefit obligation........................................ $40,113 $39,669
======= =======
Accumulated benefit obligation................................... $40,113 $40,701
Plan assets at fair value........................................ 39,473 34,394
------- -------
Benefit obligation in excess of plan assets...................... 640 6,307
Unrecognized gain................................................ 2,241 71
------- -------
Net pension liability............................................ $ 2,881 $ 6,378
======= =======
</TABLE>
Assumptions used in accounting for the Company's U.S. defined benefit plan
were as follows:
<TABLE>
<S> <C>
Weighted average discount rate........................................ 7.5%
Weighted average expected long-term rate of return on assets.......... 9.0%
</TABLE>
Costs for the two years ended September 30, 1996 for the Company's U.S.
defined benefit plan were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Service cost for benefits earned................................. $ 359 $ 586
Interest cost on projected benefit obligation.................... 2,862 1,382
Actual return on plan assets..................................... (3,997) (3,267)
Net amortization and deferral.................................... 862 1,916
------- -------
Net pension cost................................................. $ 86 $ 617
======= =======
</TABLE>
32
<PAGE> 33
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
In addition, the Company sponsors defined benefit plans for foreign
operations which cover substantially all employees in Canada, the United Kingdom
and Venezuela. Due to differences in foreign pension laws and economics, the
defined benefit plans are at least partially unfunded. The funded status of
these plans at September 30, 1996 and 1995 was as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation..................................... $ 39,594 $ 5,357
======== =======
Accumulated benefit obligation................................ $ 42,535 $ 6,474
======== =======
Projected benefit obligation.................................... $ 51,370 $ 9,846
Plan assets at fair value....................................... (46,969) (6,718)
-------- -------
Projected benefit obligation in excess of plan assets........... 4,401 3,128
Unrecognized loss............................................... (2,218) (1,093)
Unrecognized transition asset, net of amortization.............. 135 155
Unrecognized prior service cost................................. (366) (253)
-------- -------
Net pension liability........................................... $ 1,952 $ 1,937
======== =======
</TABLE>
Assumptions used in accounting for the Company's international defined
benefit pension plans were as follows:
<TABLE>
<S> <C>
Weighted average discount rate....................................... 6-8%
Weighted average rate of increase in future compensation............. 4-6%
Weighted average expected long-term rate of return on assets......... 8-9%
</TABLE>
Combined costs for the Company's international defined benefit plans for
the three years ended September 30, 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------ ------
<S> <C> <C> <C>
Net periodic foreign pension cost:
Service cost for benefits earned...................... $ 2,836 $1,090 $ 830
Interest cost on projected benefit obligation......... 2,450 660 497
Actual return on plan assets.......................... (2,719) (617) (45)
Net amortization and deferral......................... 468 158 (391)
------- ------ ------
Net pension cost........................................ $ 3,035 $1,291 $ 891
======= ====== ======
</TABLE>
The Company also sponsors a plan whereby certain health care and life
insurance benefits are provided for retired employees (primarily U.S.) and their
eligible dependents if the employee meets specified age and service
requirements. These plans are unfunded and the Company retains the right,
subject to existing agreements, to modify or eliminate these plans.
Effective October 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions" ("SFAS 106"). In accordance with the requirements of SFAS
106, the Company changed its accounting for postretirement benefits from a cash
basis to an accrual basis over an employee's period of service. On October 1,
1993, the Company elected to immediately recognize the cumulative effect of the
change in accounting principle of $16.0 million ($10.4 million after tax, or
$.66 per share).
33
<PAGE> 34
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Effective January 1, 1994 the Company amended its postretirement medical
benefit plan to provide credits based on years of service which could be used to
purchase coverage under the active employee plans. This change effectively caps
the Company's health care inflation rate at a 4% increase per year. The
reduction of approximately $5.7 million in the accumulated postretirement
benefit obligation due to this amendment is being amortized over the average
period of future service to the date of full eligibility for such postretirement
benefits of the active employees. Postretirement medical benefit costs were
$1,681,000, $946,000 and $639,000 in 1996, 1995 and 1994, respectively.
Net periodic postretirement benefit costs for the three years ended
September 30, 1996 included the following components (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ -----
<S> <C> <C> <C>
Service cost for benefits attributed to service during the
period.................................................. $1,194 $ 807 $ 512
Interest cost on accumulated postretirement benefit
obligation.............................................. 1,381 1,033 798
Amortization of prior service costs....................... (894) (894) (671)
------ ------ -----
Net periodic postretirement benefit cost.................. $1,681 $ 946 $ 639
====== ====== =====
</TABLE>
The actuarial and recorded liabilities for these postretirement benefits
were as follows at September 30, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees....................................................... $ 7,217 $ 7,680
Fully eligible active plan participants........................ 3,573 3,525
Other active plan participants................................. 10,163 8,988
------- -------
20,953 20,193
Unrecognized cumulative net gain................................. 1,832 776
Unrecognized prior service cost.................................. 3,282 4,177
------- -------
Accrued postretirement benefit liability......................... $26,067 $25,146
======= =======
</TABLE>
The accumulated postretirement benefit obligation was determined using a
discount rate of 7.5% and a health care cost trend rate of 4%, reflecting the
"cap" discussed above. Increasing the assumed health care cost trend rates by
one percentage point would not have a material impact on the accumulated
postretirement benefit obligation or the net periodic postretirement benefit
cost because these benefits are effectively "capped" by the Company's 1994 plan
amendment.
11. COMMITMENTS AND CONTINGENCIES
The Company through performance of its service operations is sometimes
named as a defendant in litigation, usually relating to claims for bodily
injuries or property damage (including claims for well or reservoir damage). The
Company maintains insurance coverage against such claims to the extent deemed
prudent by management. The Company believes that there are no existing claims of
a potentially material adverse nature for which it has not already provided
appropriate accruals.
Federal, state and local laws and regulations govern the Company's
operation of underground fuel storage tanks. Rather than incur additional costs
to restore and upgrade tanks as required by regulations, management has opted to
remove the existing tanks. The Company is in the process of removing these tanks
and has identified certain tanks with leaks which will require remedial
cleanups. In addition, the Company is conducting a number of environmental
investigations and remedial actions at current and former company locations and,
along with other companies, has been named a potentially responsible party at 8
waste disposal
34
<PAGE> 35
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
sites. The Company has established an accrual of $11,500,000 for such
environmental matters which management believes to be its best estimate of the
Company's portion of future costs to be incurred. The Company also maintains
insurance for environmental liabilities which the Company believes is reasonable
based on its knowledge of its industry.
Lease Commitments: At September 30, 1996, the Company had long-term
operating leases covering certain facilities and equipment with varying
expiration dates. Minimum annual rental commitments for the years ended
September 30, 1997, 1998, 1999, 2000 and 2001 are $20,308,000, $16,353,000,
$12,578,000, $9,270,000 and $7,187,000 respectively, and $39,968,000 in the
aggregate thereafter.
12. SUPPLEMENTAL FINANCIAL INFORMATION
Supplemental financial information for the three years ended September 30,
1996 is as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- -------
<S> <C> <C> <C>
Consolidated Statement of Operations:
Research and development expense.................. $ 7,157 $ 6,801 $ 6,421
Rent expense...................................... 19,148 16,759 15,580
Net foreign exchange gain (loss).................. (214) 1,537 (762)
Consolidated Statement of Cash Flows:
Income taxes paid................................. $ 11,768 $ 5,980 $ 6,233
Interest paid..................................... 24,533 12,798 10,330
Details of acquisitions:
Fair value of assets acquired.................. 283,505 447,622 1,808
Liabilities assumed............................ 91,218 111,731 501
Goodwill....................................... 393,995 175,540 693
Cash paid for acquisitions, net of cash
acquired..................................... 586,282 203,313 2,000
</TABLE>
In connection with the Western acquisition, in 1995 the Company issued
$263,551,000 of common stock and warrants to Western stockholders.
Other income -- net for the three years ended September 30, 1996 is
summarized as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ----
<S> <C> <C> <C>
Gain on sales of assets -- net............................. $2,271 $ 830 $346
Gain on Argentine bonds.................................... 400
Royalty income............................................. 785 1,385
Dividend income............................................ 82 430
Other -- net............................................... 183 118 (1)
------ ------ ----
Other income -- net........................................ $3,321 $2,763 $745
====== ====== ====
</TABLE>
13. EMPLOYEE STOCK PLANS
Stock Option Plans: The Company's 1990 Stock Incentive Plan and 1995
Incentive Plan (the "Plans") provide for the granting of options for the
purchase of the Company's common stock ("Common Stock") and other performance
based awards to officers, key employees and non employee directors of the
Company. Such options vest over a three-year period and are exercisable for
periods ranging from one to ten years. An aggregate of 3,000,000 shares of
Common Stock have been reserved for grants, of which 957,058 were available at
September 30, 1996.
35
<PAGE> 36
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
Stock option activity under the Company's Plans for the three years ended
September 30, 1996 is summarized below (in thousands, except per share prices):
<TABLE>
<CAPTION>
NUMBER OF SHARES 1996 1995 1994
---------------- ----- ----- ----
<S> <C> <C> <C>
Stock options outstanding, beginning of year.................. 1,435 767 621
Changes during the year:
Granted (per share):
1996, $22.75 to $38.38................................... 322
1995, $16.89 to $21.62................................... 697
1994, $19.63 to $22.75................................... 188
Exercised/surrendered (per share):
1996, $13.63 to $23.25................................... (375)
1995, $16.28 to $21.62................................... (29)
1994, $13.63 to $23.25................................... (42 )
----- ----- ---
Stock options outstanding, end of year (per share: $12.00 to
$38.38)..................................................... 1,382 1,435 767
===== ===== ===
Stock options exercisable, end of year (per share: $12.00 to
$23.25)..................................................... 457 630 417
===== ===== ===
</TABLE>
Pursuant to the terms of the 1990 Stock Incentive Plan, during 1993 through
1996 the Company also issued a total of 332,922 Performance Units ("Units") to
officers of the Company. Each Unit represents the right to receive from the
Company at the end of a stipulated period one unrestricted share of Common
Stock, contingent upon achievement of certain financial performance goals over
the stipulated period. Should the Company fail to achieve the specific financial
goals as set by the Executive Compensation Committee of the Board of Directors,
the Units are canceled and the related shares revert to the Company for
reissuance under the plan. The aggregate fair market value of the underlying
shares granted under this plan is considered unearned compensation at the time
of grant and is adjusted annually based on the current market price for the
Company's Common Stock. Compensation expense is determined based on management's
current estimate of the likelihood of meeting the specific financial goals and
charged ratably over the stipulated period. In connection with the acquisition
of Western, which triggered certain change of control provisions in the
Company's 1990 Stock Incentive Plan, a total of 168,547 Units were converted
into Common Stock and issued to officers, and 51,769 Units were canceled. The
difference between the amount accrued as of the acquisition date and the value
of the shares issued has been reflected as an unusual charge in the accompanying
financial statements (see Note 4). As of September 30, 1996 there were 112,606
Units outstanding.
Stock Purchase Plan: The Company's 1990 Employee Stock Purchase Plan (the
"Purchase Plan") is a plan under which all employees may purchase shares of the
Company's Common Stock at 85% of market value on the first or last business day
of the twelve-month plan period beginning each October, whichever is lower. Such
purchases are limited to 10% of the employee's regular pay. A maximum aggregate
of 750,000 shares has been reserved under the Purchase Plan, 521,386 of which
were available for future purchase at September 30, 1996. In October 1996,
78,503 shares were purchased at $21.46 per share.
14. STOCKHOLDERS' EQUITY
On July 1, 1996, the Company issued 9,775,000 shares of common stock
through a public offering. The net proceeds of $323.1 million were used to repay
indebtedness incurred to fund the Nowsco acquisition.
Stockholder Rights Plan: The Company has a Stockholder Rights Plan (the
"Rights Plan") designed to deter coercive takeover tactics and to prevent an
acquirer from gaining control of the Company without offering a fair price to
all of the Company's stockholders. Under this plan, each outstanding share of
the
36
<PAGE> 37
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Company's Common Stock includes one preferred share purchase right ("Right")
which becomes exercisable under certain circumstances, including when beneficial
ownership of the Company's Common Stock by any person, or group, equals or
exceeds 15% of the Company's outstanding Common Stock. Each Right entitles the
registered holder to purchase from the Company one one-hundredth of a share of
Series A Junior Participating Preferred Stock at a price of $150, subject to
adjustment under certain circumstances. Upon the occurrence of certain events
specified in the Rights Plan, each holder of a Right (other than an Acquiring
Person) will have the right, upon exercise of such Right, to receive that number
of shares of common stock of the Company (or the surviving corporation) that, at
the time of such transaction, would have a market price of two times the
purchase price of the Right. No shares of Series A Junior Participating
Preferred Stock have been issued by the Company at September 30, 1996.
In January 1994, the former rights plan was triggered and the Company
redeemed all of the preferred share purchase rights issued under its Stockholder
Rights agreement to acquire Series One Junior Participating Preferred Stock. The
Rights were redeemed at a price of $.01 per Right, a total cost to the Company
of $155,000.
Stock Purchase Warrants: In connection with the acquisition of Western (See
Note 3), the Company issued 4,800,037 stock purchase warrants ("Warrants"). The
Warrants were issued on April 14, 1995 at an initial value of $5.00 per Warrant.
Each Warrant represents the right to purchase one share of the Company's common
stock at an exercise price of $30, until the expiration date of April 13, 2000.
As of September 30, 1996, no Warrants had been exercised.
15. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FISCAL
FIRST SECOND THIRD FOURTH YEAR
QUARTER QUARTER QUARTER QUARTER TOTAL
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Fiscal Year 1996:
Revenue.......................... $206,501 $200,794 $220,960 $337,006 $965,261
Gross profit(a).................. 35,671 29,773 38,553 64,124 168,121
Net income....................... 9,145 4,423 9,072 (b) 17,846(c) 40,486
Net income per share:
Primary........................ .32 .15 .31 (b) .45(c) 1.29
Fully diluted.................. .32 .15 .31 (b) .45(c) 1.26
Fiscal Year 1995:
Revenue.......................... $119,415 $106,668 $199,542 $208,035 $633,660
Gross profit(a).................. 17,753 13,788 28,782 35,179 95,502
Net income (loss)................ 4,744 1,378 (5,848)(d) 9,615(e)(f) 9,889
Net income (loss) per share:
Primary........................ .30 .09 (.22)(d) .34(e)(f) .46
Fully diluted.................. .30 .09 (.22)(d) .34(e)(f) .45
</TABLE>
- - ---------------
(a) Represents revenue less cost of sales and services and research and
engineering expenses.
(b) Includes $3.5 million ($2.3 million after tax or $.08 per share) unusual
charge resulting from the acquisition of Nowsco. See Note 4.
(c) Includes $3.9 million ($2.5 million after tax or $.06 per share) unusual
charge resulting from the acquisition of Nowsco. See Note 4.
(d) Includes $16 million ($10.4 million after tax or $.40 per share) unusual
charge resulting from the acquisition of Western. See Note 4.
(e) Includes $1.2 million ($.8 million after tax or $.03 per share) unusual
charge resulting from the acquisition of Western. See Note 4.
(f) Includes $1.5 million ($.05 per share) of nonrecurring tax benefits.
37
<PAGE> 38
BJ SERVICES COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
16. SUPPLEMENTAL GUARANTOR INFORMATION
As discussed in Note 6, each of the Guarantor Subsidiaries has fully and
unconditionally guaranteed, on a joint and several basis, the obligation to pay
principal and interest with respect to the 7% Series B Notes.
Substantially all of the Company's operating income and cash flow is generated
by its subsidiaries. As a result, funds necessary to meet the Company's debt
service obligations are provided in part by distributions or advances from its
subsidiaries. Under certain circumstances, contractual and legal restrictions,
as well as the financial condition and operating requirements of the Company's
subsidiaries, could limit the Company's ability to obtain cash from its
subsidiaries for the purpose of meeting its debt service obligations, including
the payment of principal and interest on the 7% Series B Notes. Although holders
of the 7% Series B Notes will be direct creditors of the Company's principal
direct subsidiaries by virtue of the guarantees, the Company has subsidiaries
("Non-Guarantor Subsidiaries") that are not included among the Guarantor
Subsidiaries, and such subsidiaries will not be obligated with respect to the 7%
Series B Notes. As a result, the claims of creditors of the Non-Guarantor
Subsidiaries will effectively have priority with respect to the assets and
earnings of such companies over the claims of creditors of the Company,
including the holders of the 7% Series B Notes.
The following supplemental consolidating condensed financial statements
present:
1. Consolidating condensed statements of financial position as of
September 30, 1996 and September 30, 1995, consolidating condensed
statements of operations for each of the years ended September 30, 1996,
1995 and 1994 and consolidating condensed statements of cash flows for each
of the years ended September 30, 1996, 1995 and 1994.
2. BJ Services Company (the "Parent"), combined Guarantor Subsidiaries
and combined Non-Guarantor Subsidiaries with their investments in
subsidiaries accounted for using the equity method.
3. Elimination entries necessary to consolidate the Parent and all of
its subsidiaries.
Management does not believe that separate financial statements of the Guarantor
Subsidiaries of the 7% Series B Notes are material to investors in the 7% Series
B Notes.
38
<PAGE> 39
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue................................. $ $595,873 $411,471 $(42,083) $965,261
Operating expenses:
Cost of sales and services............ 502,575 319,554 (42,083) 780,046
Research and engineering.............. 15,241 1,853 17,094
Marketing............................. 30,210 9,099 39,309
General and administrative............ 23,705 14,868 38,573
Goodwill amortization................. 468 7,442 7,910
Unusual charge........................ 5,369 2,056 7,425
------- -------- -------- -------- --------
Total operating expenses...... 577,568 354,872 (42,083) 890,357
------- -------- -------- -------- --------
Operating income........................ 18,305 56,599 74,904
Interest income......................... 1,590 2,618 (2,894) 1,314
Interest expense........................ (23,616) (6,226) 2,894 (26,948)
Income from equity investees............ 40,486 39,562 (80,048)
Other income-net........................ 2,103 1,218 3,321
------- -------- -------- -------- --------
Income before income taxes.............. 40,486 37,944 54,209 (80,048) 52,591
Income tax expense (benefit)............ (2,542) 14,647 12,105
------- -------- -------- -------- --------
Net income.............................. $40,486 $ 40,486 $ 39,562 $(80,048) $ 40,486
======= ======== ======== ======== ========
</TABLE>
39
<PAGE> 40
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue.................................. $ $392,207 $267,755 $(26,302) $633,660
Operating expenses:
Cost of sales and services............. 345,937 206,224 (26,302) 525,859
Research and engineering............... 11,505 794 12,299
Marketing.............................. 19,146 7,283 26,429
General and administrative............. 16,055 12,263 28,318
Goodwill amortization.................. 2,573 693 3,266
Unusual charge......................... 17,200 17,200
------ -------- -------- -------- --------
Total operating expenses....... 412,416 227,257 (26,302) 613,371
------ -------- -------- -------- --------
Operating income (loss).................. (20,209) 40,498 20,289
Interest income.......................... 1,384 672 (1,157) 899
Interest expense......................... (12,090) (4,231) 1,157 (15,164)
Income from equity investees............. 9,889 29,373 (39,262)
Other income-net......................... 2,683 80 2,763
------ -------- -------- -------- --------
Income before income taxes............... 9,889 1,141 37,019 (39,262) 8,787
Income tax expense (benefit)............. (8,748) 7,646 (1,102)
------ -------- -------- -------- --------
Net income............................... $9,889 $ 9,889 $ 29,373 $(39,262) $ 9,889
====== ======== ======== ======== ========
</TABLE>
40
<PAGE> 41
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue................................... $ $249,716 $209,909 $(25,149) $434,476
Operating expenses:
Cost of sales and services.............. 228,071 166,072 (25,149) 368,994
Research and engineering................ 7,671 950 8,621
Marketing............................... 8,608 5,561 14,169
General and administrative.............. 12,025 10,684 22,709
Goodwill amortization................... 1,274 24 1,298
---- -------- -------- -------- --------
Total operating expenses........ 257,649 183,291 (25,149) 415,791
---- -------- -------- -------- --------
Operating income (loss)................... (7,933) 26,618 18,685
Interest income........................... 2,869 (2,140) 729
Interest expense.......................... (6,685) (2,838) 2,140 (7,383)
Income from equity investees.............. 370 17,504 (17,874)
Other income (expense) -- net............. 1,830 (1,085) 745
---- -------- -------- -------- --------
Income before income taxes and cumulative
effect of accounting change............. 370 7,585 22,695 (17,874) 12,776
Income tax expense (benefit).............. (3,185) 5,191 2,006
---- -------- -------- -------- --------
Income before cumulative effect
of accounting change.................... 370 10,770 17,504 (17,874) 10,770
Cumulative effect of change in
accounting principle, net of tax........ (10,400) (10,400)
---- -------- -------- -------- --------
Net income................................ $370 $ 370 $ 17,504 $(17,874) $ 370
==== ======== ======== ======== ========
</TABLE>
41
<PAGE> 42
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF FINANCIAL POSITION
SEPTEMBER 30, 1996
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents............ $ $ 2,897 $ $ $ 2,897
Receivables -- net................... 109,110 162,473 271,583
Inventories -- net................... 39,222 47,879 87,101
Deferred income taxes................ 19,349 19,349
Other current assets................. 5,379 31,838 37,217
-------- -------- -------- --------- ----------
Total current assets......... 175,957 242,190 418,147
Investment in subsidiaries........... 213,404 150,339 (363,743)
Intercompany advances -- net......... 628,979 (628,979)
Property -- net...................... 292,075 266,081 558,156
Deferred income taxes................ 112,574 20,092 132,666
Goodwill and other assets............ 185,018 415,173 600,191
-------- -------- -------- --------- ----------
Total assets................. $842,383 $915,963 $943,536 $(992,722) $1,709,160
======== ======== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................... $ $ 78,740 $ 63,226 $ $ 141,966
Short-term borrowings and current
portion of long-term debt......... 6,015 28,343 34,358
Accrued employee compensation and
benefits.......................... 20,548 11,679 32,227
Income and other taxes............... 2,635 11,063 13,698
Other accrued liabilities............ 680 35,428 33,668 69,776
-------- -------- -------- --------- ----------
Total current liabilities.... 680 143,366 147,979 292,025
Long-term debt......................... 276,461 246,543 523,004
Deferred income taxes.................. 11,740 11,740
Accrued post retirement benefits and
other................................ 39,343 1,345 40,688
Intercompany advances -- net........... 243,389 385,590 (628,979)
Stockholders' equity................... 841,703 213,404 150,339 (363,743) 841,703
-------- -------- -------- --------- ----------
Total liabilities and
stockholders' equity....... $842,383 $915,963 $943,536 $(992,722) $1,709,160
======== ======== ======== ========= ==========
</TABLE>
42
<PAGE> 43
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF FINANCIAL POSITION
SEPTEMBER 30, 1995
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents............ $ $ 1,842 $ $ $ 1,842
Receivables -- net................... 87,118 81,653 168,771
Inventories -- net................... 38,463 28,388 66,851
Deferred income taxes................ 9,370 9,370
Other current assets................. 3,163 6,938 10,101
-------- -------- -------- --------- --------
Total current assets......... 139,956 116,979 256,935
Investment in subsidiaries............. 171,612 107,653 (279,265)
Intercompany advances.................. 296,156 (296,156)
Property -- net........................ 261,713 155,097 416,810
Deferred income taxes.................. 92,447 15,442 107,889
Goodwill and other assets.............. 205,403 2,646 208,049
-------- -------- -------- --------- --------
Total assets................. $467,768 $807,172 $290,164 $ (575,421) $989,683
======== ======== ======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................... $ $ 60,677 $ 24,998 $ $ 85,675
Short-term borrowings and current
portion of long-term debt......... 37,600 37,600
Accrued employee compensation and
benefits.......................... 16,277 8,608 24,885
Income and other taxes............... 7 4,097 7,271 11,375
Other accrued liabilities............ 966 29,959 16,648 (2,837) 44,736
-------- -------- -------- --------- --------
Total current liabilities.... 973 148,610 57,525 (2,837) 204,271
Long-term debt......................... 222,566 37,000 259,566
Deferred income taxes.................. 2,248 9,248 11,496
Accrued post retirement benefits and
other................................ 46,902 653 47,555
Intercompany advances -- net........... 215,234 78,085 (293,319)
Stockholders' equity................... 466,795 171,612 107,653 (279,265) 466,795
-------- -------- -------- --------- --------
Total liabilities and
stockholders' equity....... $467,768 $807,172 $290,164 $ (575,421) $989,683
======== ======== ======== ========= ========
</TABLE>
43
<PAGE> 44
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................ $40,486... $ 40,486 $ 39,562 $(80,048) $ 40,486
Adjustments to reconcile net income to
cash provided by (used for)
operating activities:
Depreciation and amortization....... 31,830 34,220 66,050
Net gain on disposal of assets...... (14) (2,257) (2,271)
Recognition of unearned
compensation..................... 1,305 1,305
Deferred income taxes (benefit)..... (136) (136)
Unusual charge (noncash)............ 2,397 1,903 4,300
Income of equity investees.......... (40,486) (39,562) 80,048
Changes in:
Receivables......................... (21,992) (10,483) (32,475)
Accounts payable.................... 18,063 (9,443) 8,620
Inventories......................... (759) (2,958) (3,717)
Other current assets and
liabilities...................... (293) (13,616) (18,569) 3,040 (29,438)
Advances, net....................... (329,700) 13,683 319,057 (3,040)
Other, net.......................... (30,212) 28,694 (1,518)
--------- -------- -------- -------- ---------
Net cash provided by (used
for) operating
activities................ (329,993) 1,609 379,590 51,206
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions.................... (24,777) (29,381) (54,158)
Proceeds from disposal of assets...... 1,913 2,892 4,805
Acquisition of business, net of cash
acquired............................ (586,282) (586,282)
--------- -------- -------- -------- ---------
Net cash used for investing
activities................ (22,864) (612,771) (635,635)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock....... 329,993 329,993
Proceeds from borrowings-net.......... 22,310 233,181 255,491
--------- -------- -------- -------- ---------
Net cash provided by financing
activities.......................... 329,993 22,310 233,181 585,484
Increase in cash and cash
equivalents......................... 1,055 1,055
Cash and cash equivalents at beginning
of period........................... 1,842 1,842
--------- -------- -------- -------- ---------
Cash and cash equivalents at end
of period........................... $ $ 2,897 $ $ $ 2,897
========= ======== ======== ======== =========
</TABLE>
44
<PAGE> 45
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................. $ 9,889 $ 9,889 $ 29,373 $(39,262) $ 9,889
Adjustments to reconcile net income to
cash provided by operating activities:
Unusual charge (noncash).............. 3,646 3,646
Depreciation and amortization......... 22,688 19,376 42,064
Net gain on disposal of assets........ (27) (803) (830)
Recognition of unearned
compensation....................... 2,463 2,463
Deferred income taxes (benefit)....... (8,336) (525) (8,861)
Income of equity investees............ (9,889) (29,373) 39,262
Changes in:
Receivables........................... 21,894 (22,985) (1,091)
Accounts payable...................... 3,506 4,201 7,707
Inventories........................... 83 (8,161) (8,078)
Other current assets and
liabilities........................ 966 (10,224) 10,199 (2,111) (1,170)
Other, net............................ (2,241) 2,167 (8,392) 2,111 (6,355)
------- --------- -------- -------- ---------
Net cash provided by (used
for) operating activities... (1,275) 18,376 22,283 39,384
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions.................... (8,263) (22,703) (30,966)
Proceeds from disposal of assets...... 2,662 2,731 5,393
Acquisition on business, net of cash
acquired........................... (203,313) (203,313)
------- --------- -------- -------- ---------
Net cash used for investing
activities.................. (208,914) (19,972) (228,886)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock......... 1,275 1,275
Proceeds from (reduction of)
borrowings -- net..................... 189,162 (2,311) 186,851
------- --------- -------- -------- ---------
Net cash provided by (used
for) financing activities... 1,275 189,162 (2,311) 188,126
Increase in cash and cash equivalents... (1,376) (1,376)
Cash and cash equivalents at beginning
of period............................. 3,218 3,218
------- --------- -------- -------- ---------
Cash and cash equivalents at end of
period................................ $ $ 1,842 $ $ $ 1,842
======= ========= ======== ======== =========
</TABLE>
45
<PAGE> 46
SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED SEPTEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMBINED COMBINED
GUARANTOR NONGUARANTOR
PARENT SUBSIDIARIES SUBSIDIARIES ELIMINATIONS CONSOLIDATED
------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................... $ 370 $ 370 $ 17,504 $(17,874) $ 370
Adjustments to reconcile net income to
cash provided by operating activities:
Cumulative effect of accounting
change.............................. 10,400 10,400
Depreciation and amortization.......... 9,988 15,347 25,335
Net gain on disposal of assets......... (148) (198) (346)
Recognition of unearned compensation... 524 524
Deferred income taxes (benefit)........ (2,831) (2,128) (4,959)
Income of equity investees............. (370) (17,504) 17,874
Changes in:
Receivables............................ (2,666) (6,569) (9,235)
Accounts payable....................... 5,165 3,252 8,417
Inventories............................ 57 (678) (621)
Other current assets and liabilities... (2,786) 1,298 (472) (1,960)
Other, net............................. (980) 2,975 (4,137) 472 (1,670)
----- -------- -------- -------- --------
Net cash provided by (used for)
operating activities......... (980) 3,544 23,691 26,255
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions..................... (13,343) (26,002) (39,345)
Proceeds from disposal of assets....... 1,059 1,529 2,588
Acquisition of business, net of cash
acquired............................ (2,000) (2,000)
----- -------- -------- -------- --------
Net cash used for investing
activities................... (12,284) (26,473) (38,757)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of stock........ 980 980
Proceeds from borrowings -- net........ 10,338 2,782 13,120
----- -------- -------- -------- --------
Net cash provided by financing
activities................... 980 10,388 2,782 14,100
Increase in cash and cash equivalents.... 1,598 1,598
Cash and cash equivalents at beginning of
period................................. 1,620 1,620
----- -------- -------- -------- --------
Cash and cash equivalents at end of
period................................. $ $ 3,218 $ $ $ 3,218
===== ======== ======== ======== ========
</TABLE>
46
<PAGE> 47
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company is set forth in the
section entitled "Election of Directors" in the Proxy Statement of the Company
for the Annual Meeting of Stockholders to be held January 23, 1997 which section
is incorporated herein by reference. For information regarding executive
officers of the Company, see page 9 hereof. Information concerning compliance
with Section 16(a) of the Exchange Act is set forth in the section entitled
"Compliance with Section 16(a) of the Exchange Act" in the Proxy Statement of
the Company for the Annual Meeting of Stockholders to be held January 23, 1997,
which section is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
Information for this item is set forth in the sections entitled "Executive
Compensation" and "Severance Agreements" in the Proxy Statement of the Company
for the Annual Meeting of Stockholders to be held January 23, 1997, which
sections are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information for this item is set forth in the sections entitled "Voting
Securities" and "Election of Directors" in the Proxy Statement of the Company
for the Annual Meeting of Stockholders to be held January 23, 1997, which
sections are incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
47
<PAGE> 48
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) List of documents filed as part of this report or incorporated herein by
reference:
(1) Financial Statements:
The following financial statements of the Registrant as set forth under
Part II, Item 8 of this report on Form 10-K on the pages indicated.
<TABLE>
<CAPTION>
PAGE IN THIS
FORM 10-K
------------
<S> <C>
Independent Auditors' Report......................................... 18
Consolidated Statement of Operations for the years ended September
30, 1994, 1995 and 1996............................................ 19
Consolidated Statement of Financial Position as of September 30, 1995
and 1996........................................................... 20
Consolidated Statement of Stockholders' Equity for the years ended
September 30, 1994, 1995 and 1996.................................. 21
Consolidated Statement of Cash Flows for the years ended September
30, 1994, 1995 and 1996............................................ 22
Notes to Consolidated Financial Statements........................... 23
</TABLE>
BJ Services Company U.S.A., BJ Service International, Inc., and BJ
Services Company Middle East (the "Subsidiary Guarantors") have jointly
and severally and fully and unconditionally guaranteed the Company's 7%
Notes due 2006. Consolidating condensed financial information for the
Subsidiary Guarantors is included in the Notes to Consolidated Financial
Statements. The Subsidiary Guarantors are wholly owned subsidiaries of
the Company, and separate financial statements for the Subsidiary
Guarantors are not presented because the Company has determined that
they are not material to investors.
(2) Financial Statement Schedule:
<TABLE>
<CAPTION>
SCHEDULE PAGE
NUMBER DESCRIPTION OF SCHEDULE NUMBER
-------- ---------------------------------------------------------------- ------
<C> <S> <C>
II Valuation and Qualifying Accounts 53
</TABLE>
All other financial statement schedules are omitted because of the
absence of conditions under which they are required or because all
material information required to be reported is included in the
consolidated financial statements and notes thereto.
(b) The Company did not file any reports on Form 8-K during the fourth quarter
of fiscal 1996.
48
<PAGE> 49
(3) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- - -------------------- ------------------------------------------------------------------------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of November 17, 1994 ("Merger
Agreement"), among BJ Services Company, WCNA Acquisition Corp. and
The Western Company of North America (filed as Exhibit 2.1 to the
Company's annual report on Form 10-K for the year ended September 30,
1995, and incorporated herein by reference).
2.2 -- First Amendment to Agreement and Plan of Merger dated March 7, 1995,
among BJ Services Company, WCNA Acquisition Corp. and The Western
Company of North America (filed as Exhibit 2.2 to the Company's
annual report on Form 10-K for the year ended September 30, 1995, and
incorporated herein by reference).
*3.1 -- Certificate of Incorporation, as amended.
*3.2 -- Certificate of Designation of Series A Junior Participating Preferred
Stock, as amended.
*3.3 -- Bylaws of the Company, as amended.
4.1 -- Specimen form of certificate for the Common Stock (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-1 (Reg. No.
33-35187) and incorporated herein by reference).
4.2 -- Amended and Restated Rights Agreement dated as of September 26, 1996,
between the Company and First Chicago Trust Company of New York, as
Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K dated
October 21, 1996 and incorporated herein by reference).
4.3 -- Indenture between The Western Company of North America and United
States Trust Company of New York, Trustee, dated as of November 15,
1992, which includes the form of 12 7/8% Senior Note due 2002 as an
Exhibit thereto (filed as Exhibit to Registration Statement of
Western on Form S-2 (Reg. No. 33-51852), and incorporated herein by
reference).
4.4 -- First Supplemental Indenture, dated March 2, 1994, to Indenture,
dated as of November 15, 1992, between The Western Company of North
America and United States Trust Company of New York, Trustee (filed
as Exhibit to Form 10-K of Western for the year ended December 31,
1993, and incorporated herein by reference).
4.5 -- Second Supplemental Indenture, dated as of April 13, 1995, to
Indenture dated as of November 15, 1992, between The Western Company
of North America, BJ Services Company and United States Trust Company
of New York, Trustee (filed as Exhibit 10.5 to Post-Effective
Amendment No. 1 to Registration Statement on Form S-4 (Reg. No.
33-58017), and incorporated herein by reference).
4.6 -- Warrant Agreement with respect to the Company's warrants to purchase
common stock (filed as Exhibit 4.6 to the Company's annual report on
Form 10-K for the year ended September 30, 1995, and incorporated
herein by reference).
10.1 -- Relationship Agreement dated as of July 20, 1990, between the Company
and Baker Hughes Incorporated (filed as Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-35187) and
incorporated herein by reference).
10.2 -- Tax Allocation Agreement dated as of July 20, 1990, between the
Company and Baker Hughes Incorporated (included as Exhibit A to
Exhibit 10.1) (filed as Exhibit 10.2 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-35187) and incorporated herein by
reference).
</TABLE>
49
<PAGE> 50
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- - -------------------- ------------------------------------------------------------------------
<C> <S>
+10.3 -- 1990 Stock Incentive Plan, as amended and restated (filed as Exhibit
10.1 to the Company's Registration Statement on Form S-8 (Reg. No.
33-62098) and incorporated herein by reference.
*+10.4 -- Amendment effective December 12, 1996, to 1990 Stock Incentive Plan,
as amended and restated.
+10.5 -- 1990 Employee Stock Purchase Plan (filed as Exhibit 10.4 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-35187) and
incorporated herein by reference).
*+10.6 -- Amendment effective December 12, 1996, to 1990 Employee Stock
Purchase Plan.
+10.7 -- BJ Services Retirement Thrift Plan effective November 16, 1992 (filed
as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1992 and incorporated herein by reference).
+10.8 -- BJ Services Company 1995 Incentive Plan (filed as Exhibit 4.5 to the
Company's Registration Statement on Form S-8 (Reg. No. 33-58637) and
incorporated herein by reference).
*+10.9 -- Amendments effective January 25, 1996, and December 12, 1996, to BJ
Services Company 1995 Incentive Plan.
+10.10 -- The Western Company Retirement Savings Plan, as restated, and as
amended by Amendment No. 1 and the Second Amendment thereto (filed as
Exhibits 4.5, 4.6 and 4.7, respectively, to the Company's
Registration Statement (Reg. No. 33-58639) on Form S-8 and
incorporated herein by reference).
+10.11 -- Form of Severance Agreement between BJ Services Company and certain
executive officers (filed as Exhibit 10.6 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1993, and
incorporated herein by reference).
10.12 -- Note Agreement dated August 1, 1991 ("Note Agreement") by and among
the Company, BJ Services Company U.S.A., BJ Service International,
Inc., and BJ Services Company Middle East for the issuance of $30.0
million of 9.2% Senior Notes due August 1, 1998 (filed as Exhibit 4.4
to the Company's Annual Report on Form 10-K for the year ended
September 30, 1991 and incorporated herein by reference).
10.13 -- Fourth Amendment to Note Agreement dated as of August 7, 1996 (filed
as Exhibit 10.3 to the Company's Form 10-Q for the quarter ended June
30, 1996 and incorporated herein by reference).
10.14 -- Credit Agreement dated as of August 7, 1996, among the Company, BJ
Services Company, U.S.A., BJ Service International, Inc., BJ Services
Company Middle East, Nowsco Well Service, Ltd., and Bank of America
National Trust and Saving Association and Bank of America Canada, as
agents, and the other financial institutions parties thereto (the
"Credit Agreement") (filed as Exhibit 10. 1 to the Company's Form
10-Q for the quarter ended June 30, 1996, and incorporated herein by
reference).
*10.15 -- Form of Revolving Note, U.S. Term Note, Prime Rate Note and Swing
Loan Note pursuant to the Credit Agreement.
</TABLE>
50
<PAGE> 51
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- - -------------------- ------------------------------------------------------------------------
<C> <S>
*10.16 -- Parent Guaranty Agreement dated as of August 7, 1996, by the Company
under the Credit Agreement.
*10.17 -- Form of Guaranty Agreement dated as of August 7, 1996, by each of BJ
Services Company, U.S.A., BJ Service International, Inc. and BJ
Services Company Middle East under the Credit Agreement.
*+10.18 -- Form of Amendment to Executive Severance Agreement between BJ
Services Company and certain executive officers.
*21.1 -- Subsidiaries of the Company.
*23.1 -- Consent of Deloitte & Touche LLP.
*27.1 -- Financial data schedule.
</TABLE>
- - ---------------
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
51
<PAGE> 52
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BJ SERVICES COMPANY
By /s/ J. W. STEWART
------------------------------------
J. W. Stewart
President and Chief Executive
Officer
Date: December 20, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - --------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ J. W. STEWART Chairman of the Board, December 20, 1996
- - --------------------------------------------- President, and Chief
J. W. Stewart Executive Officer
(Principal Executive
Officer)
/s/ MICHAEL MCSHANE Vice President -- Finance, December 20, 1996
- - --------------------------------------------- Chief Financial Officer
Michael McShane and Director (Principal
Financial Officer)
/s/ MATTHEW D. FITZGERALD Controller (Principal December 20, 1996
- - --------------------------------------------- Accounting Officer)
Matthew D. Fitzgerald
Director
- - ---------------------------------------------
L. William Heiligbrodt
Director
- - ---------------------------------------------
John R. Huff
Director
- - ---------------------------------------------
Don D. Jordan
/s/ R. A. LEBLANC Director December 20, 1996
- - ---------------------------------------------
R. A. LeBlanc
/s/ JAMES E. MCCORMICK Director December 20, 1996
- - ---------------------------------------------
James E. McCormick
/s/ MICHAEL E. PATRICK Director December 20, 1996
- - ---------------------------------------------
Michael E. Patrick
</TABLE>
52
<PAGE> 53
BJ SERVICES COMPANY
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONS
------------------------
BALANCE AT CHARGED TO
BEGINNING CHARGED OTHER BALANCE AT
OF PERIOD TO EXPENSE ACCOUNTS DEDUCTIONS END OF PERIOD
---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 1994
Allowance for doubtful accounts
receivable......................... $2,352 $1,177 $1,345(1) $ 2,184
Reserve for inventory obsolescence
and adjustment..................... 8,519 708 1,081(2) 8,146
YEAR ENDED SEPTEMBER 30, 1995
Allowance for doubtful accounts
receivable......................... $2,184 $1,399 $4,105(3) $ 205(1) $ 7,483
Reserve for inventory obsolescence
and adjustment..................... 8,146 115 2,061(3) 777(2) 9,545
YEAR ENDED SEPTEMBER 30, 1996
Allowance for doubtful accounts
receivable......................... $7,483 $ 357 $1,302(3) $2,919(1) $ 6,223
Reserve for inventory obsolescence
and adjustment..................... 9,545 66 2,481(3) 1,082(2) 11,010
</TABLE>
- - ---------------
(1) Deductions in the allowance for doubtful accounts principally reflect the
write-off of previously reserved accounts.
(2) Deductions in the reserve for inventory obsolescence and adjustment
principally reflect the sale or disposal of related inventory.
(3) Additions to the reserve resulting from acquisitions of businesses.
53
<PAGE> 54
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- - -------------------- ------------------------------------------------------------------------
<C> <S>
2.1 -- Agreement and Plan of Merger dated as of November 17, 1994 ("Merger
Agreement"), among BJ Services Company, WCNA Acquisition Corp. and
The Western Company of North America (filed as Exhibit 2.1 to the
Company's annual report on Form 10-K for the year ended September 30,
1995, and incorporated herein by reference).
2.2 -- First Amendment to Agreement and Plan of Merger dated March 7, 1995,
among BJ Services Company, WCNA Acquisition Corp. and The Western
Company of North America (filed as Exhibit 2.2 to the Company's
annual report on Form 10-K for the year ended September 30, 1995, and
incorporated herein by reference).
*3.1 -- Certificate of Incorporation, as amended.
*3.2 -- Certificate of Designation of Series A Junior Participating Preferred
Stock, as amended.
*3.3 -- Bylaws of the Company, as amended.
4.1 -- Specimen form of certificate for the Common Stock (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-1 (Reg. No.
33-35187) and incorporated herein by reference).
4.2 -- Amended and Restated Rights Agreement dated as of September 26, 1996,
between the Company and First Chicago Trust Company of New York, as
Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K dated
October 21, 1996 and incorporated herein by reference).
4.3 -- Indenture between The Western Company of North America and United
States Trust Company of New York, Trustee, dated as of November 15,
1992, which includes the form of 12 7/8% Senior Note due 2002 as an
Exhibit thereto (filed as Exhibit to Registration Statement of
Western on Form S-2 (Reg. No. 33-51852), and incorporated herein by
reference).
4.4 -- First Supplemental Indenture, dated March 2, 1994, to Indenture,
dated as of November 15, 1992, between The Western Company of North
America and United States Trust Company of New York, Trustee (filed
as Exhibit to Form 10-K of Western for the year ended December 31,
1993, and incorporated herein by reference).
4.5 -- Second Supplemental Indenture, dated as of April 13, 1995, to
Indenture dated as of November 15, 1992, between The Western Company
of North America, BJ Services Company and United States Trust Company
of New York, Trustee (filed as Exhibit 10.5 to Post-Effective
Amendment No. 1 to Registration Statement on Form S-4 (Reg. No.
33-58017), and incorporated herein by reference).
4.6 -- Warrant Agreement with respect to the Company's warrants to purchase
common stock (filed as Exhibit 4.6 to the Company's annual report on
Form 10-K for the year ended September 30, 1995, and incorporated
herein by reference).
10.1 -- Relationship Agreement dated as of July 20, 1990, between the Company
and Baker Hughes Incorporated (filed as Exhibit 10.1 to the Company's
Registration Statement on Form S-1 (Reg. No. 33-35187) and
incorporated herein by reference).
10.2 -- Tax Allocation Agreement dated as of July 20, 1990, between the
Company and Baker Hughes Incorporated (included as Exhibit A to
Exhibit 10.1) (filed as Exhibit 10.2 to the Company's Registration
Statement on Form S-1 (Reg. No. 33-35187) and incorporated herein by
reference).
</TABLE>
0
<PAGE> 55
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- - -------------------- ------------------------------------------------------------------------
<C> <S>
+10.3 -- 1990 Stock Incentive Plan, as amended and restated (filed as Exhibit
10.1 to the Company's Registration Statement on Form S-8 (Reg. No.
33-62098) and incorporated herein by reference.
*+10.4 -- Amendment effective December 12, 1996, to 1990 Stock Incentive Plan,
as amended and restated.
+10.5 -- 1990 Employee Stock Purchase Plan (filed as Exhibit 10.4 to the
Company's Registration Statement on Form S-1 (Reg. No. 33-35187) and
incorporated herein by reference).
*+10.6 -- Amendment effective December 12, 1996, to 1990 Employee Stock
Purchase Plan.
+10.7 -- BJ Services Retirement Thrift Plan effective November 16, 1992 (filed
as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the
year ended September 30, 1992 and incorporated herein by reference).
+10.8 -- BJ Services Company 1995 Incentive Plan (filed as Exhibit 4.5 to the
Company's Registration Statement on Form S-8 (Reg. No. 33-58637) and
incorporated herein by reference).
*+10.9 -- Amendments effective January 25, 1996, and December 12, 1996, to BJ
Services Company 1995 Incentive Plan.
+10.10 -- The Western Company Retirement Savings Plan, as restated, and as
amended by Amendment No. 1 and the Second Amendment thereto (filed as
Exhibits 4.5, 4.6 and 4.7, respectively, to the Company's
Registration Statement (Reg. No. 33-58639) on Form S-8 and
incorporated herein by reference).
+10.11 -- Form of Severance Agreement between BJ Services Company and certain
executive officers (filed as Exhibit 10.6 to the Company's Annual
Report on Form 10-K for the year ended September 30, 1993, and
incorporated herein by reference).
10.12 -- Note Agreement dated August 1, 1991 ("Note Agreement") by and among
the Company, BJ Services Company U.S.A., BJ Service International,
Inc., and BJ Services Company Middle East for the issuance of $30.0
million of 9.2% Senior Notes due August 1, 1998 (filed as Exhibit 4.4
to the Company's Annual Report on Form 10-K for the year ended
September 30, 1991 and incorporated herein by reference).
10.13 -- Fourth Amendment to Note Agreement dated as of August 7, 1996 (filed
as Exhibit 10.3 to the Company's Form 10-Q for the quarter ended June
30, 1996 and incorporated herein by reference).
10.14 -- Credit Agreement dated as of August 7, 1996, among the Company, BJ
Services Company, U.S.A., BJ Service International, Inc., BJ Services
Company Middle East, Nowsco Well Service, Ltd., and Bank of America
National Trust and Saving Association and Bank of America Canada, as
agents, and the other financial institutions parties thereto (the
"Credit Agreement") (filed as Exhibit 10. 1 to the Company's Form
10-Q for the quarter ended June 30, 1996, and incorporated herein by
reference).
*10.15 -- Form of Revolving Note, U.S. Term Note, Prime Rate Note and Swing
Loan Note pursuant to the Credit Agreement.
</TABLE>
1
<PAGE> 56
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- - -------------------- ------------------------------------------------------------------------
<C> <S>
*10.16 -- Parent Guaranty Agreement dated as of August 7, 1996, by the Company
under the Credit Agreement.
*10.17 -- Form of Guaranty Agreement dated as of August 7, 1996, by each of BJ
Services Company, U.S.A., BJ Service International, Inc. and BJ
Services Company Middle East under the Credit Agreement.
*+10.18 -- Form of Amendment to Executive Severance Agreement between BJ
Services Company and certain executive officers.
*21.1 -- Subsidiaries of the Company.
*23.1 -- Consent of Deloitte & Touche LLP.
*27.1 -- Financial data schedule.
</TABLE>
- - ---------------
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
2
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
KNAK CO.
FIRST: The name of the Corporation is:
KNAK CO.
SECOND: The address of its registered office in the State of
Delaware is the Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation
shall have the authority to issue is 45,000,000 shares of capital stock
consisting of 5,000,000 shares of preferred stock, par value $1.00 per share
(the "Preferred Stock"), and 40,000,000 shares of common stock, par value $.10
per share (the "Common Stock").
The designations, powers, preferences and relative, participating,
optional or other special rights and qualifications, limitations or
restrictions of the Preferred Stock shall be established by resolution of the
Board of Directors pursuant to Section 151 of the General Corporation Law of
the State of Delaware.
FIFTH: The name and mailing address of the incorporator is:
<TABLE>
<CAPTION>
Name Mailing Address
---- ---------------
<S> <C>
Karen M. Nakfoor Fulbright & Jaworski
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
</TABLE>
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, alter or
repeal the bylaws of the Corporation.
EIGHTH: Election of directors need not be by written ballot unless
the bylaws of the Corporation shall so provide.
-1-
<PAGE> 2
NINTH: The bylaws of the Corporation shall not be made, repealed,
altered, amended or rescinded by the stockholders of the Corporation except by
the vote of the holders of not less than 75% of the total voting power of all
shares of stock of the Corporation entitled to vote in the election of
directors, considered for purposes of this Article NINTH as one class.
TENTH: No action shall be taken by the stockholders except at an
annual or special meeting of stockholders and stockholders may not act by
written consent.
ELEVENTH: Special meetings of the stockholders of the Corporation
for any purpose or purposes may be called at any time by the Board of
Directors, or by a committee of the Board of Directors which has been duly
designated by the Board of Directors and whose powers and authority, as
provided in a resolution of the Board of Directors or in the bylaws of the
Corporation, include the power to call such meetings. Special meetings of
stockholders of the Corporation may not be called by any other person or
persons.
TWELFTH: No director of this Corporation shall be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation 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 General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit.
If the General Corporation Law of the State of Delaware is hereafter
amended to authorize corporate action further limiting or eliminating the
personal liability of directors, then the liability of the director to the
Corporation shall be limited or eliminated to the full extent permitted by the
General Corporation Law of the State of Delaware, as so amended from time to
time. Any repeal or modification of this Article shall be prospective only,
and shall not adversely affect any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or
modification.
THIRTEENTH: The names and mailing addresses of the persons who are to
serve as the directors of the Corporation until the first annual meeting of the
stockholders or until their respective successors are elected and qualified
are:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
J. W. Stewart 5500 N.W. Central Drive
Houston, Texas 77210-4442
Michael McShane 5500 N.W. Central Drive
Houston, Texas 77210-4442
</TABLE>
-2-
<PAGE> 3
<TABLE>
<S> <C>
James D. Woods 3900 Essex Lane
Houston, Texas 77026
Thomas W. Cason 3900 Essex Lane
Houston, Texas 77026
</TABLE>
The Board of Directors shall be divided into three classes, Class I,
Class II and Class III. The number of directors in each class shall be the
whole number contained in the quotient arrived at by dividing the authorized
number of directors by three, and if a fraction is also contained in such
quotient then if such fraction is one-third (1/3) the extra director shall be a
member of Class III and if the fraction is two-thirds (2/3) one of the extra
directors shall be a member of Class III and the other shall be a member of
Class II. After division of the Board of Directors into classes, each director
shall serve for a term ending on the date of the third annual meeting following
the annual meeting at which such director was elected; provided, however, that
the initial directors appointed to Class I shall serve for a term ending on the
date of the first annual meeting next following September 30, 1990, the initial
directors appointed to Class II shall serve for a term ending on the date of
the second annual meeting next following September 30, 1990, and the initial
directors appointed to Class III shall serve for a term ending on the date of
the third annual meeting next following September 30, 1990.
The number of directors shall be fixed from time to time by the bylaws
of the Corporation or an amendment thereof duly adopted by the Board of
Directors or by the stockholders acting in accordance with Article NINTH
herein. In the event of any increase or decrease in the authorized number of
directors, (a) each director then serving as such shall nevertheless continue
as a director of the class of which he is a member until the expiration of his
current term, or his prior death, retirement, resignation or removal, and (b)
the newly created or eliminated directorships resulting from such increase or
decrease shall be apportioned by the Board of Directors to such class or
classes as shall, so far as possible, bring the number of directors in the
respective classes into conformity with the formula in this Article, as applied
to the new authorized number of directors.
Notwithstanding any of the foregoing provisions of this Article, each
director shall serve until his successor is elected and qualified or until his
death, retirement, resignation or removal. No director may be removed during
his term except for cause.
FOURTEENTH: The affirmative vote of the holders of not less than 75%
of the outstanding shares of "Voting Stock" (as hereinafter defined) of the
Corporation, including the affirmative vote of the holders of not less than 66
2/3% of the outstanding shares of Voting Stock not owned, directly or
indirectly, by any "Related Person" (as hereinafter defined), shall be required
for the approval or authorization of any "Business Combination" (as hereinafter
defined) of the Corporation with any Related Person; provided, however, that
the 66 2/3% voting requirement referred to above shall not be applicable if the
Business Combination is approved by the affirmative vote of the holders of not
less than 90% of the outstanding shares of Voting Stock; and further provided
that the 75% voting requirement shall not be applicable if:
-3-
<PAGE> 4
(1) The Board of Directors of the Corporation by a vote of not less
than 75% of the directors then holding office (a) have expressly approved in
advance the acquisition of outstanding shares of Voting Stock of the
Corporation that caused the Related Person to become a Related Person or (b)
have approved the Business Combination prior to the Related Person involved in
the Business Combination having become a Related Person;
(2) The Business Combination is solely between the Corporation and
another corporation, 100% of the Voting Stock of which is owned directly or
indirectly by the Corporation; or
(3) All of the following conditions have been met: (a) the Business
Combination is a merger or consolidation, the consummation of which is proposed
to take place within one year of the date of the transaction pursuant to which
such person became a Related Person and the cash or fair market value of the
property, securities or other consideration to be received per share by holders
of Common Stock of the Corporation in the Business Combination is not less than
the highest per share price (with appropriate adjustments for recapitalizations
and for stock splits, reverse stock splits and stock dividends) paid by the
Related Person in acquiring any of its holdings of the Corporation's Common
Stock; (b) the consideration to be received by such holders is either cash or,
if the Related Person shall have acquired the majority of its holdings of the
Corporation's Common Stock for a form of consideration other than cash, in the
same form of consideration as the Related Person acquired such majority; (c)
after such Related Person has become a Related Person and prior to the
consummation of such Business Combination: (i) except as approved by a majority
of the "Continuing Directors" (as hereinafter defined), there shall have been
no failure to declare and pay at the regular date therefor any full quarterly
dividends (whether or not cumulative) on any outstanding Shares of Preferred
Stock of the Corporation, (ii) there shall have been no reduction in the annual
rate of dividends paid per share on the Corporation's Common Stock (adjusted as
appropriate for recapitalizations and for stock splits, reverse stock splits
and stock dividends) except as approved by a majority of the Continuing
Directors, (iii) such Related Person shall not have become the "Beneficial
Owner" (as hereinafter defined) of any additional shares of Voting Stock of the
Corporation except as part of the transaction which resulted in such Related
Person becoming a Related Person, and (iv) such Related Person shall not have
received the benefit, directly or indirectly (except proportionately as a
stockholder), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages provided by the
Corporation, whether in anticipation of or in connection with such Business
Combination or otherwise; and (d) a proxy statement, responsive to the
requirements of the Securities Exchange Act of 1934, as amended ("Exchange
Act") and the rules and regulations thereunder (or any subsequent provisions
replacing the Exchange Act, rules or regulations), shall be mailed to all
stockholders of record at least 30 days prior to the consummation of the
Business Combination for the purpose of soliciting stockholder approval of the
Business Combination and shall contain at the front thereof, in a prominent
place, any recommendations as to the advisability (or inadvisability) of the
Business Combination which the Continuing Directors, or any of them, may choose
to state and, if deemed advisable by a majority of the Continuing Directors, an
opinion of a reputable investment banking firm as to the fairness (or
unfairness) of the terms of such Business Combination from the point of view of
the remaining stockholders of the Corporation
-4-
<PAGE> 5
(such investment banking firm to be selected by a majority of the Continuing
Directors and to be paid a reasonable fee for its services by the Corporation
upon receipt of such opinion).
For the purposes of this Article:
(i) The term "Business Combination" shall mean (a) any merger or
consolidation of the Corporation or a subsidiary with or into a Related Person,
(b) any sale, lease, exchange, transfer or other disposition, including without
limitation a mortgage or any other security device, of all or any "Substantial
Part" (as hereinafter defined) of the assets either of the Corporation
(including, without limitation, any voting securities of a subsidiary) or of a
subsidiary to a Related Person (other than a distribution by the Corporation or
a subsidiary to the Related Person of assets in connection with a pro rata
distribution by the Corporation to all stockholders), (c) any merger or
consolidation of a Related Person with or into the Corporation or a subsidiary
of the Corporation, (d) any sale, lease, exchange, transfer or other
disposition of all or any Substantial Part of the assets of a Related Person to
the Corporation or a subsidiary of the Corporation, (e) the issuance of any
securities (other than by way of pro rata distribution to all stockholders) of
the Corporation or a subsidiary of the Corporation to a Related Person, (f) the
acquisition by the Corporation or a subsidiary of the Corporation of any
securities of a Related Person, (g) any recapitalization that would have the
effect of increasing the voting power of a Related Person, (h) any series or
combination of transactions having the same effect, directly or indirectly, as
any of the foregoing and (i) any agreement, contract or arrangement providing
for any of the transactions described in this definition of Business
Combination.
(ii) The term "Continuing Director" shall mean any member of the
Board of Directors of the Corporation who is not affiliated with a Related
Person and who was a member of the Board of Directors immediately prior to the
time that the Related Person became a Related Person, and any successor to a
Continuing Director who is not affiliated with the Related Person and is
recommended to succeed a Continuing Director by a majority of Continuing
Directors then serving as members of the Board of Directors of the Corporation.
(iii) The term "Related Person" shall mean and include any
individual, corporation, partnership or other person or entity which, together
with its "Affiliates" and "Associates" (as defined on July 1, 1990 in Rule
12b-2 under the Exchange Act), is the "Beneficial Owner" (as defined on July 1,
1990 in Rule 13d-3 under the Exchange Act) in the aggregate of 10% or more of
the outstanding Voting Stock of the Corporation, and any Affiliate or Associate
of any such individual, corporation, partnership or other person or entity.
(iv) The term "Substantial Part" shall mean more than 10% of the
book value of the total assets of the Corporation in question as of the end of
its most recent fiscal year ending prior to the time the determination is being
made.
-5-
<PAGE> 6
(v) Without limitation, any shares of Common Stock of the
Corporation that any person has the right to acquire pursuant to any agreement,
or upon exercise of conversion rights, warrants or options, or otherwise, shall
be deemed beneficially owned by such person.
(vi) For the purposes of subparagraph (3) of this Article, the term
"other consideration to be received" shall include, without limitation, Common
Stock of the Corporation retained by its existing public stockholders in the
event of a Business Combination in which the Corporation is the surviving
corporation.
(vii) The term "Voting Stock" shall mean all outstanding shares of
capital stock of the Corporation or another corporation entitled to vote
generally in the election of directors and each reference to a proportion of
shares of Voting Stock shall refer to such proportion of the votes entitled to
be cast by such shares.
FIFTEENTH: The provisions set forth in this Article FIFTEENTH and
in Articles NINTH (dealing with the alteration of Bylaws by stockholders),
TENTH (dealing with the prohibition against stockholder action without
meetings), TWELFTH (dealing with liability of directors), THIRTEENTH (dealing
with the classification and number of directors) and FOURTEENTH (dealing with
the 75% vote of stockholders required for certain Business Combinations) herein
may not be repealed or amended in any respect, and no Article imposing
cumulative voting in the election of directors may be added, unless such action
is approved by the affirmative vote of not less than 75% of the total voting
power of all shares of stock of the Corporation entitled to vote in the
election of directors, considered for purposes of this Article FIFTEENTH as one
class. Amendment to the provisions set forth in this Article FIFTEENTH and in
Article FOURTEENTH shall also require the affirmative vote of 66 2/3% of such
total voting power excluding the vote of shares owned by a "Related Person" (as
defined in Article FOURTEENTH). The voting requirements contained in Article
NINTH, Article FOURTEENTH and this Article FIFTEENTH herein shall be in
addition to the voting requirements imposed by law, other provisions of this
Certificate of Incorporation or any Certificate of Designation of Preferences
in favor of certain classes or series of classes of shares of the Corporation.
SIXTEENTH: The Corporation reserves the right to amend, alter,
change or repeal any provisions contained in this Certificate of Incorporation,
in the manner now or hereafter prescribed by statute, and all rights conferred
upon stockholders herein are granted subject to this reservation.
Notwithstanding the foregoing, the provisions set forth in Articles NINTH,
TENTH, TWELFTH, THIRTEENTH, FOURTEENTH and FIFTEENTH may not be repealed or
amended in any respect unless such repeal or amendment is approved as specified
in Article FIFTEENTH herein.
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<PAGE> 7
THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, does make this Certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 12th day of July, 1990.
/s/ Karen M. Nakfoor
--------------------
Karen M. Nakfoor
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<PAGE> 8
CERTIFICATE OF MERGER
Pursuant to the provisions of Section 251 of the General Corporation
Law of the State of Delaware, the undersigned certifies as follows:
1. The names and states of incorporation of each of the constituent
corporations are as follows:
<TABLE>
<CAPTION>
Name of Corporation State of Incorporation
------------------- ----------------------
<S> <C>
KNAK CO. Delaware
BJ Services Company Delaware
</TABLE>
2. A Plan and Agreement of Merger dated July 13, 1990, between KNAK
CO. and BJ Services Company (the "Plan and Agreement of Merger"), has been
approved, adopted, certified, executed and acknowledged by each of the
constituent corporations, in accordance with Section 251 of the General
Corporation Law of the State of Delaware.
3. The name of the surviving corporation is KNAK CO.
4. At the effective time of the merger, Article FIRST of the
Certificate of Incorporation of KNAK CO. shall be amended to read in its
entirety as follows:
"The name of the Corporation is:
BJ SERVICES COMPANY."
5. The executed Plan and Agreement of Merger is on file at the
principal place of business of the surviving corporation at the following
address: 5500 N.W. Central Drive, Houston, Texas 77210-4442.
6. A copy of the Plan and Agreement of Merger will be furnished by
the surviving corporation, on request and without cost, to any stockholder of
KNAK CO. or BJ Services Company.
Dated as of July 13, 1990.
KNAK CO.
By: /s/ George E. Cash
------------------------------
George E. Cash, Vice President
ATTEST:
/s/ Matthew D. Fitzgerald
- - ----------------------------------
Matthew D. Fitzgerald,
Secretary
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<PAGE> 9
BJ SERVICES COMPANY
CERTIFICATE OF DESIGNATION OF
SERIES ONE JUNIOR PARTICIPATING PREFERRED STOCK
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
BJ SERVICES COMPANY, a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter, the
"Corporation"), DOES HEREBY CERTIFY that, by the unanimous written consent of
the Board of Directors of the Corporation dated July 13, 1990, the following
resolution was adopted pursuant to Section 151 of the General Corporation Law
of the State of Delaware:
WHEREAS, Article FOURTH of the Certificate of Incorporation of this
Corporation authorizes 45,000,000 shares of capital stock, consisting of
5,000,000 shares of preferred stock, with par value of $1.00 per share (the
"Preferred Stock"), issuable from time to time in one or more series and
40,000,000 shares of common stock, with par value of $.10 per share (the
"Common Stock"), issuable from time to time; and
WHEREAS, pursuant to Article FOURTH of the Certificate of
Incorporation of this Corporation, the Board of Directors of this Corporation
is authorized to fix the designations, powers, preferences and relative,
participating, optional or other special rights, if any, and qualifications,
limitations or restrictions thereof, of any wholly unissued series of Preferred
Stock, and to fix the number of shares constituting such series, and to
increase or decrease the number of shares of any such series (but not below the
number of shares thereof then outstanding); and
WHEREAS, it is the desire of the Board of Directors of this
Corporation, pursuant to its authority as aforesaid, to issue a series of
Preferred Stock and to fix the rights, preferences, restrictions and other
matters relating thereto;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does
hereby establish a series of Preferred Stock of this Corporation and does
hereby fix and determine the rights, preferences, restrictions and other
matters relating to said series of Preferred Stock, as follows:
Section 1. Title of Series and Ranking. The shares of such series
shall be designated as "Series One Junior Participating Preferred Stock." The
Series One Junior Participating Preferred Stock shall rank junior to all other
series of the Corporation's Preferred Stock as to the payment of dividends and
the distribution of assets, unless the terms of any such series shall provide
otherwise.
Section 2. Number of Shares in Series. The number of shares which
shall constitute such Series shall be 400,000.
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<PAGE> 10
Section 3. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the
shares of Series One Junior Participating Preferred Stock with respect to
dividends, the holders of shares of Series One Junior Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the thirtieth day of March, June, September and December, or
such earlier date within each such calendar quarter determined from time to
time by the Board of Directors (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series One Junior Participating Preferred Stock, in an amount per share
(rounded to the nearest cent) equal to the greater of (a) $.25 or (b) subject
to the provision for adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series One Junior
Participating Preferred Stock. In the event the Corporation shall at any time
after July 16, 1990 (the "Rights Declaration Date") (i) declare any dividend on
Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding
Common Stock, or (iii) combine the outstanding Common Stock into a smaller
number of shares, then in each such case the amount to which holders of shares
of Series One Junior Participating Preferred Stock were entitled immediately
prior to such event under clause (a) and clause (b) of the preceding sentence
shall be adjusted by multiplying each such amount by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the
Series One Junior Participating Preferred Stock as provided in paragraph (A)
above immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided that,
in the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $.25 per share
as such amount may be adjusted pursuant to the last sentence of the preceding
paragraph on the Series One Junior Participating Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series One Junior Participating Preferred Stock from the
Quarterly Dividend Payment Date next preceding the date of issue of such shares
of Series One Junior Participating Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend
Payment Date, in which case dividends on such shares shall begin to accrue from
the date of issue of such shares, or
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<PAGE> 11
unless the date of issue is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of shares of Series One
Junior Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series One Junior Participating Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of Series One Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 4. Liquidation, Dissolution or Winding Up.
(A) Upon any voluntary liquidation, dissolution or winding up of
the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Series One Junior Participating Preferred Stock unless
prior thereto, the holders of shares of Series One Junior Participating
Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereof, whether or not
declared, to the date of such payment (the "Series One Liquidation
Preference"). Following the payment of the full amount of the Series One
Liquidation Preference, no additional distribution shall be made to the holders
of shares of Series One Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Common Stock shall have received an amount
per share (the "Common Adjustment") equal to the quotient obtained by dividing
(i) the Series One Liquidation Preference by (ii) 100 appropriately adjusted as
set forth in subparagraph C below to reflect such events as stock splits, stock
dividends and recapitalizations with respect to the Common Stock) (such number
in clause (ii), the "Adjustment Number"). Following the payment of the full
amount of the Series One Liquidation Preference and the Common Adjustment in
respect of all outstanding shares of Series One Junior Participating Preferred
Stock and Common Stock, respectively, holders of Series One Junior
Participating Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the remaining assets to be
distributed in the ratio of the Adjustment Number to 1 with respect to such
Preferred Stock and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series One Liquidation Preference
and the liquidation preferences of all other series of preferred stock, if any,
which rank on a parity with the Series One Junior Participating Preferred
Stock, then such remaining assets shall be distributed ratably to the holders
of such parity shares in proportion to their respective liquidation
preferences. In the event, however, that there are not sufficient assets
available to permit payment in full of the Common Adjustment, then such
remaining assets shall be distributed ratably to the holders of Common Stock.
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<PAGE> 12
(C) In the event the corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 5. No Redemption. The shares of Series One Junior
Participating Preferred Stock shall not be redeemable.
Section 6. Voting Rights. The holders of shares of Series One Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth
and subject to the provisions in paragraph C below, each share of Series One
Junior Participating Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the number of votes per share to which holders of shares of Series One
Junior Participating Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction the numerator
of which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series One Junior Participating Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(C) If, on the date used to determine stockholders of record for
any meeting of stockholders of the Corporation for the election of directors,
the equivalent of six full quarterly dividends payable on the Series One Junior
Participating Preferred Stock shall be accrued and unpaid, the holders of the
Series One Junior Participating Preferred Stock voting as a class together with
all other holders of Preferred Stock, the terms of which expressly provide
similar voting rights, will, to the exclusion of the holders of Common Stock
and such other series of Preferred Stock not given a class voting right with
the Series One Junior Participating Preferred Stock with respect thereto, be
entitled to elect, at such meeting and subsequent meetings of stockholders held
for the purpose of electing directors, a total of two directors, to be
distributed among the several classes of directors as nearly equally as
possible. Upon election, such directors shall become additional directors of
the Corporation and the authorized number of directors of the Corporation shall
thereupon be automatically increased by such number of directors. Such right
to elect directors shall continue until
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<PAGE> 13
all accrued dividends on all such shares of Series One Junior Participating
Preferred Stock shall have been paid for all past dividend periods. When all
accrued dividends on Series One Junior Participating Preferred Stock have been
paid for all past dividend periods, the right of the holders of Series One
Junior Participating Preferred Stock to elect such number of directors shall
cease, the term of such directors shall thereupon terminate, and the authorized
number of directors of the Corporation shall thereupon return to the number of
authorized directors otherwise in effect, but subject always to the same
provisions for the vesting of such special voting rights in the case of any
such future dividend default or defaults. The fact that dividends have been
paid as required by the preceding sentence shall be evidenced by a certificate
executed by the President and the Chief Financial Officer of the Corporation
and delivered to the Board of Directors. The directors so elected by holders
of Series One Junior Participating Preferred Stock shall serve until the
certificate described in the preceding sentence shall have been delivered to
the Board of Directors or until their respective successors shall be elected or
appointed and qualify.
Except as otherwise provided by law, at all meetings of the holders of
Series One Junior Participating Preferred Stock to elect or remove directors
pursuant to the terms of this subparagraph (C) each share of Series One Junior
Participating Preferred Stock entitled to vote thereat shall be entitled to one
vote per share. Each director elected by the holders of the shares of Series
One Junior Participating Preferred Stock and by the holders of shares of
Preferred Stock the terms of which provide similar voting rights (herein called
a "Preferred Director") may be removed by, and shall not be removed except by,
the vote of the holders of record of the majority of the outstanding shares of
Series One Junior Participating Preferred Stock (and other Preferred Stock) who
are at the time of such vote entitled to vote for the election of Preferred
Directors pursuant to the terms of this subparagraph (C), voting together as a
single class without regard to series, at a meeting of the stockholders, or of
the holders of such shares of stock, called for that purpose. So long as a
default in any preferred dividends on Preferred Stock shall exist (i) any
vacancy in the office of a Preferred Director may be filled (except as provided
in the following clause (ii) by any instrument in writing signed by the
remaining Preferred Director and filed with the Corporation and (ii) in the
case of the removal of any Preferred Director, the vacancy may be filled by the
vote of the holders of the majority of the outstanding shares of Series One
Junior Participating Preferred Stock and other Preferred Stock who are at the
time of such vote entitled to vote for the election of Preferred Directors
pursuant to the terms of this subparagraph (C), voting together as a single
class without regard to series, at the same meeting at which such removal shall
be voted. Each director appointed as aforesaid by the remaining Preferred
Director shall be deemed, for all purposes hereof, to be a Preferred Director.
(D) Unless the vote or consent of the holders of a greater number
of shares shall be then required by law, so long as any shares of Series One
Junior Participating Preferred Stock are outstanding, the Corporation will not,
without the affirmative vote or consent of at least 2/3 of the outstanding
shares of Series One Junior Participating Preferred Stock, voting as a separate
class, amend any of the provisions of its Certificate of Incorporation
(including any Certificate of Designation relating to any series of Preferred
Stock) so as to affect adversely the powers, preferences or special rights of
the Convertible Preferred Stock.
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<PAGE> 14
The increase of the authorized amount of the Preferred Stock or Common
Stock, or the creation, authorization or issuance of any stock which ranks
junior to or on a parity with the Series One Junior Participating Preferred
Stock, or the reclassification of any authorized or outstanding stock of the
Corporation (other than the Series One Junior Participating Preferred Stock)
into any such junior or parity stock, or the creation, authorization or
issuance of any obligation or security convertible into or evidencing the right
to purchase any such junior Stock or parity Stock or the limitation or
qualification of the Corporation's right to redeem or repurchase shares of
Series One Junior Participating Preferred Stock or to take any other actions,
including without limitation, mergers, consolidations or the matters covered by
the preceding provisions of this paragraph, shall not be deemed, for purposes
of this subparagraph (D), to affect adversely the powers, preferences or
special rights of the Series One Junior Participating Preferred Stock
regardless of any financial or other effect on the Series One Junior
Participating Preferred Stock resulting therefrom.
(E) Unless the vote of the holders of a greater number of shares
shall then be required by law, so long as any shares of Series One Junior
Participating Preferred Stock are outstanding, the Corporation will not,
without the affirmative vote of the holders of at least a majority of all of
the outstanding shares of Series One Junior Participating Preferred Stock,
merge or consolidate with or into any other corporation if such merger or
consolidation would adversely affect the powers, preferences or rights of the
Series One Junior Participating Preferred Stock expressly set forth herein.
(F) Except as set forth herein, holders of Series One Junior
Participating Preferred Stock shall have no special voting rights and their
consent shall not be required (except to the extent they are entitled to vote
with holders of Common Stock as set forth herein) for taking any corporate
action.
Section 7. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series One Junior Participating Preferred Stock as
provided in Section 3 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of
Series One Junior Participating Preferred Stock outstanding shall have been
paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series One Junior Participating Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series One Junior Participating Preferred Stock, except dividends paid
ratably on the Series One Junior Participating Preferred Stock
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<PAGE> 15
and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such
shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series One Junior Participating Preferred Stock, provided that the
Corporation may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series One Junior
Participating Preferred Stock;
(iv) purchase or otherwise acquire for consideration any
shares of Series One Junior Participating Preferred Stock, or any
shares of stock ranking on a parity with the Series One Junior
Participating Preferred Stock, except in accordance with a purchase
offer made in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective
series and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 7, purchase or otherwise acquire such shares at such time and in
such manner.
Section 8. Consolidation, Mergers, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series One Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the amount set forth in the preceding sentence with respect to the
exchange or change of shares of Series One Junior Participating Preferred Stock
shall be adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.
Section 9. Exclusion of Other Rights. Except as may otherwise be
required by law, the shares of Series One Junior Participating Preferred Stock
shall not have any preferences or relative,
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<PAGE> 16
participating, optional or other special rights other than those specifically
set forth in this resolution (as such resolution may be amended from time to
time) and in the Certificate of Incorporation of the Corporation.
Section 10. Heading of Subdivision. The headings of the various
subdivisions hereof are for convenience of reference only and shall not affect
the interpretation of any of the provisions hereof.
Section 11. Severability of Provisions. If any right, preference or
limitation of the Series One Junior Participating Preferred Stock set forth in
this resolution (as such resolutions may be amended from time to time) is
invalid, unlawful, or incapable of being enforced by reason of any rule of law
or public policy, all other rights, preferences and limitations set forth in
this resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless,
remain in full force and effect, and no right, preference or limitation herein
set forth shall be deemed dependent upon any other such right, preference or
limitation unless so expressed herein.
Section 12. Status of Reacquired Shares. Shares of the Series One
Junior Participating Preferred Stock which have been issued and reacquired in
any manner shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) have the status of authorized and unissued shares of the
class of Preferred Stock issuable in series, undesignated as to series, and may
be redesignated and reissued.
Section 13. Fractional Shares. Series One Junior Participating
Preferred Stock may be issued in fractions of a share which shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series One Junior Participating Preferred
Stock.
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be affixed and this certificate to be signed by George E. Cash, Vice President,
and attested to by Matthew D. Fitzgerald, its Secretary, this 17th day of
July, 1990.
/s/ George E. Cash
----------------------------------
George E. Cash
Vice President
[CORPORATE SEAL]
Attest:
/s/ Matthew D. Fitzgerald
- - -----------------------------
Matthew D. Fitzgerald
Secretary
-8-
<PAGE> 17
ACKNOWLEDGMENT
BE IT DEEMED that on this 17th day of July, 1990, personally came
before me, the undersigned, a Notary Public duly authorized to take
acknowledgment of deeds by the laws of the place where the foregoing
certificate was executed, George E. Cash and Matthew D. Fitzgerald, Vice
President and Secretary, respectively, of BJ Services Company, a corporation of
the State of Delaware, the corporation described in the foregoing certificate,
known to me personally to be such, and they duly executed said certificate
before me and acknowledged the said certificate to be their act and deed and
made on behalf of said corporation, and that the facts stated therein are true;
and that the signatures of said George E. Cash, Vice President and of the said
Matthew D. Fitzgerald, Secretary, of the said corporation to said foregoing
certificate are in their handwriting.
GIVEN under my hand on July 17, 1990.
/s/ Pat Montgomery
--------------------------
Notary Public
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<PAGE> 18
CERTIFICATE OF DESIGNATION
OF
SERIES TWO JUNIOR PARTICIPATING PREFERRED STOCK
OF
BJ SERVICES COMPANY
PURSUANT TO SECTION 151 OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
BJ SERVICES COMPANY, a corporation organized and existing under the
laws of the State of Delaware (the "Company"), DOES HEREBY CERTIFY that, at a
meeting of the Company's Board of Directors duly called and held on January 5,
1994 at which a quorum was present and acting throughout, the following
resolutions were adopted pursuant to Section 151 of the Delaware General
Corporation Law (the "Delaware Act").
WHEREAS, Article FOURTH of the Company's Certificate of Incorporation,
as amended (the "Charter") authorizes 45,000,000 shares of capital stock,
consisting of 5,000,000 shares of preferred stock, par value $1.00 per share
(the "Preferred Stock"), issuable from time to time in one or more series, and
40,000,000 shares of common stock, par value $0.10 per share (the "Common
Stock"), issuable from time to time; and
WHEREAS, in accordance with Section 151 of the Delaware Act and
pursuant to Article FOURTH of the Charter, the Company's Board of Directors is
authorized to fix the designations, powers, preferences and relative,
participating, optional or other special rights, if any, and qualifications,
limitations or restrictions thereof, of any wholly unissued series of Preferred
Stock, and to fix the number of shares constituting such series, and to
increase or decrease the number of shares of any such series (but not below the
number of shares thereof then outstanding); and
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<PAGE> 19
WHEREAS, it is the desire of the Company's Board of Directors of this
Corporation, in accordance with the authority conferred upon it as described
above, to issue a series of Preferred Stock and to fix the rights, preferences,
restrictions and other matters relating thereto;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does
hereby establish a series of Preferred Stock of this Company and does hereby
fix and determine the rights, preferences, restrictions and other matters
relating to said series of Preferred Stock, as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series Two Junior Participating Preferred Stock" ("Series Two
Preferred Stock") and the number of shares constituting such series shall be
400,000. Such number of shares may be adjusted by appropriate action of the
Board of Directors.
Section 2. Dividends and Distribution.
(A) Subject to the provisions for adjustment hereinafter set forth,
the holders of shares of Series Two Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds
legally available for the purpose, (i) cash dividends in an amount per share
(rounded to the nearest cent) equal to 100 times the aggregate per share amount
of all cash dividends contemporaneously declared on the Company's Common Stock,
par value $0.10 per share ("Common Stock"), and (ii) a preferential cash
dividend ("Preferential Dividends"), if any, on the tenth day of March, June,
September and December of each year (each a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first
issuance of a share or fraction of a share of Series Two Preferred Stock, in an
amount equal to $1.00 per share of Series Two Preferred Stock less the per
share amount of all cash dividends declared on the Series Two Preferred Stock
pursuant to clause (i) of this sentence since the immediately preceding
Quarterly
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<PAGE> 20
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series
Two Preferred Stock. In the event the Company shall, at any time after the
issuance of any share or fraction of a share of Series Two Preferred Stock,
make any distribution on the shares of Common Stock of the Company, whether by
way of a dividend or a reclassification of stock, a recapitalization,
reorganization or partial liquidation of the Company or otherwise, which is
payable in cash or any debt security, debt instrument, real or personal
property or any other property (other than cash dividends subject to the
immediately preceding sentence and other than a distribution of shares of
Common Stock or other capital stock of the Company and other than a
distribution of rights or warrants to acquire any such share, including any
debt security convertible into or exchangeable for any such share, at a price
less than the Current Market Price of such share), then and in each such event
the Company shall simultaneously pay on each then outstanding share of Series
Two Preferred Stock of the Company a distribution, in like kind, of 100 times
(subject to the provisions for adjustment hereinafter set forth) such
distribution paid on a share of Common Stock. The dividends and distributions
on the Series Two Preferred Stock to which holders thereof are entitled
pursuant to clause (i) of the first sentence of this paragraph and pursuant to
the second sentence of this paragraph are hereinafter referred to as
"Participating Dividends" and the multiple of such cash and non-cash dividends
on the Common Stock applicable to the determination of the Participating
Dividends, which shall be 100 initially but shall be adjusted from time to time
as hereinafter provided, is hereinafter referred to as the "Dividend Multiple."
In the event the Company shall at any time after January 17, 1994 declare or
pay any dividend or make any distribution on Common Stock payable in shares of
Common Stock, or effect a subdivision or split or a combination, consolidation
or reverse split of the outstanding shares of Common Stock into a
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<PAGE> 21
greater or lesser number of shares of Common Stock, then in each such case the
Dividend Multiple thereafter applicable to the determination of the amount of
Participating Dividends which holders of shares of Series Two Preferred Stock
shall be entitled to receive shall be the Dividend Multiple applicable
immediately prior to such event multiplied by a fraction, of which the
numerator is the number of shares of Common Stock outstanding immediately after
such event and of which the denominator is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) The Company shall declare each Participating Dividend at the
same time it declares any cash or non-cash dividend or distribution on the
Common Stock in respect of which a Participating Dividend is required to be
paid. No cash or non-cash dividend or distribution on the Common Stock in
respect of which a Participating Dividend is required to be paid shall be paid
or set aside for payment on the Common Stock unless a Participating Dividend in
respect of such dividend or distribution on the Common Stock shall be
simultaneously paid, or set aside for payment, on the Series Two Preferred
Stock.
(C) Preferential Dividends shall begin to accrue on outstanding
shares of Series Two Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issuance of any shares of Series Two Preferred
Stock. Accrued but unpaid Preferential Dividends shall cumulate but shall not
bear interest. Preferential Dividends paid on the shares of Series Two
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
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<PAGE> 22
Section 3. Voting Rights. The holders of shares of Series Two
Preferred Stock shall have the following voting rights:
(A) Subject to the provisions for adjustment hereinafter set forth,
each share of Series Two Preferred Stock shall entitle the holder thereof to
100 votes on all matters submitted to a vote of the stockholders of the
Company. The number of votes which a holder of Series Two Preferred Stock is
entitled to cast, as the same may be adjusted from time to time as hereinafter
provided, is hereinafter referred to as the "Vote Multiple." In the event the
Company shall at any time after January 17, 1994 declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding
shares of Common Stock into a greater or lesser number of shares of Common
Stock, then in each such case the Vote Multiple thereafter applicable to the
determination of the number of votes per share to which holders of shares of
Series Two Preferred Stock shall be entitled after such event shall be the Vote
Multiple immediately prior to such event multiplied by a fraction, of which the
numerator is the number of shares of Common Stock outstanding immediately after
such event and of which the denominator is the number of shares of Common Stock
that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
shares of Series Two Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Company.
(C) In the event that the Preferential Dividends accrued on the
Series Two Preferred Stock for six or more quarterly dividend periods, whether
consecutive or not, shall not have been declared and paid or set apart for
payment, the holders of record or preferred stock of the Company of all
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<PAGE> 23
series (including the Series Two Preferred Stock), other than any series in
respect of which the right is expressly withheld by the Certificate of
Incorporation or the authorizing resolutions included in the Certificate of
Designation therefor, shall have the right, at the next meeting of stockholders
called for the election of directors, to elect two members to the Board of
Directors, which directors shall be in addition to the number required by the
Company's bylaws as in effect prior to such event, to serve until the next
annual meeting of the stockholders and until their successors are elected and
qualified or their earlier resignation, removal or incapacity or until such
earlier time as all accrued and unpaid Preferential Dividends upon the
outstanding shares of Series Two Preferred Stock shall have been paid (or set
aside for payment) in full. The holders of shares of Series Two Preferred
Stock shall continue to have the right to elect directors as provided by the
immediately preceding sentence until all accrued and unpaid Preferential
Dividends upon the outstanding shares of Series Two Preferred Stock shall have
been paid (or set aside for payment) in full. Such directors may be removed
and replaced by such stockholders, and vacancies in such directorships may be
filled only by such stockholders (or by the remaining director elected by such
stockholders, if there be one) in the manner permitted by law; provided,
however, that any such action by stockholders shall be taken at a meeting of
stockholders and shall not be taken by written consent thereof.
(D) Except as otherwise required by law or set forth herein,
holders of Series Two Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for the taking of any
corporate action.
-6-
<PAGE> 24
Section 4. Certain Restrictions.
(A) Whenever Preferential Dividends or Participating Dividends are
in arrears or the Company shall be in default of payment thereof, thereafter
and until all accrued and unpaid Preferential Dividends and Participating
Dividends, whether or not declared, on shares of Series Two Preferred Stock
outstanding shall have been paid or set aside for payment in full, and in
addition to any and all other rights which any holder of shares of Series Two
Preferred Stock may have in such circumstances, the Company shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to, the
Series Two Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity as to
dividends with the Series Two Preferred Stock, unless dividends are
paid ratably on the Series Two Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) except as permitted by sub-clause (iv) of this
Section 4(A), redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series Two Preferred Stock, provided that the Company may at any time
redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares
-7-
<PAGE> 25
of any stock of the Company ranking junior (both as to dividends and
upon liquidation, dissolution or winding up) to the Series Two
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series Two Preferred Stock, or any shares of stock ranking
on a parity with the Series Two Preferred Stock (either as to
dividends or upon liquidation, dissolution or winding up), except in
accordance with a purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders of such shares
upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in
good faith will result in fair and equitable treatment among the
respective series or classes.
(B) The Company shall not permit any subsidiary of the Company to
purchase or otherwise acquire for consideration any shares of stock of the
Company unless the Company could, in accordance with Section 4(A), purchase or
otherwise acquire such shares at such time and in such manner.
(C) The Company shall not issue any shares of Series Two Preferred
Stock except upon exercise of rights issued pursuant to that certain Rights
Agreement dated as of January 17, 1994 between the Company and First Chicago
Trust Company of New York, a copy of which is on file with the Secretary of the
Company at its principal executive office and shall be made available to
stockholders of record without charge upon written request therefor addressed
to the Secretary. Notwithstanding the foregoing sentence, nothing contained in
the provisions hereof shall prohibit or
-8-
<PAGE> 26
restrict the Company from issuing for any purpose any series of preferred stock
with rights and privileges similar to, different from, or greater than, those
of the Series Two Preferred Stock.
Section 5. Reacquired Shares. Any shares of Series Two Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. The
Company shall cause all such shares upon their retirement and cancellation to
become authorized but unissued shares of preferred stock, without designation
as to series, and such shares may be reissued as part of a new series of
preferred stock to be created by resolution or resolutions of the Board of
Directors.
Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary
or involuntary liquidation, dissolution or winding up of the Company, no
distribution shall be made (i) to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series Two Preferred Stock unless the holders of shares of Series Two Preferred
Stock shall have received, subject to adjustment as hereinafter provided, (A)
$1.00 per share plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, or
(B) if greater than the amount specified in clause (i)(A) of this sentence, the
amount equal to 100 times the aggregate amount to be distributed per share to
holders of Common Stock, or (ii) to the holders of stock ranking on a parity
upon liquidation, dissolution or winding up with the Series Two Preferred
Stock, unless simultaneously therewith distributions are made ratable on the
Series Two Preferred Stock and all other shares of such parity stock in
proportion to the total amounts to which the holders of shares of Series Two
Preferred Stock are entitled under clause (i)(A) of this sentence and to which
the holders of such parity shares are entitled, in each case upon such
liquidation, dissolution or winding up. The amount to which holders of Series
Two Preferred Stock
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<PAGE> 27
may be entitled upon liquidation, dissolution or winding up of the Company
pursuant to clause (i)(B) of the immediately preceding sentence is hereinafter
referred to as the "Participating Liquidation Amount" and the multiple of the
amount to be distributed to holders of shares of Common Stock upon the
liquidation, dissolution or winding up of the Company applicable pursuant to
such clause to the determination of the Participating Liquidation Amount, as
such multiple may be adjusted from time to time as hereinafter provided, is
hereinafter referred to as the "Liquidation Multiple." In the event the
Company shall at any time after January 17, 1994 declare or pay any dividend on
Common Stock payable in shares of Common Stock, or effect a subdivision or
split or a combination, consolidation or reverse split of the outstanding
shares of Common Stock into a greater or lesser number of shares than of Common
Stock, then in each such case the Liquidation Multiple thereafter applicable to
the determination of the Participating Liquidation Amount to which holders of
Series Two Preferred Stock shall be entitled after such event shall be the
Liquidation Multiple applicable immediately prior to such event multiplied by a
fraction, of which the numerator is the number of shares of Common Stock
outstanding immediately after such event and of which the denominator is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 7. Certain Reclassifications and Other Events.
(A) In the event that holders of shares of Common Stock of the
Company receive after January 17, 1994 in respect of their shares of Common
Stock any share of capital stock of the Company (other than any share of Common
Stock of the Company), whether by way of reclassification, recapitalization,
reorganization, dividend or other distribution or otherwise ("Transaction"),
then and in each such event the dividend rights, voting rights and rights upon
the liquidation, dissolution or winding up of the Company of the shares of
Series Two Preferred Stock
-10-
<PAGE> 28
shall be adjusted so that after such event the holders of Series Two Preferred
Stock shall be entitled, in respect of each share of Series Two Preferred Stock
held, in addition to such rights in respect thereof to which such holder was
entitled immediately prior to such adjustment, to (i) such additional dividends
as equal the Dividend Multiple in effect immediately prior to such Transaction
multiplied by the additional dividends which the holder of a share of Common
Stock shall be entitled to receive by virtue of the receipt in the transaction
of such capital stock, (ii) such additional voting rights as equal the Vote
Multiple in effect immediately prior to such Transaction multiplied by the
additional voting rights which the holder of a share of Common Stock shall be
entitled to receive by virtue of the receipt in the transaction of such capital
stock and (iii) such additional distributions upon liquidation, dissolution or
winding up of the Company as equal the Liquidation Multiple in effect
immediately prior to such transaction multiplied by the additional amount which
the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company by virtue of the receipt
in the Transaction of such capital stock, as the case may be, all as provided
by the terms of such capital stock.
(B) In the event that holders of shares of Common Stock of the
Company receive after January 17, 1994 in respect of their shares of Common
Stock any right or warrant to purchase Common Stock (including as such a right,
for all purposes of this paragraph, any security convertible into or
exchangeable for Common Stock) at a purchase price per share less than the
Current Market Price (as hereinafter defined) of a share of Common Stock on the
date of issuance of such right or warrant, then and in each such event the
dividend rights, voting rights and rights upon the liquidation, dissolution or
winding up of the Company of the shares of Series Two Preferred Stock shall
each be adjusted so that after such event the Dividend Multiple, the Vote
Multiple and the Liquidation
-11-
<PAGE> 29
Multiple shall each be the product of the Dividend Multiple, the vote Multiple
and the Liquidation Multiple, as the case may be, in effect immediately prior
to such event multiplied by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately before such issuance
of rights or warrants plus the maximum number of shares of Common Stock which
could be acquired upon exercise in full of all such rights or warrants and of
which the denominator shall be the number of shares of Common Stock outstanding
immediately before such issuance of rights or warrants plus the number of
shares of Common Stock which could be purchased, at the Current Market Price of
the Common Stock at the time of such issuance, by the maximum aggregate
consideration payable upon exercise in full of all such rights or warrants.
(C) In the event that holders of shares of Common Stock of the
Company receive after January 17, 1994 in respect of their shares of Common
Stock any right or warrant to purchase capital stock of the Company (other than
shares of common stock), including as such a right, for all purposes of this
paragraph, any security convertible into or exchangeable for capital stock of
the Company (other than Common Stock), at a purchase price per share less than
the Current Market Price of such shares of capital stock on the date of
issuance of such right or warrant, then and in each such event the dividend
rights, voting rights and rights upon liquidation, dissolution or winding up of
the Company of the shares of Series Two Preferred Stock shall each be adjusted
so that after such event each holder of a share of Series Two Preferred Stock
shall be entitled, in respect of each share of Series Two Preferred Stock held,
in addition to such rights in respect thereof to which such holder was entitled
immediately prior to such event, to receive (i) such additional dividends as
equal the Dividend Multiple in effect immediately prior to such event
multiplied, first, by the additional dividends to which the holder of a share
of Common Stock shall be entitled upon exercise of such
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<PAGE> 30
right or warrant by virtue of the capital stock which could be acquired upon
such exercise and multiplied again by the Discount Fraction (as hereinafter
defined) and (ii) such additional voting rights as equal the Vote Multiple in
effect immediately prior to such event multiplied, first, by the additional
voting rights to which the holder of a share of Common Stock shall be entitled
upon exercise of such right or warrant by virtue of the capital stock which
could be acquired upon such exercise and multiplied again by the Discount
Fraction and (iii) such additional distributions upon liquidation, dissolution
or winding up of the Company as equal the Liquidation Multiple in effect
immediately prior to such event multiplied, first, by the additional amount
which the holder of a share of Common Stock shall be entitled to receive upon
liquidation, dissolution or winding up of the Company upon exercise of such
right or warrant by virtue of the capital stock which could be acquired upon
such exercise and multiplied again by the Discount Fraction. For purposes of
this paragraph, the "Discount Fraction" shall be a fraction, of which the
numerator shall be the difference between the Current Market (as hereinafter
defined) of a share of the capital stock subject to a right or warrant
distributed to holders of shares of Common Stock of the Company as contemplated
by this paragraph immediately after the distribution thereof and the purchase
price per share for such share of capital stock pursuant to such right or
warrant and of which the denominator shall be the Current Market Price of a
share of such capital stock immediately after the distribution of such right or
warrant.
(D) For purposes of this Section 7, the "Current Market Price" of a
share of capital stock of the Company (including a share of Common Stock) on
any date shall be deemed to be the average of the daily closing prices per
share thereof over the 30 consecutive Trading Days (as such term is hereinafter
defined) immediately prior to such date; provided, however, that, in the event
that such Current Market Price of any such share of capital stock is determined
during a period which includes
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<PAGE> 31
any date that is within 30 Trading Days after the ex-dividend date for (i) a
dividend or distribution on stock payable in shares of such stock or securities
convertible into shares of such stock, or (ii) any subdivision, split,
combination, consolidation, reverse stock split or reclassification of such
stock, then, and in each such case, the Current Market Price shall be
appropriately adjusted by the Board of Directors of the Company to reflect the
Current Market Price of such stock to take into account ex-dividend trading.
The closing price for any day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the shares are not
listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares are listed or admitted to trading or, if the shares are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then
in use, or if on any such date the shares are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the shares selected by the Board
of Directors of the Company. The term "Trading Day" shall mean a day on which
the principal national securities exchange on which the shares are listed or
admitted to trading is open for the transaction of business or, if the shares
are not listed or admitted to trading on any national securities exchange, on
which the New York Stock Exchange or such other national securities exchange as
may be selected by the Board of Directors of the Company
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<PAGE> 32
is open. If the shares are not publicly held or not so listed or traded on any
day within the period of 30 Trading Days applicable to the determination of
current Market Price thereof as aforesaid, "Current Market Price" shall mean
the fair market value thereof per share as determined in good faith by the
Board of Directors of the Company. In either case referred to in the foregoing
sentence, the determination of Current Market Price shall be described in a
statement filed with the Secretary of the Company.
Section 8. Consolidation, Merger, Etc. In case the Company shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each
outstanding share of Series Two Preferred Stock shall at the same time be
similarly exchanged for or changed into the aggregate amount of stock,
securities, cash and/or other property (payable in like kind), as the case may
be, for which or into which each share of Common Stock is changed or exchanged
multiplied by the highest of the Vote Multiple, the Dividend Multiple or the
Liquidation Multiple in effect immediately prior to such event.
Section 9. Effective Time of Adjustments.
(A) Adjustments to the Series Two Preferred Stock required by the
provisions hereof shall be effective as of the time at which the event required
such adjustments occurs.
(B) The Company shall give prompt written notice to each holder of
a share of Series Two Preferred Stock of the effect of any adjustment to the
voting rights, dividend rights or rights upon liquidation, dissolution or
winding up of the Company of such shares required by the provisions hereof.
Notwithstanding the foregoing sentence, the failure of the Company to give such
notice shall not affect the validity of or the force or effect of or the
requirement for such adjustment.
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<PAGE> 33
Section 10. No Redemption. The shares of Series Two Preferred Stock
shall not be redeemable at the option of the Company or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Company may acquire
shares of Series Two Preferred Stock in any other manner permitted by law, the
provisions hereof and the Company's Charter.
Section 11. Ranking. Unless otherwise provided in the Charter or a
Certificate of Designation relating to a subsequent series of preferred stock
of the Company, the Series Two Preferred Stock shall rank junior to all other
series of the Company's preferred stock as to the payment of dividends and the
distribution of assets on liquidation, dissolution or winding up and senior to
the Common Stock.
Section 12. Amendment. The provisions hereof and of the Charter shall
not be amended in any manner which would materially affect the rights,
privileges or powers of the Series Two Preferred Stock without, in addition to
any other vote of stockholders required by law, the affirmative vote of the
holders of two-thirds or more of the outstanding shares of Series Two Preferred
Stock, voting together as a single class.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate
of Designation and do affirm the foregoing as true under the penalties of
perjury this 12th day of January, 1994.
/s/ J. W. Stewart
---------------------------------
J. W. Stewart
President and
Chief Executive Officer
/s/ Matthew D. Fitzgerald
---------------------------------
Matthew D. Fitzgerald
Assistant Secretary
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<PAGE> 34
BJ SERVICES COMPANY
CERTIFICATE OF ELIMINATION
OF
CERTIFICATE OF DESIGNATION OF SERIES ONE
JUNIOR PARTICIPATING PREFERRED STOCK
BJ Services Company, a corporation organized and existing under the
General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of BJ Services
Company, resolutions were duly adopted setting forth the proposed elimination
of the Series One Junior Participating Preferred Stock as set forth below:
RESOLVED FURTHER, that as none of the Series One Junior
Participating Preferred Stock authorized and designated pursuant to
that certain Certificate of Designation dated as of July 1990, and
attached as Exhibit A to the Current Rights Agreement, are currently
outstanding and, as the Current Rights are being redeemed, none of
such shares will be issued, the proper officers of the Company are
hereby authorized and directed, for and on behalf of the Company and
in its name, to file or cause to be filed in the State of Delaware
such certificate or certificates reflecting such fact and cancelling
such certificate of designation, and upon the filing of same the
400,000 shares so designated as Series One Junior Participating
Preferred Stock shall constitute authorized but unissued preferred
shares subject to issuance in accordance with the Company's
certificate of incorporation; and
SECOND: None of the authorized shares of the Series One Junior
Participating Preferred Stock are outstanding and none will be issued.
THIRD: In accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Certificate of
Incorporation of BJ Services Company is hereby amended to eliminate all
reference to the Series One Junior Participating Preferred Stock.
IN WITNESS WHEREOF, said BJ Services Company has caused this
certificate to be signed by Michael McShane, its Vice-President and attested
by Margaret B. Shannon, its Secretary, this 19th day of April, 1994.
BJ SERVICES COMPANY
By: /s/ Michael McShane
--------------------------
Vice-President
ATTEST:
By: /s/ Margaret B. Shannon
---------------------------
Secretary
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<PAGE> 35
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "BJ SERVICES COMPANY," FILED IN THIS OFFICE ON THE TWENTY-SECOND
DAY OF OCTOBER, A.D. 1996, AT 4 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[GREAT SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2235917 8100 AUTHENTICATION: 8157742
960307305 DATE: 10-23-96
<PAGE> 36
AMENDED
CERTIFICATE OF DESIGNATION
OF
SERIES TWO JUNIOR PARTICIPATING PREFERRED STOCK
OF
BJ SERVICES COMPANY
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
--------------------
BJ Services Company, a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"Company"), hereby certifies that the following resolution was duly adopted by
the Board of Directors of the Company as required by Section 151 of the General
Corporation Law of the State of Delaware at a meeting duly called and held on
September 26, 1996:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Company's
Certificate of Incorporation, as amended to date (hereinafter called the
"Certificate of Incorporation"), the Board of Directors on January 5, 1994
adopted a resolution creating a series of shares of Preferred Stock, par value
$1.00 per share, designated as Series Two Junior Participating Preferred Stock
and filed such designation with the Secretary of State of Delaware on April 7,
1994, no shares of which have been issued as of September 26, 1996; and the
Board of Directors on September 26, 1996 adopted the following resolution to
amend and restate the terms of such Preferred Stock; and be it further
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Delaware
General Corporation Law and the Certificate of Incorporation, the Series Two
Junior Participating Preferred Stock of the Corporation heretofore created be,
and that the designation thereof and the powers, designations, preferences and
relative, participating, optional or other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are hereby
amended and restated as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 200,000. Such number of shares may be increased or
decreased by
<PAGE> 37
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Company (the "Preferred Stock") (or any
similar stock) ranking prior and superior to the Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock, par value $.10 per share, of the
Company (the "Common Stock") and of any other stock of the Company ranking
junior to the Series A Preferred Stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the last day of January,
April, July, and October in each year (each such date being referred to herein
as a "Dividend Payment Date"), commencing on the first Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $10 or (b) subject to the provision for adjustment
hereinafter set forth, 1000 times the aggregate per share amount of all cash
dividends, and 1000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock, declared on the Common Stock since the immediately
preceding Dividend Payment Date or, with respect to the first Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Company shall at any time after September
26, 1996 declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a
<PAGE> 38
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Dividend Payment Date and the next subsequent Dividend
Payment Date, a dividend of $10 per share on the Series A Preferred Stock shall
nevertheless be payable, when, as and if declared, on such subsequent Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether
or not earned or declared, on outstanding shares of Series A Preferred Stock
from the Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of issue is
a Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights;
(A) Subject to the provision for adjustment hereinafter set
forth and except as otherwise provided in the Certificate of
Incorporation or required by law, each share of Series A Preferred Stock
shall entitle the holder thereof to 1000 votes on all matters upon which
the holders of the Common Stock of the Company are entitled to vote. In
the event the Company shall at any time after September 26, 1996 declare
or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is
<PAGE> 39
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a
series of Preferred Stock or any similar stock, and except as otherwise
required by law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock and any other capital stock of the
Company having general voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not earned or declared, on
shares of Series A Preferred Stock outstanding shall have been paid in
full, the Company shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (as to
dividends) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as to
dividends) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Company may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Company
ranking junior (as to dividends and upon dissolution, liquidation
or winding up) to the Series A Preferred Stock or rights,
warrants or options to acquire such junior stock;
<PAGE> 40
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock
of the Company unless the Company could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their retirement become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new series of Preferred
Stock to be created by resolution or resolutions of the Board of Directors,
subject to any conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned
or declared, to the date of such payment, provided that the holders of shares
of Series A Preferred Stock shall be entitled to receive an aggregate amount
per share, subject to the provision for adjustment hereinafter set forth, equal
to 1000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (B) to the holders of shares of stock ranking on a
parity upon liquidation, dissolution or winding up with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and
all such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up. In the event, however, that there are not sufficient assets available to
permit payment in full of the Series A liquidation preference and the
liquidation preferences of all other classes
<PAGE> 41
and series of stock of the Company, if any, that rank on a parity with the
Series A Preferred Stock in respect thereof, then the assets available for such
distribution shall be distributed ratably to the holders of the Series A
Preferred Stock and the holders of such parity shares in the proportion to
their respective liquidation preferences. In the event the Company shall at
any time after September 26, 1996 declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (A) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are converted into, exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case each share of Series A Preferred Stock shall at the same time be
similarly converted into, exchanged for or changed into an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 1000
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is converted, exchanged or converted. In the event the Company
shall at any time after September 26, 1996 declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
conversion, exchange or change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable from any holder.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding
<PAGE> 42
up of the Company, junior to all other series of Preferred Stock and senior to
the Common Stock.
Section 10. Amendment. If any proposed amendment to the
Certificate of Incorporation (including this Certificate of Designations) would
alter, change or repeal any of the preferences, powers or special rights given
to the Series A Preferred Stock so as to affect the Series A Preferred Stock
adversely, then the holders of the Series A Preferred Stock shall be entitled
to vote separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series A Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
<PAGE> 43
IN WITNESS WHEREOF, this Certificate of Designations is executed
on behalf of the Company by its President and attested by its Secretary this
26th day of September, 1996.
/s/ J. W. STEWART
-----------------------------------
J. W. STEWART
Attest:
/s/ MARGARET B. SHANNON
- - ------------------------------
MARGARET B. SHANNON
<PAGE> 1
EXHIBIT 3.2
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "BJ SERVICES COMPANY," FILED IN THIS OFFICE ON THE TWENTY-SECOND
DAY OF OCTOBER, A.D. 1996, AT 4 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDER OF DEEDS FOR RECORDING.
[GREAT SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
-----------------------------------
Edward J. Freel, Secretary of State
2235917 8100 AUTHENTICATION: 8157742
960307305 DATE: 10-23-96
<PAGE> 2
AMENDED
CERTIFICATE OF DESIGNATION
OF
SERIES TWO JUNIOR PARTICIPATING PREFERRED STOCK
OF
BJ SERVICES COMPANY
(Pursuant to Section 151 of the
General Corporation Law of the State of Delaware)
--------------------
BJ Services Company, a corporation organized and existing under
the General Corporation Law of the State of Delaware (hereinafter called the
"Company"), hereby certifies that the following resolution was duly adopted by
the Board of Directors of the Company as required by Section 151 of the General
Corporation Law of the State of Delaware at a meeting duly called and held on
September 26, 1996:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Company (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Company's
Certificate of Incorporation, as amended to date (hereinafter called the
"Certificate of Incorporation"), the Board of Directors on January 5, 1994
adopted a resolution creating a series of shares of Preferred Stock, par value
$1.00 per share, designated as Series Two Junior Participating Preferred Stock
and filed such designation with the Secretary of State of Delaware on April 7,
1994, no shares of which have been issued as of September 26, 1996; and the
Board of Directors on September 26, 1996 adopted the following resolution to
amend and restate the terms of such Preferred Stock; and be it further
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation in accordance with the provisions of the Delaware
General Corporation Law and the Certificate of Incorporation, the Series Two
Junior Participating Preferred Stock of the Corporation heretofore created be,
and that the designation thereof and the powers, designations, preferences and
relative, participating, optional or other special rights of the shares of such
series, and the qualifications, limitations or restrictions thereof are hereby
amended and restated as follows:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Junior Participating Preferred Stock" (the
"Series A Preferred Stock") and the number of shares constituting the Series A
Preferred Stock shall be 200,000. Such number of shares may be increased or
decreased by
<PAGE> 3
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Series A Preferred Stock to a number less than the
number of shares then outstanding plus the number of shares reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Company convertible
into Series A Preferred Stock.
Section 2. Dividends and Distributions.
(A) Subject to the rights of the holders of any shares of any
series of Preferred Stock of the Company (the "Preferred Stock") (or any
similar stock) ranking prior and superior to the Series A Preferred Stock with
respect to dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of Common Stock, par value $.10 per share, of the
Company (the "Common Stock") and of any other stock of the Company ranking
junior to the Series A Preferred Stock, shall be entitled to receive, when, as
and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the last day of January,
April, July, and October in each year (each such date being referred to herein
as a "Dividend Payment Date"), commencing on the first Dividend Payment Date
after the first issuance of a share or fraction of a share of Series A
Preferred Stock, in an amount per share (rounded to the nearest cent) equal to
the greater of (a) $10 or (b) subject to the provision for adjustment
hereinafter set forth, 1000 times the aggregate per share amount of all cash
dividends, and 1000 times the aggregate per share amount (payable in kind) of
all non-cash dividends or other distributions other than a dividend payable in
shares of Common Stock, declared on the Common Stock since the immediately
preceding Dividend Payment Date or, with respect to the first Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Preferred Stock. In the event the Company shall at any time after September
26, 1996 declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the amount to which
holders of shares of Series A Preferred Stock were entitled immediately prior
to such event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Series A Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common Stock
(other than a
<PAGE> 4
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during
the period between any Dividend Payment Date and the next subsequent Dividend
Payment Date, a dividend of $10 per share on the Series A Preferred Stock shall
nevertheless be payable, when, as and if declared, on such subsequent Dividend
Payment Date.
(C) Dividends shall begin to accrue and be cumulative, whether
or not earned or declared, on outstanding shares of Series A Preferred Stock
from the Dividend Payment Date next preceding the date of issue of such shares,
unless the date of issue of such shares is prior to the record date for the
first Dividend Payment Date, in which case dividends on such shares shall begin
to accrue from the date of issue of such shares, or unless the date of issue is
a Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock entitled to
receive a quarterly dividend and before such Dividend Payment Date, in either
of which events such dividends shall begin to accrue and be cumulative from
such Dividend Payment Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix
a record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be not more than 60 days prior to the date
fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A
Preferred Stock shall have the following voting rights;
(A) Subject to the provision for adjustment hereinafter set
forth and except as otherwise provided in the Certificate of
Incorporation or required by law, each share of Series A Preferred Stock
shall entitle the holder thereof to 1000 votes on all matters upon which
the holders of the Common Stock of the Company are entitled to vote. In
the event the Company shall at any time after September 26, 1996 declare
or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise
than by payment of a dividend in shares of Common Stock) into a greater
or lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is
<PAGE> 5
the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) Except as otherwise provided herein, in the Certificate of
Incorporation or in any other Certificate of Designations creating a
series of Preferred Stock or any similar stock, and except as otherwise
required by law, the holders of shares of Series A Preferred Stock and
the holders of shares of Common Stock and any other capital stock of the
Company having general voting rights shall vote together as one class on
all matters submitted to a vote of stockholders of the Company.
(C) Except as set forth herein, or as otherwise provided by
law, holders of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the extent
they are entitled to vote with holders of Common Stock as set forth
herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not earned or declared, on
shares of Series A Preferred Stock outstanding shall have been paid in
full, the Company shall not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (as to
dividends) to the Series A Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (as to
dividends) with the Series A Preferred Stock, except dividends
paid ratably on the Series A Preferred Stock and all such parity
stock on which dividends are payable or in arrears in proportion
to the total amounts to which the holders of all such shares are
then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock, provided that the Company may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Company
ranking junior (as to dividends and upon dissolution, liquidation
or winding up) to the Series A Preferred Stock or rights,
warrants or options to acquire such junior stock;
<PAGE> 6
(iv) redeem or purchase or otherwise acquire for
consideration any shares of Series A Preferred Stock, or any
shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of
Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual
dividend rates and other relative rights and preferences of the
respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective
series or classes.
(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock
of the Company unless the Company could, under paragraph (A) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Company in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All
such shares shall upon their retirement become authorized but unissued shares
of Preferred Stock and may be reissued as part of a new series of Preferred
Stock to be created by resolution or resolutions of the Board of Directors,
subject to any conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Company, no distribution shall be
made (A) to the holders of the Common Stock or of shares of any other stock of
the Company ranking junior, upon liquidation, dissolution or winding up, to the
Series A Preferred Stock unless, prior thereto, the holders of shares of Series
A Preferred Stock shall have received $100 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not earned
or declared, to the date of such payment, provided that the holders of shares
of Series A Preferred Stock shall be entitled to receive an aggregate amount
per share, subject to the provision for adjustment hereinafter set forth, equal
to 1000 times the aggregate amount to be distributed per share to holders of
shares of Common Stock, or (B) to the holders of shares of stock ranking on a
parity upon liquidation, dissolution or winding up with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and
all such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up. In the event, however, that there are not sufficient assets available to
permit payment in full of the Series A liquidation preference and the
liquidation preferences of all other classes
<PAGE> 7
and series of stock of the Company, if any, that rank on a parity with the
Series A Preferred Stock in respect thereof, then the assets available for such
distribution shall be distributed ratably to the holders of the Series A
Preferred Stock and the holders of such parity shares in the proportion to
their respective liquidation preferences. In the event the Company shall at
any time after September 26, 1996 declare or pay any dividend on the Common
Stock payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
aggregate amount to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event under the proviso in clause (A) of the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Company
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are converted into, exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case each share of Series A Preferred Stock shall at the same time be
similarly converted into, exchanged for or changed into an amount per share
(subject to the provision for adjustment hereinafter set forth) equal to 1000
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is converted, exchanged or converted. In the event the Company
shall at any time after September 26, 1996 declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the amount set forth in the preceding sentence with respect to the
conversion, exchange or change of shares of Series A Preferred Stock shall be
adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock
shall not be redeemable from any holder.
Section 9. Rank. The Series A Preferred Stock shall rank, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding
<PAGE> 8
up of the Company, junior to all other series of Preferred Stock and senior to
the Common Stock.
Section 10. Amendment. If any proposed amendment to the
Certificate of Incorporation (including this Certificate of Designations) would
alter, change or repeal any of the preferences, powers or special rights given
to the Series A Preferred Stock so as to affect the Series A Preferred Stock
adversely, then the holders of the Series A Preferred Stock shall be entitled
to vote separately as a class upon such amendment, and the affirmative vote of
two-thirds of the outstanding shares of the Series A Preferred Stock, voting
separately as a class, shall be necessary for the adoption thereof, in addition
to such other vote as may be required by the General Corporation Law of the
State of Delaware.
Section 11. Fractional Shares. Series A Preferred Stock may be
issued in fractions of a share that shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.
<PAGE> 9
IN WITNESS WHEREOF, this Certificate of Designations is executed
on behalf of the Company by its President and attested by its Secretary this
26th day of September, 1996.
/s/ J. W. STEWART
-----------------------------------
J. W. STEWART
Attest:
/s/ MARGARET B. SHANNON
- - ------------------------------
MARGARET B. SHANNON
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED
BYLAWS OF
BJ SERVICES COMPANY
AS OF DECEMBER 12, 1996
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
ARTICLE I - Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Registered Office . . . . . . . . . . . . . . . 1
Section 2. Other Offices . . . . . . . . . . . . . . . . . 1
ARTICLE II - Meetings of Stockholders . . . . . . . . . . . . . . . . . . 1
Section 1. Place of Meetings . . . . . . . . . . . . . . . 1
Section 2. Annual Meeting of Stockholders . . . . . . . . 1
Section 3. Quorum; Adjourned Meetings and Notice Thereof . 1
Section 4. Voting . . . . . . . . . . . . . . . . . . . . 2
Section 5. Proxies . . . . . . . . . . . . . . . . . . . . 2
Section 6. Special Meetings . . . . . . . . . . . . . . . 2
Section 7. Notice of Stockholders' Meetings . . . . . . . 2
Section 8. Waiver of Notice . . . . . . . . . . . . . . . 3
Section 9. Maintenance and Inspection of Stockholder List 3
Section 10. Stockholder Action by Written Consent Without .
a Meeting . . . . . . . . . . . . . . . . . . 3
Section 11. Inspectors of Election . . . . . . . . . . . . 3
Section 12. Procedure for Stockholders' Meetings . . . . . 4
Section 13. Order of Business . . . . . . . . . . . . . . . 4
Section 14. Procedures for Bringing Business before an. . .
Annual Meeting . . . . . . . . . . . . . . . . 4
Section 15. Procedures for Nominating Directors . . . . . . 5
ARTICLE III - Directors . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1. Number and Qualification of Directors . . . . . 6
Section 2. Election and Term of Office . . . . . . . . . . 6
Section 3. Resignation and Removal of Directors . . . . . 7
Section 4. Vacancies . . . . . . . . . . . . . . . . . . . 7
Section 5. Powers . . . . . . . . . . . . . . . . . . . . 8
Section 6. Place of Directors' Meetings . . . . . . . . . 8
Section 7. Regular Meetings . . . . . . . . . . . . . . . 8
Section 8. Special Meetings . . . . . . . . . . . . . . . 8
Section 9. Quorum . . . . . . . . . . . . . . . . . . . . 9
Section 10. Action Without Meeting . . . . . . . . . . . . 9
Section 11. Telephonic Meetings . . . . . . . . . . . . . . 9
Section 12. Meetings and Action of Committees . . . . . . . 9
Section 13. Special Meetings of Committees . . . . . . . . 10
Section 14. Minutes of Committee Meetings . . . . . . . . . 10
Section 15. Compensation of Directors . . . . . . . . . . . 10
Section 16. Indemnification . . . . . . . . . . . . . . . . 10
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE IV - Officers . . . . . . . . . . . . . . . . . . . . . . . 12
Section 1. Officers . . . . . . . . . . . . . . . . . . . 12
Section 2. Election of Officers . . . . . . . . . . . . . 12
Section 3. Subordinate Officers . . . . . . . . . . . . . 12
Section 4. Removal and Resignation of Officers . . . . . . 12
Section 5. Vacancies in Offices . . . . . . . . . . . . . 12
Section 6. Chairman of the Board . . . . . . . . . . . . . 12
Section 7. Vice Chairman of the Board . . . . . . . . . . 12
Section 8. President . . . . . . . . . . . . . . . . . . . 13
Section 9. Vice Presidents . . . . . . . . . . . . . . . . 13
Section 10. Secretary . . . . . . . . . . . . . . . . . . . 13
Section 11. Chief Financial Officer . . . . . . . . . . . . 13
Section 12. Treasurer and Controller . . . . . . . . . . . 14
ARTICLE V - Certificates of Stock . . . . . . . . . . . . . . . . . . . . 14
Section 1. Certificates . . . . . . . . . . . . . . . . . 14
Section 2. Signature on Certificates . . . . . . . . . . . 14
Section 3. Statement of Stock Rights, Preferences,
Privileges. . . . . . . . . . . . . . . . . . . 14
Section 4. Lost Certificates . . . . . . . . . . . . . . . 15
Section 5. Transfers of Stock . . . . . . . . . . . . . . 15
Section 6. Fixing Record Date . . . . . . . . . . . . . . 15
Section 7. Registered Stockholders . . . . . . . . . . . . 15
ARTICLE VI - General Provisions - Dividends . . . . . . . . . . . . . . . 16
Section 1. Dividends . . . . . . . . . . . . . . . . . . . 16
Section 2. Payment of Dividends; Directors' Duties . . . . 16
Section 3. Checks . . . . . . . . . . . . . . . . . . . . 16
Section 4. Corporate Contracts and Instruments . . . . . . 16
Section 5. Fiscal Year . . . . . . . . . . . . . . . . . . 16
Section 6. Manner of Giving Notice . . . . . . . . . . . . 16
Section 7. Waiver of Notice . . . . . . . . . . . . . . . 17
Section 8. Annual Statement . . . . . . . . . . . . . . . 17
ARTICLE VII - Amendments . . . . . . . . . . . . . . . . . . . . . . . 17
Section 1. Amendment by Directors . . . . . . . . . . . 17
Section 2. Amendments by Stockholders . . . . . . . . . . 18
</TABLE>
<PAGE> 4
BYLAWS
OF
BJ SERVICES COMPANY
ARTICLE I
Offices
Section 1. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware.
Section 2. The Corporation may also have offices at such other places
both within and without the State of Delaware as the Board of Directors may
from time to time determine or the business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. All meetings of the stockholders shall be held at such
place either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting.
Section 2. An annual meeting of stockholders shall be held on the
fourth Thursday in January in each year, if not a legal holiday, and if a legal
holiday, then on the next business day following, at 2:00 p.m. or at such other
date and time as may be determined from time to time by resolution adopted by
the Board of Directors, for the purpose of electing, subject to Article III,
Section 17 hereof, one class of the directors of the Corporation, and
transacting such other business as may properly be brought before the meeting.
Section 3. A majority of the stock issued and outstanding and
entitled to vote at any meeting of stockholders, the holders of which are
present in person or represented by proxy, without regard to class or series,
shall constitute a quorum for the transaction of business except as otherwise
provided by law, by the Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation"), or by these Bylaws. A quorum, once
established, shall not be broken by the withdrawal of enough votes to leave
less than a quorum and the votes present may continue to transact business
until adjournment provided that any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, a majority of the voting stock represented in person or by
proxy may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the
<PAGE> 5
meeting as originally noticed. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote thereat.
Section 4. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy and entitled to vote shall decide any question brought
before such meeting, unless the question is one upon which by express provision
of the statutes or the Certificate of Incorporation or these Bylaws, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 5. At each meeting of the stockholders, each stockholder
having the right to vote may vote in person or may authorize another person or
persons to act for him by proxy appointed by an instrument in writing
subscribed by such stockholder and bearing a date not more than three years
prior to said meeting, unless said instrument provides for a longer period.
All proxies must be filed with the Secretary of the Corporation at the
beginning of each meeting in order to be counted in any vote at the meeting. A
proxy shall be deemed signed if the stockholder's name is placed on the proxy
(whether by manual signature, telegraphic transmission or otherwise) by the
stockholder or the stockholder's attorney in fact. Except as otherwise set
forth in the Certificate of Incorporation, each stockholder shall have one vote
for each share of stock having voting power, registered in his name on the
books of the Corporation on the record date set by the Board of Directors as
provided in Article V, Section 6 hereof.
Section 6. Special meetings of the stockholders, for any purpose, or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called at any time by the Board of Directors or by a
committee of the Board of Directors and whose powers and authority, as provided
in a resolution of the Board of Directors or in these Bylaws, include the power
to call meetings. Special meetings of stockholders of the corporation may not
be called by any other person or persons. Business transacted at any special
meeting of stockholders shall be limited to the purposes stated in the notice.
Section 7. Any notice requested to be given to stockholders by
statute, the Certificate of Incorporation or these Bylaws, including notice of
any meeting of stockholders, shall be given personally, by first-class mail or
by telegraphic communication, charges prepaid, addressed to the stockholder at
the address of such stockholder appearing on the books of the Corporation or
given by the stockholder to the Corporation for the purpose of notice. If no
such address appears on the Corporation's books or has been so given, notice
shall be deemed to have been given if sent by first-class mail or telegraphic
communication to the Corporation's principal executive office, or if published
at least once in a newspaper of general circulation in the county where such
principal executive office is located. Notice shall be deemed to have been
given at the time when delivered personally or deposited in the mail or sent by
telegram.
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<PAGE> 6
If any notice addressed to a stockholder at the address of such
stockholder appearing on the books of a Corporation is returned to the
Corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the stockholder
at such address, all further notices shall be deemed to have been duly given
without further mailing if the same shall be available to the stockholder upon
written demand of the stockholder at the principal executive office of the
Corporation for a period of one year from the date of the giving of such
notice.
Section 8. Attendance of a person at a meeting shall constitute a
waiver of notice to such person of such meeting, except when the person objects
at the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened, or objects to the consideration of
matters not included in the notice of the meeting.
Section 9. The officer or agent who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within the
city where their meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept open at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine such list or
to vote at any meetings of stockholders.
Section 10. No action shall be taken by stockholders except at an
annual or special meeting of stockholders, and stockholders may not act by
written consent.
Section 11. Before any meeting of stockholders, the Board of
Directors may appoint any persons other than nominees for office to act as
inspectors of election at the meeting or its adjournment. If no inspectors of
election are so appointed, the chairman of the meeting may, and on the request
of any stockholder or a stockholder's proxy shall, appoint inspectors of
election at the meeting. The number of inspectors shall be either one or
three. If inspectors are appointed at a meeting on the request of one or more
stockholders or proxies, the holders of a majority of shares or their proxies
present at the meeting shall determine whether one or three inspectors are to
be appointed. If any person appointed as inspector fails to appear or fails or
refuses to act, the chairman of the meeting may, and upon the request of any
stockholder or a stockholder's proxy shall, appoint a person to fill such
vacancy.
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<PAGE> 7
The duties of these inspectors shall be as follows:
(a) Determine the number of shares outstanding and the voting
power of each, the shares represented at the meeting, the existence of a
quorum, and the authenticity, validity and effect of proxies;
(b) Receive votes or ballots;
(c) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) Count and tabulate all votes;
(e) Determine when the polls shall close;
(f) Determine the results; and
(g) Do any other acts that may be proper to conduct the election
or vote with fairness to all stockholders.
Section 12. Meetings of the stockholders shall be presided over by
the Chairman of the Board of Directors, or in his absence, by the Vice
Chairman, the President or by any Vice President, or, in the absence of any of
such officers, by a chairman to be chosen by a majority of the stockholders
entitled to vote at the meeting who are present in person or by proxy. The
Secretary, or, in his absence, any person appointed by the Chairman, shall act
as secretary of all meetings of the stockholders.
Section 13. The order of business at all meetings of stockholders
shall be as determined by the chairman of the meeting.
Section 14. Notwithstanding anything in these Bylaws to the contrary,
no business shall be conducted at an annual meeting of the stockholders except
in accordance with the procedures hereinafter set forth in this Section 14;
provided, however, that nothing in this Section 14 shall be deemed to preclude
discussion by any stockholder of any business properly brought before the
annual meeting in accordance with said procedures.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be (1) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the Board, (2) otherwise properly brought before the meeting by or at the
direction of the Board, or (3) otherwise properly brought before the meeting by
a stockholder. In addition to any other applicable requirements, for business
to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the
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<PAGE> 8
Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 90 days prior to the date of the anniversary of the
annual meeting of the Corporation's stockholders held in the prior year. Any
adjournment(s) or postponement(s) of the original meeting whereby the meeting
will reconvene within 30 days from the original date shall be deemed for
purposes of notice to be a continuation of the original meeting and no business
may be brought before any such reconvened meeting unless timely notice of such
business was given to the Secretary of the Corporation for the meeting as
originally scheduled. A stockholder's notice to the Secretary shall set forth
as to each matter the stockholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be brought before the annual
meeting and their reasons for conducting such business at the annual meeting,
(ii) the name and record address of the stockholder proposing such business,
(iii) the class and number of shares of the Corporation which are beneficially
owned by the stockholder, and (iv) any material interest of the stockholder in
such business.
The Chairman of an annual meeting shall, if the facts warrant,
determine and declare to the meeting that business was not properly brought
before the meeting in accordance with the provisions of this Section 14, and if
he should so determine, he shall so declare to the meeting and any such
business not properly brought before the meeting shall not be transacted.
Section 15. Notwithstanding anything in these Bylaws to the contrary,
only persons who are nominated in accordance with the procedures hereinafter
set forth in this Section 15 shall be eligible for election as directors of the
Corporation.
Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of stockholders only (1) by or at the
direction of the Board of Directors or (2) by any stockholder of the
Corporation entitled to vote for the election of directors at the meeting who
complies with the notice of procedures set forth in this Section 15. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
or mailed and received at the principal executive offices of the Corporation
not less than 90 days prior to the date of the anniversary of the annual
meeting of the Corporation's stockholders held in the prior year in the case of
an annual meeting or, in the case of a special meeting called by the Board of
Directors (or by a committee of the Board) for the purpose of electing
directors, not more than 10 days following the earlier of the date of notice of
such special meeting or the date on which a public announcement of such meeting
is made. Any adjournment(s) or postponement(s) of the original meeting whereby
the meeting will reconvene within 30 days from the original date shall be
deemed for purposes of notice to be a continuation of the original meeting and
no nominations by a shareholder of persons to be elected directors of the
Corporation may be made at any such reconvened meeting other than pursuant to a
notice that was timely for the meeting on the date originally scheduled. Such
stockholder's notice shall set forth: (i) as to each person
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<PAGE> 9
whom the stockholder proposes to nominate for election or re-election as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended, or any successor regulation
thereto (including such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected); and (ii) as to
the stockholder giving the notice (A) the name and address, as they appear on
the Corporation's books, of such stockholder, and (B) the class and number of
shares of the Corporation which are beneficially owned by such stockholder. At
the request of the Board of Directors, any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's notice
of nomination which pertains to the nominee.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
procedures prescribed by this Section 15, and if he should so determine, he
shall so declare to the meeting and the defective nomination shall be
disregarded.
ARTICLE III
Directors
Section 1. The Board of Directors shall consist of a minimum of four
(4) and a maximum of ten (10) directors. The number of directors shall be
fixed from time to time within the minimum and the maximum number established
by the then elected Board of Directors. The number of directors until changed
by the Board shall be seven (7). The maximum number of directors may not be
increased by the Board of Directors to exceed ten (10) without the affirmative
vote of 75% of the members of the entire Board. The directors need not be
stockholders. No officer of the Corporation may serve on a board of directors
of any company having a present or retired employee on the Corporation's Board
of Directors. No person may stand for election as a director if within the
previous one (1) year he has resigned from the Board as a result of the tenure
provisions of Article III, Section 3 hereof regarding service for more than 10,
11 or 12 consecutive years on the Board. No person associated with an
organization whose services are contracted by the Corporation shall serve on
the Corporation's Board of Directors, provided however that this prohibition
may be waived by a majority of the members of the whole Board if the Board in
its judgment determines that such waiver would be in the best interest of the
Corporation.
Section 2. The Board of Directors shall be divided into three
classes, Class I, Class II and Class III. The number of directors in each
class shall be the whole number contained in the quotient arrived at by
dividing the authorized number of directors by three, and if a fraction is also
contained in such quotient then if such fraction is one-third (1/3), the extra
director shall be a member of Class III, and if the fraction is two-thirds
(2/3), one of the extra directors shall be a member of Class III and the other
a member of
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<PAGE> 10
Class II. Each director shall serve for a term ending on the date of the third
annual meeting following the annual meeting at which such director was elected;
provided, however, that the directors initially appointed to Class I shall
serve for a term ending on the date of the first annual meeting next following
September 30, 1990, the directors initially appointed to Class II shall serve
for a term ending on the date of the second annual meeting next following
September 30, 1990, and the directors initially appointed to Class III shall
serve for a term ending on the date of the third annual meeting next following
September 30, 1990. One class of the directors shall be elected at each annual
meeting of the stockholders. If any such annual meeting is not held or the
directors are not elected thereat, the directors may be elected at any special
meeting of stockholders held for that purpose. All directors shall hold office
until their respective successors are elected and qualified or until their
earlier death, resignation or removal.
Section 3. Directors who are employees of the Corporation must resign
from the Board of Directors at the time of any diminution in their duties or
responsibilities as an officer, at the time they leave the employ of the
Corporation for any reason or on their 70th birthday. A director's term of
office shall automatically terminate on the date of the annual meeting of
stockholders following: (i) his 70th birthday; (ii) the third anniversary of
his retirement from his principal occupation; (iii) unless he is an officer of
the Corporation, the date on which he has served on the Corporation's Board of
Directors for a consecutive period of (a) twelve (12) complete years or more
prior to the Corporation's 1991 annual meeting of stockholders, (b) eleven (11)
complete years or more prior to the Corporation's 1992 annual meeting of
stockholders, or (c) commencing with the 1993 annual meeting of stockholders, a
total of ten (10) complete years or more thereafter; (iv) any fiscal year in
which he has failed to attend at least 66% of the meetings of the Board of
Directors and any committees of the Board of Directors on which such director
serves; or (v) the first anniversary of any change in his employment (other
than a promotion or lateral movement within the same organization). The
requirements of sections 3(i) and 3(ii) of this Article III shall not apply to
a director who was 68 years old and serving on the Company's Board of Directors
on December 1, 1995. The requirements of sections 3(i) and 3(ii) of this
Article III shall not apply to a director who retired in 1995 and was serving
on the Company's Board of Directors on December 1, 1996. The requirements of
Section 3(v) of Article III may be waived by a majority of the members of the
whole Board (excluding the director whose resignation would otherwise be
required) if the Board in its judgment determines that such waiver would be in
the best interest of the Corporation. Any director may be removed for cause by
the holders of a majority of the shares of the Corporation entitled to vote in
the election of directors; stockholders may not remove any director without
cause. The Board of Directors may not remove any director for or without
cause, and no recommendation by the Board of Directors that a director be
removed for cause may be made to the stockholders except by the affirmative
vote of not less than 75% of the members of the whole Board; provided that the
Board may remove any director who fails to resign as required by the provisions
of these Bylaws.
Section 4. Except as otherwise provided by statute or the Certificate
of Incorporation, in the case of any increase in the number of directors, such
additional director or directors shall be proposed for election to terms of
office that will most nearly result in each Class of directors containing
one-third of the entire number of members of
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<PAGE> 11
the whole Board, and, unless such position is to be filled by a vote of the
stockholders at an annual or special meeting, shall be elected by a majority
vote of the directors in such Class or Classes, voting separately by Class. In
the case of any vacancy in the Board of Directors, however created, the vacancy
or vacancies shall be filled by majority vote of the directors remaining in the
Class in which the vacancy occurs or, if only one such director remains, by
such director. In the event one or more directors shall resign, effective at a
future date, such vacancy or vacancies shall be filled as provided herein.
Directors so chosen or elected shall hold office for the remaining term of the
directorship to which appointed. Any director elected or chosen as provided
herein shall serve for the unexpired term of office or until his successor is
elected and qualified or until his earlier death, resignation or removal.
In the event of any decrease in the authorized number of directors,
(a) each director then serving as such shall nevertheless continue as a
director of the class of which he is a member until the expiration of this
current term, or his prior death, resignation or removal, and (b) the newly
eliminated directorships resulting from such decrease shall be apportioned by
the board of directors to such class or classes as shall, so far as possible,
bring the number of directors in the respective classes into conformity with
the formula in Section 2 hereof as applied to the new authorized number of
directors.
Section 5. The property and business of the Corporation shall be
managed by or under the direction of its Board of Directors. In addition to
the powers and authorities by these Bylaws expressly conferred upon them, the
Board may exercise all such powers of the corporation and do all such lawful
acts and things as are not by statute, by the Certificate of Incorporation or
by these Bylaws directed or required to be exercised or done by the
stockholders.
Meetings of the Board of Directors
Section 6. The directors may hold their meetings and have one or more
offices, and keep the books of the Corporation outside the state of Delaware.
Section 7. Regular meetings of the Board of Directors may be held
without notice at such time and place as shall from time to time be determined
by the Board. Except as otherwise provided by statute, any business may be
transacted at any regular meeting of the Board of Directors.
Section 8. Special meetings of the Board of Directors may be called
by the Chairman of the Board, the Vice Chairman or the President on at least
forty-eight hours' notice to each director. Special meetings shall be called
by the President or the Secretary in like manner and on like notice on the
written request of any two directors unless the Board consists of only one
director, in which case special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of the sole
director.
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<PAGE> 12
Section 9. At all meetings of the Board of Directors a majority of
the authorized number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the vote of a majority
of the directors present at any meeting at which there is a quorum, shall be
the act of the Board of Directors, except as may be otherwise specifically
provided by statute, by the Certificate of Incorporation or by these Bylaws.
If a quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
If only one director is authorized, such sole director shall constitute a
quorum. A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action is
approved by at least a majority of the required quorum for such meeting.
Section 10. Unless otherwise restricted by statute, the Certificate
of Incorporation or these Bylaws, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting, if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
Section 11. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in a meeting of
the Board of Directors, or any committee, by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting.
Committees of Directors
Section 12. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each such
committee to consist of one or more of the directors of the Corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. If no alternate members have been appointed, the committee
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any absent or disqualified member. The Board of Directors shall, by resolution
passed by a majority of the whole Board, designate one member of each committee
as chairman of such committee. Each such chairman shall hold such office for a
period not in excess of five years, and shall upon surrender of such
chairmanship resign from membership on such committee. Any such committee, to
the extent provided in the resolution of the Board of Directors, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and affairs of the Corporation, but no such
committee shall have the power or authority to authorize an amendment to the
Certificate of Incorporation, adopt an agreement of merger or
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consolidation, recommend to the stockholders the sale, lease or exchange of all
or substantially all of the Corporation's property and assets, recommend to the
stockholders a dissolution of the Corporation or a revocation of a dissolution,
or amend the Bylaws of the Corporation; and, unless the resolution or the
Certificate of Incorporation expressly so provide, no such committee shall have
the power or authority to declare a dividend or to authorize the issuance of
stock.
Section 13. Special meetings of committees may be called by the
Chairman of such committee, the Chairman of the Board or the President, on at
least 48 hours notice to each member and alternate member. Alternate members
shall have the right to attend all meetings of the committee. The Board of
Directors may adopt rules for the government of any committee not inconsistent
with the provisions of these Bylaws. If a committee is comprised of an odd
number of members, a quorum shall consist of a majority of that number. If the
committee is comprised of an even number of members, a quorum shall consist of
one-half of that number. If a committee is comprised of two members, a quorum
shall consist of both members.
Section 14. Each committee shall keep regular minutes of its meetings
and report the same to the Board of Directors when requested.
Compensation of Directors
Section 15. Unless otherwise restricted by the Certificate of
Incorporation or these Bylaws, the Board of Directors shall have the authority
to fix the compensation of directors. The directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors and
may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as director. No such payment shall preclude any
director from serving the Corporation in any other capacity and receiving
compensation therefor. Members of special or standing committees may be
allowed like compensation for attending committee meetings.
Indemnification
Section 16. (a) The Corporation shall indemnify every person who is
or was a party or is or was threatened to be made a party to any action, suit,
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation or any of its direct or indirect wholly-owned subsidiaries or,
while a director, officer, employee or agent of the Corporation or any of its
direct or indirect wholly-owned subsidiaries, is or was serving at the request
of the Corporation or any of its direct or indirect wholly-owned subsidiaries,
as a director, officer, employee, agent or trustee of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise,
against expenses (including counsel fees), judgments, fines, and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding, to the full extent permitted by applicable laws
provided that the Corporation shall not be obligated to
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<PAGE> 14
indemnify any such person against any such action, suit or proceeding which is
brought by such person against the Corporation or any of its direct or indirect
wholly-owned subsidiaries or the directors of the Corporation or any of its
direct or indirect wholly-owned subsidiaries, other than an action brought by
such person to enforce his rights to indemnification hereunder, unless a
majority of the Board of Directors of the Corporation shall have previously
approved the bringing of such action, suit or proceeding. The Corporation
shall indemnify every person who is or was a party or is or was threatened to
be made a party to any action, suit, or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was
licensed to practice law and an employee (including an employee who is or was
an officer) of the Corporation or any of its direct or indirect wholly-owned
subsidiaries and, while acting in the course of such employment committed or is
alleged to have committed any negligent acts, errors or omissions in rendering
professional legal services at the request of the Corporation or pursuant to
his employment (including, without limitation, rendering written or oral legal
opinions to third parties) against expenses (including counsel fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding, to the full
extent permitted by applicable law; provided that the Corporation shall not be
obligated to indemnify any such person against any action, suit or proceeding
arising out of any adjudicated criminal, dishonest or fraudulent acts, errors
or omissions of such person or any adjudicated willful, intentional or
malicious acts, errors or omissions of such person.
(b) Expenses incurred by an officer or director of the Corporation
or any of its direct or indirect wholly-owned subsidiaries in defending a
civil or criminal action, suit or proceeding shall be paid by the Corporation
in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in this Section 16. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
(c) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 16 shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under any provision of law, the Corporation's Certificate of
Incorporation, the Certificate of Incorporation or bylaws or other governing
documents of any direct or indirect wholly-owned subsidiary of the Corporation,
or any agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding any of the positions or having any of the relationships referred
to in this Section 16.
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ARTICLE IV
Officers
Section 1. The officers of the Corporation shall be a Chairman of the
Board, a President, a Chief Financial Officer, a Vice President, a Secretary, a
Treasurer and a Controller. The Corporation may also have, at the discretion
of the Board of Directors, a Vice Chairman of the Board, one or more additional
Vice Presidents, and such other officers as may be appointed in accordance with
the provisions of Section 3 of this Article.
Section 2. The officers of the Corporation, except such officers as
may be appointed in accordance with the provisions of Section 3 or Section 5 of
this Article, shall be chosen by the Board of Directors, and each shall serve
at the pleasure of the Board, subject to the rights, if any, of any officer
under any contract of employment.
Section 3. The Board of Directors may appoint, and may empower the
President to appoint, such other officers as the business of the Corporation
may require, each of whom shall hold office for such period, have such
authority and perform such duties as are provided in the Bylaws or as the Board
of Directors may from time to time determine.
Section 4. Any officer may be removed, either with or without cause,
by the Board of Directors, at any regular or special meeting thereof, or except
in case of an officer chosen by the Board of Directors, by any officer upon
whom such power of removal may be conferred by the Board of Directors, provided
that such removal shall not prejudice the remedy of such officer for breach of
any contract of employment.
Any officer may resign at any time by giving written notice to the
Corporation. Any such resignation shall take effect on receipt of such notice
or at any later time specified therein. Unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Any such resignation is without prejudice to the rights, if any, of the
Corporation under any contract to which the officer is a party.
Section 5. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner
prescribed in these Bylaws for regular appointments to such office.
Section 6. The Chairman of the Board shall, if present, preside at
all meetings of the Board of Directors and of the stockholders, and shall
exercise and perform such other powers and duties as may be from time to time
assigned to him by the Board of Directors or prescribed by the Bylaws.
Section 7. The Vice Chairman of the Board shall exercise and perform
such powers and duties as may be from time to time assigned to him by the Board
of Directors
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or prescribed in these Bylaws. In the absence of the Chairman of the Board,
the Vice Chairman of the Board shall preside at all meetings of the
stockholders and the Board of Directors.
Section 8. The President shall be the chief executive officer of the
Corporation and shall, subject to the control of the Board of Directors, have
general supervision, direction and control of the business and the officers of
the Corporation. In the absence of the Chairman of the Board and the Vice
Chairman of the Board, the President shall preside at all meetings of the
stockholders and the Board of Directors. He shall have the general powers and
duties of management usually vested in the office of President of a
Corporation, and shall have such other powers and duties as may be prescribed
by the Board of Directors or the Bylaws.
Section 9. In the absence or disability of the President, the Vice
Presidents, if any, in order of their rank as fixed by the Board of Directors,
or if not ranked, the Vice President designated by the President, shall perform
all the duties of the President, and when so acting shall have all the powers
of, and be subject to all the restrictions upon, the President. The Vice
Presidents shall have such other powers and perform such other duties as from
time to time may be prescribed for them respectively by the Board of Directors,
these Bylaws or the President.
Section 10. The Secretary shall keep or cause to be kept, at the
principal office or such other place as the Board of Directors may order, a
book of minutes of all meetings and actions of directors, committees of
directors and stockholders, with the time and place of holding, whether regular
or special, and, if special, how authorized, the notice thereof given, the
names of those present at directors' and committee meetings, the number of
shares present or represented at stockholders' meetings, and the proceedings
thereof.
The Secretary shall keep, or cause to be kept, at the principal office
or at the office of the Corporation's transfer agent or registrar, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The Secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the Board of Directors required by these Bylaws or
by law to be given, and he shall keep the seal of the Corporation, if one be
adopted, in safe custody, and shall have such other powers and perform such
other duties as may be prescribed by the Board of Directors or by the Bylaws.
Section 11. The Chief Financial Officer shall keep and maintain, or
cause to be kept and maintained, adequate and correct books and records of
accounts of the properties and business transactions of the Corporation,
including accounts of its assets, liabilities,
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receipts, disbursements, gains, losses, capital, retained earnings and shares.
The books of account shall be open at all times to inspection by any director.
The Chief Financial Officer shall deposit all moneys and other
valuables in the name and to the credit of the Corporation with such
depositaries as may be designated by the Board of Directors. He shall disburse
the funds of the Corporation as may be ordered by the Board of Directors, shall
render to the President and Directors, whenever they request it, an account of
all of his transactions as Chief Financial Officer and of the financial
condition of the Corporation, and shall have other powers and perform such
other duties as may be prescribed by these Board of Directors or these Bylaws.
Section 12. The Treasurer and the Controller shall each have such
powers and perform such duties as from time to time may be prescribed for him
by the Board of Directors, the President or these Bylaws.
ARTICLE V
Certificate of Stock
Section 1. Every holder of stock of the Corporation shall be entitled
to have a certificate signed by, or in the name of the Corporation by, the
Chairman or Vice Chairman of the Board of Directors, or the President or a Vice
President, and by the Secretary or an Assistant Secretary, if one be appointed,
or the Treasurer or an Assistant Treasurer, if one be appointed, of the
Corporation, certifying the number of shares represented by the certificate
owned by such stockholder in the Corporation.
Section 2. Any or all of the signatures on the certificate may be a
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
Section 3. If the Corporation shall be authorized to issue more than
one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualification,
limitations or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
Corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided by statute, in lieu of the foregoing
requirements, there may be set forth on the face or back of the certificate
which the Corporation shall issue to represent such class or series of stock, a
statement that the Corporation will furnish without charge to each stockholder
who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
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<PAGE> 18
Lost, Stolen or Destroyed Certificates
Section 4. The Board of Directors, the Secretary and the Treasurer
each may direct a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the owner of such certificate, or his legal representative. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such manner
as it shall require and/or to furnish the Corporation a bond in such form and
substance and with such surety as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the Certificate
alleged to have been lost, stolen or destroyed.
Transfers of Stock
Section 5. Upon surrender to the Corporation, or the transfer agent
of the Corporation, of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignation or authority to transfer, it shall
be the duty of the Corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books.
Fixing Record Date
Section 6. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of the
stockholders, or any adjournment thereof, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock
or for the purpose of any other lawful action, the Board of Directors may fix a
record date which shall not be more than 60 nor less than 10 days before the
date of such meeting, nor more than 60 days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for
the adjourned meeting.
Registered Stockholder
Section 7. The Corporation shall be entitled to treat the holder of
record of any share or shares of stock as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or other claim or
interest in such share on the part of any other person, whether or not it shall
have express or other notice thereof, save as expressly provided by the laws of
the State of Delaware.
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<PAGE> 19
ARTICLE VI
General Provisions
Dividends
Section 1. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property or in shares of the
Corporation's capital stock, subject to the provisions of the Certificate of
Incorporation.
Section 2. Before declaration of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or sums as
the Board of Directors from time to time, in their absolute discretion, thinks
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose as the Board of Directors shall think conducive to the interests of the
Corporation, and the Board of Directors may thereafter abolish any such reserve
in its absolute discretion.
Checks
Section 3. All checks, drafts or other orders for payment of money,
notes or other evidences of indebtedness, issued in the name of or payable to
the Corporation shall be signed by such officer or officers as the Board of
Directors or the President or any Vice President, acting jointly, may from time
to time designate.
Section 4. The President, any Vice President, the Secretary or the
Treasurer may enter into contracts and execute instruments on behalf of the
Corporation. The Board of Directors, the President or any Vice President may
authorize any officer or officers, and any employee or employees or agent or
agents of the Corporation or any of its subsidiaries, to enter into any
contract or execute any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
Fiscal Year
Section 5. The fiscal year of the Corporation shall be October 1
through September 30, unless otherwise fixed by resolution of the Board of
Directors.
Notices
Section 6. Whenever, under the provisions of the statutes, the
Certificate of Incorporation or these Bylaws, notice is required to be given to
any director, it shall not be construed to require personal notice, but such
notice may be given in writing, by mail,
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<PAGE> 20
addressed to such director, at his address as it appears on the records of the
Corporation (unless prior to the mailing of such notice he shall have filed
with the Secretary a written request that notices intended for him be mailed to
some other address, in which case such notice shall be mailed to the address
designated in the request) with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the
United States mail; provided, however, that, in the case of notice of a special
meeting of the Board of Directors, if such meeting is to be held within seven
calendar days after the date of such notice, notice shall be deemed given as of
the date such notice shall be accepted for delivery by a courier service that
provides "opening of business next day" delivery, so long as at least one
attempt shall have been made, on or before the date such notice is accepted for
delivery by such courier service, to provide notice by telephone to each
director at his principal place of business and at his principal residence.
Notice to directors may also be given by telegram, by personal delivery or
telephone.
Section 7. Whenever any notice is required to be given under the
provisions of the statutes, the Certificate of Incorporation or these Bylaws, a
waiver thereof in writing, or by telegraph, cable or other written form of
recorded communication, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
Annual Statement
Section 8. The Board of Directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by vote
of the stockholders, a full and clear statement of the business and condition
of the Corporation.
ARTICLE VII
Amendments
Section l. Except any amendment to this Article VII and to Article
II, Section 6, Article II, Section 10, Article III, Section 1 (as it relates to
increases in the number of directors), Article III, Section 2, the last
sentence of Article III, Section 3 (as it relates to removal of directors),
Article III, Section 4, Article III, Section 16 and Article VI, Section 6 of
these Bylaws, or any of such provisions, which shall require approval by the
affirmative vote of directors representing at least 75% of the number of
directors provided for in accordance with Article III, Section 1, and except as
otherwise expressly provided in a bylaw adopted by the stockholders as
hereinafter provided, the directors, by the affirmative vote of a majority of
the whole Board and without the assent or vote of the stockholders, may at any
meeting, make, repeal, alter, amend or rescind any of these Bylaws, provided
the substance of the proposed amendment or other action shall have been stated
in a notice of the meeting.
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<PAGE> 21
Section 2. These Bylaws may not be altered, amended or rescinded, and
new Bylaws may not be adopted, by the stockholders of the Corporation except by
the vote of the holders of not less than 75% of the total voting power of all
shares of stock of the Corporation entitled to vote in the election of
directors, considered for such purpose as one class.
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<PAGE> 1
Exhibit 10.4
AMENDMENT TO
BJ SERVICES COMPANY 1990 STOCK INCENTIVE PLAN
(AS AMENDED AND RESTATED)
WHEREAS, BJ SERVICES COMPANY (the "Company") has heretofore adopted
and subsequently amended and restated the BJ SERVICES COMPANY 1990 STOCK
INCENTIVE PLAN (the "Plan"); and
WHEREAS, pursuant to certain amendments to the rules promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended (the "Amended
Rules"), the Company desires to amend the Plan to ensure compliance with the
Amended Rules;
NOW, THEREFORE, the Plan shall be amended as follows, effective
December 12, 1996:
1. The second sentence of the second paragraph of Article I,
Section 3, shall be deleted and the following shall be substituted therefor:
"No person shall be eligible to serve on the Committee unless
he is then a Section 16 Director and also an "outside director" within
the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "CODE"). A "SECTION 16 DIRECTOR" means a director that
meets the criteria of a "Non-Employee Director" as defined in 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."
2. Clause (f) of Article I, Section 4, shall be amended by adding
the phrase "(as hereinafter defined)" after the term "Non-Employee Directors."
3. Paragraph (b) of Article I, Section 9, shall be amended by
deleting the phrase "'disinterested persons' within the meaning of Rule 16b-3"
and by substituting the term "Section 16 Directors" therefor.
4. Article VII shall be deleted and the following shall be
substituted therefor:
Any issuance of Common Stock pursuant to the exercise of an
option or 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. With respect to any Non-Employee Director and any
Employee Optionee or Employee Grantee who is subject to Rule 16b-3 at
the time tax withholding is required with respect to an Award payable
in Common Stock, such Non-Employee Director, Employee Optionee or
Employee Grantee may direct the Company to withhold from such Award 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.
Notwithstanding the preceding sentence, the withholding of shares to
satisfy the tax withholding requirement shall be allowed only at the
discretion of the Committee with respect to Awards outstanding as of
December 12, 1996.
5. As amended hereby, the Plan is specifically ratified and
reaffirmed.
<PAGE> 1
Exhibit 10.6
AMENDMENT TO
BJ SERVICES COMPANY
1990 EMPLOYEE STOCK PURCHASE PLAN
WHEREAS, BJ SERVICES COMPANY (the "Company") has heretofore adopted
the BJ SERVICES COMPANY 1990 EMPLOYEE STOCK PURCHASE PLAN (the "Plan"); and
WHEREAS, pursuant to certain amendments to the rules promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended (the "Amended
Rules"), the Company desires to amend the Plan to ensure compliance with the
Amended Rules;
NOW, THEREFORE, the Plan shall be amended as follows, effective
December 12, 1996:
1. The second paragraph of Section 2 shall be deleted.
2. As amended hereby, the Plan is specifically ratified and
reaffirmed.
<PAGE> 1
EXHIBIT 10.9
AMENDMENT ONE
TO THE
BJ SERVICES COMPANY 1995 INCENTIVE PLAN
WHEREAS, BJ Services Company (the "Company") and the stockholders of
the Company have heretofore adopted and approved the BJ Services Company 1995
Incentive Plan (the "1995 Plan"); and
WHEREAS, the Company desires to amend the 1995 Plan, subject to
stockholder approval, to increase the number of option shares that are
automatically granted to Non-Employee Directors;
NOW, THEREFORE, effective as of January 25, 1996, Paragraph 3 of
Article IV of the 1995 Plan is amended to read in its entirety as follows:
"3. Annual Granting of Options to Non-Employee Directors.
Subject to the limitation of the number of shares of Common Stock set
forth in Article I, Paragraph 2, a nonqualified option to purchase
2,000 (increased to 4,000 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 1996 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)."
All terms used herein that are defined in the 1995 Plan shall have the
same meanings given to such terms in the 1995 Plan.
Except as amended hereby, the 1995 Plan shall continue in full force
and effect without interruption or change and the 1995 Plan and this amendment
shall be read, taken and construed as one and the same instrument.
<PAGE> 2
AMENDMENT TO
BJ SERVICES COMPANY 1995 INCENTIVE PLAN
WHEREAS, BJ SERVICES COMPANY (the "Company") has heretofore adopted
the BJ SERVICES COMPANY 1995 INCENTIVE PLAN (the "Plan"); and
WHEREAS, pursuant to certain amendments to the rules promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended (the "Amended
Rules"), the Company desires to amend the Plan to ensure compliance with the
Amended Rules;
NOW, THEREFORE, the Plan shall be amended as follows, effective
December 12, 1996:
1. The second sentence of the second paragraph of Article I,
Section 3, shall be deleted and the following shall be substituted therefor:
"No person shall be eligible to serve on the Committee unless
he is then a Section 16 Director and also an "outside director" within
the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "CODE"). A "SECTION 16 DIRECTOR" means a director that
meets the criteria of a "Non-Employee Director" as defined in 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."
2. Clause (f) of Article I, Section 4, shall be amended by adding
the phrase "(as hereinafter defined)" after the term "Non-Employee Directors."
3. Paragraph (b) of Article I, Section 9, shall be amended by
deleting the phrase "disinterested persons, within the meaning of Rule 16b-3"
and by substituting the term "Section 16 Directors" therefor.
4. Article VIII shall be deleted and the following shall be
substituted therefor:
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. With respect to any Non-Employee Director and any
Employee Optionee or Employee Grantee who is subject to Rule 16b-3 at
the time tax withholding is required with respect to an Award payable
in Common Stock, such Non-Employee Director, Employee Optionee or
Employee Grantee may direct the Company to 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. Notwithstanding the preceding sentence, the withholding of
shares to satisfy the tax withholding requirement shall be allowed
only at the discretion of the Committee with respect to Awards
outstanding as of December 12, 1996; provided that with respect to
Awards outstanding as of December 12, 1996 that are held by employees
subject to Section 16 of the Act, the foregoing withholding of shares
shall be automatic.
5. As amended hereby, the Plan is specifically ratified and
reaffirmed.
<PAGE> 1
Exhibit 10.15
REVOLVING NOTE
$_________________________ ______________, 1996
FOR VALUE RECEIVED, the undersigned, ____________________, a
__________ corporation (the "Borrower"), promises to pay to the order of
________________________________________________________________________________
__ (the "Bank"), for the account of its Lending Office, the principal amount of
_________________________ DOLLARS ($____________________) or the aggregate
unpaid principal amount of all Revolving Loans made by the Bank to the Borrower
pursuant to Section 2.01(b) of the Credit Agreement (hereinafter defined)
whichever is less, in immediately available funds at BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, AGENCY MANAGEMENT SERVICES #5506, 1455 Market
Street, Twelfth Floor, San Francisco, California 94103, at the times and in the
amounts as set forth in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal balance of the Revolving Loans, from time to
time outstanding, at the rates and on the dates set forth in the Credit
Agreement. The aggregate unpaid principal amount of all Revolving Loans shall
be due and payable on the Revolving Termination Date.
This note is one of the notes issued pursuant to, and is entitled to
the benefits of, that certain Amended and Restated Credit Agreement, dated as
of August 7, 1996 (as the same may be amended, modified or restated from time
to time, the "Credit Agreement"), among BJ SERVICES COMPANY, a Delaware
corporation ("Company"), BJ SERVICES COMPANY, U.S.A., a Delaware corporation,
BJ SERVICE INTERNATIONAL, INC., a Delaware corporation, BJ SERVICES COMPANY
MIDDLE EAST, a Delaware corporation, NOWSCO WELL SERVICE LTD., an Alberta,
Canada corporation, and the other Subsidiary Borrowers (as defined in the
Credit Agreement) (Company and Subsidiary Borrowers collectively, "Borrowers"),
the several financial institutions from time to time party thereto (the
"Banks"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as U.S. Agent
(the "U.S. Agent"), Issuing Bank and Swing Loan Bank, BANK OF AMERICA CANADA,
as Canadian Agent (the "Canadian Agent"), THE CHASE MANHATTAN BANK, as Senior
Co-Agent, and the Co-Agents therein named. All capitalized terms used but not
defined herein shall have the meaning assigned to them in the Credit Agreement.
Reference is made to the Credit Agreement for, inter alia, provisions for the
prepayment hereof, the acceleration of the maturity hereof and to the effect
that no provision of the Credit Agreement or this Note shall require the
payment or permit the charging or collection of interest in an amount in excess
of the highest non-usurious or non-criminal amount permitted by applicable law.
It is contemplated that by reason of prepayments hereon prior to the
Revolving Termination Date, there may be times when no indebtedness is owing
hereunder prior to such date, but notwithstanding such occurrence this note
shall be in full force and effect as to the Revolving Loans made pursuant to
the Credit Agreement subsequent to each such occurrence.
<PAGE> 2
All Revolving Loans made by the Bank pursuant to the Credit Agreement
and all payments of the principal thereof shall be endorsed by the holder of
this Revolving Note on the schedule annexed hereto (including any additional
pages such holder may add to such schedule), which endorsement shall constitute
prima facie evidence of the accuracy of the information so endorsed; provided,
however, that the failure of the holder of this Revolving Note to insert any
date or amount or other information on such schedule shall not in any manner
affect the obligation of the Borrower or the other Borrowers to repay any
Revolving Loans in accordance with the terms of the Credit Agreement.
The Borrower and any and all sureties, guarantors and endorsers of
this Revolving Note and all other parties now or hereafter liable hereon,
severally waive, except as otherwise provided in the Credit Agreement or in any
other of the Loan Documents, grace, demand, presentment for payment, protest,
notice of any kind (including, but not limited to, notice of dishonor, notice
of protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto, and agree
(i) to all extensions and partial payments, with or without notice, before or
after maturity, (ii) to any substitution, exchange or release of any security
now or hereafter given for this Revolving Note, (iii) to the release of any
party primarily or secondarily liable hereon, and (iv) that it will not be
necessary for the Bank, in order to enforce payment of this Revolving Note, to
first institute or exhaust the Bank's remedies against the Borrower or any
other party liable therefor or against any security for this Revolving Note.
This Revolving Note may not be changed, modified or terminated orally,
but only by an agreement in writing signed by the party charged. If any term
or provision of this Revolving Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions herein shall in
no way be affected thereby.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS REVOLVING NOTE,
THE BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY AND THE DEFENSES OF FORUM NON
CONVENIENS AND IMPROPER VENUE. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND SHALL BE BINDING UPON THE
SUCCESSORS AND ASSIGNS OF BORROWER AND INURE TO THE BENEFIT OF THE BANK AND ITS
SUCCESSORS AND ASSIGNS (INCLUDING PARTICIPANTS IN ACCORDANCE WITH THE TERMS OF
THE CREDIT AGREEMENT).
-2-
<PAGE> 3
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Revolving Note on the date first above written.
---------------------------------------
By
------------------------------------
Name:
Title:
-3-
<PAGE> 4
GRID SCHEDULE
Attached to and made part of the Revolving Note, dated August 7, 1996,
issued pursuant to that certain Amended and Restated Credit Agreement, dated as
of August 7, 1996, among BJ SERVICES COMPANY, a Delaware corporation,, BJ
SERVICES COMPANY, U.S.A., a Delaware corporation, BJ SERVICE INTERNATIONAL,
INC., a Delaware corporation, BJ SERVICES COMPANY MIDDLE EAST, a Delaware
corporation, NOWSCO WELL SERVICE LTD., an Alberta, Canada corporation, and the
other Subsidiary Borrowers (as defined in the Credit Agreement), the several
financial institutions from time to time party thereto, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as U.S. Agent, Issuing Bank and Swing
Loan Bank, BANK OF AMERICA CANADA, as Canadian Agent, THE CHASE MANHATTAN BANK,
as Senior Co-Agent, and the Co-Agents therein named.
<TABLE>
<CAPTION>
============================================================================================================================
Amount of Unpaid
Principal Principal
Principal Paid or Balance Name of
Date of Amount Type of Interest Interest Maturity Prepaid or (Balance Person Making
Loan of Loan Loan(1) Rate Period Date Converted continued) Notation
- - ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
============================================================================================================================
</TABLE>
- - ----------------------------------
(1) The type of loan may be represented either by "B" for Base Rate Loans or "O"
for LIBOR Offshore Rate Loans.
-4-
<PAGE> 5
TERM NOTE
$__________________ ___________, 1996
FOR VALUE RECEIVED, the undersigned, _______________________________,
a Delaware corporation (the "Borrower"), promises to pay to the order of
__________________________________________________ (the "Bank"), for the account
of its Lending Office, the principal amount of ____________________________
DOLLARS ($_________________) or the aggregate unpaid principal amount of all
U.S. Term Loans made by the Bank to the Borrower pursuant to Section 2.01(a)(ii)
of the Credit Agreement (hereinafter defined), whichever is less, in immediately
available funds at [BANK OF AMERICA CANADA, Suite 2700, 200 Front Street West,
Toronto, Ontario] [BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
AGENCY MANAGEMENT SERVICES #5506, 1455 Market Street, Twelfth Floor, San
Francisco, California 94103], at the times and in the amounts as set forth in
the Credit Agreement. The Borrower promises to pay interest on the unpaid
principal balance of the U.S. Term Loans, from time to time outstanding, at the
rates and on the dates set forth in the Credit Agreement. The Borrower promises
to make payments of principal in the amounts and on the dates set forth in the
Credit Agreement, and the entire unpaid principal amount of the U.S. Term Loans
shall be due and payable on the Term Loan Maturity Date.
This note is one of the notes issued pursuant to, and is entitled to
the benefits of, that certain Amended and Restated Credit Agreement, dated as
of August 7, 1996 (as the same may be amended, modified or restated from time
to time, the "Credit Agreement"), among BJ SERVICES COMPANY, a Delaware
corporation ("Company"), BJ SERVICES COMPANY, U.S.A., a Delaware corporation,
BJ SERVICE INTERNATIONAL, INC., a Delaware corporation, BJ SERVICES COMPANY
MIDDLE EAST, a Delaware corporation, NOWSCO WELL SERVICE LTD., an Alberta,
Canada corporation, and the other Subsidiary Borrowers (as defined in the
Credit Agreement), the several financial institutions from time to time party
thereto (the "Banks"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as U.S. Agent (the "U.S. Agent"), Issuing Bank and Swing Loan Bank, BANK OF
AMERICA CANADA, as Canadian Agent (the "Canadian Agent"), THE CHASE MANHATTAN
BANK, as Senior Co-Agent, and the Co-Agents therein named. All capitalized
terms used but not defined herein shall have the meaning assigned to them in
the Credit Agreement. Reference is made to the Credit Agreement for, inter
alia, provisions for the prepayment hereof, the acceleration of the maturity
hereof and to the effect that no provision of the Credit Agreement or this Note
shall require the payment or permit the charging or collection of interest in
an amount in excess of the highest non-usurious or non-criminal amount
permitted by applicable law.
The U.S. Term Loans made by the Bank pursuant to the Credit Agreement
and all payments of the principal thereof shall be endorsed by the holder of
this Term Note on the schedule annexed hereto (including any additional pages
such holder may add to such schedule), which endorsement shall constitute prima
facie evidence of the accuracy of the information so endorsed; provided,
however, that the failure of the holder of this Term Note to insert any date
<PAGE> 6
or amount or other information on such schedule shall not in any manner affect
the obligation of the Borrower to repay any U.S. Term Loans in accordance with
the terms of the Credit Agreement.
The Borrower and any and all sureties, guarantors and endorsers of
this Term Note and all other parties now or hereafter liable hereon, severally
waive, except as otherwise provided in the Credit Agreement or in any other of
the Loan Documents, grace, demand, presentment for payment, protest, notice of
any kind (including, but not limited to, notice of dishonor, notice of protest,
notice of intention to accelerate and notice of acceleration) and diligence in
collecting and bringing suit against any party hereto, and agree (i) to all
extensions and partial payments, with or without notice, before or after
maturity, (ii) to any substitution, exchange or release of any security now or
hereafter given for this Term Note, (iii) to the release of any party primarily
or secondarily liable hereon, and (iv) that it will not be necessary for the
Bank, in order to enforce payment of this Term Note, to first institute or
exhaust the Bank's remedies against the Borrower or any other party liable
therefor or against any security for this Term Note.
This Term Note may not be changed, modified or terminated orally, but
only by an agreement in writing signed by the party charged. If any term or
provision of this Term Note shall be held invalid, illegal or unenforceable,
the validity of all other terms and provisions herein shall in no way be
affected thereby.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS TERM NOTE, THE
BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY, AND THE DEFENSES OF FORUM NON
CONVENIENS AND IMPROPER VENUE. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND SHALL BE BINDING UPON THE
SUCCESSORS AND ASSIGNS OF BORROWER AND INURE TO THE BENEFIT OF THE BANK AND ITS
SUCCESSORS AND ASSIGNS (INCLUDING PARTICIPANTS IN ACCORDANCE WITH THE TERMS OF
THE CREDIT AGREEMENT).
IN WITNESS WHEREOF, the Borrower has executed and delivered this Term
Note on the date first above written.
BJ SERVICES COMPANY
By
-------------------------------------
Name:
Title:
-2-
<PAGE> 7
GRID SCHEDULE
Attached to and made part of the Term Note, dated August 7, 1996,
issued pursuant to that certain Amended and Restated Credit Agreement, dated as
of August 7, 1996, among BJ SERVICES COMPANY, a Delaware corporation,, BJ
SERVICES COMPANY, U.S.A., a Delaware corporation, BJ SERVICE INTERNATIONAL,
INC., a Delaware corporation, BJ SERVICES COMPANY MIDDLE EAST, a Delaware
corporation, NOWSCO WELL SERVICE LTD., an Alberta, Canada corporation, and the
other Subsidiary Borrowers (as defined in the Credit Agreement), the several
financial institutions from time to time party thereto, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as U.S. Agent, Issuing Bank and Swing
Loan Bank, BANK OF AMERICA CANADA, as Canadian Agent, THE CHASE MANHATTAN BANK,
as Senior Co-Agent, and the Co-Agents therein named.
<TABLE>
<CAPTION>
===========================================================================================================================
Amount of Unpaid
Principal Principal Name of
Principal Paid or Balance Person
Date of Amount Type of Interest Interest Maturity Prepaid or (Balance Making
Loan of Loan Loan(2) Rate Period Date Converted continued) Notation
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
</TABLE>
- - ----------------------------------
(2) The type of loan may be represented either by "B" for Base Rate Loans or "O"
for LIBOR Offshore Rate Loans.
-3-
<PAGE> 8
PRIME RATE NOTE
C$__________________ ___________, 1996
FOR VALUE RECEIVED, the undersigned, NOWSCO WELL SERVICE LTD., an
Alberta, Canada corporation (the "Borrower"), promises to pay to the order of
___________________________________________________________ (the "Bank"), for
the account of its Lending Office, the principal amount of
____________________________ CANADIAN DOLLARS (C$_________________) or the
aggregate unpaid principal amount of all Prime Rate Loans made by the Bank to
the Borrower pursuant to Section 2.01(a) of the Credit Agreement (hereinafter
defined), whichever is less, in immediately available funds at BANK OF AMERICA
CANADA, Suite 2700, 200 Front Street West, Toronto, Ontario, at the times and
in the amounts as set forth in the Credit Agreement. The Borrower promises to
pay interest on the unpaid principal balance of the Prime Rate Loans, from time
to time outstanding, at the rates and on the dates set forth in the Credit
Agreement. The Borrower promises to make payments of principal in the amounts
and on the dates set forth in the Credit Agreement, and the entire unpaid
principal amount of the Prime Rate Loans shall be due and payable on the Term
Loan Maturity Date.
This note is one of the notes issued pursuant to, and is entitled to
the benefits of, that certain Amended and Restated Credit Agreement, dated as
of August 7, 1996 (as the same may be amended, modified or restated from time
to time, the "Credit Agreement"), among BJ SERVICES COMPANY, a Delaware
corporation ("Company"), BJ SERVICES COMPANY, U.S.A., a Delaware corporation,
BJ SERVICE INTERNATIONAL, INC., a Delaware corporation, BJ SERVICES COMPANY
MIDDLE EAST, a Delaware corporation, NOWSCO WELL SERVICE LTD., an Alberta,
Canada corporation, and the other Subsidiary Borrowers (as defined in the
Credit Agreement), the several financial institutions from time to time party
thereto (the "Banks"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as U.S. Agent (the "U.S. Agent"), Issuing Bank and Swing Loan Bank, BANK OF
AMERICA CANADA, as Canadian Agent (the "Canadian Agent"), THE CHASE MANHATTAN
BANK, as Senior Co-Agent, and the Co-Agents therein named. All capitalized
terms used but not defined herein shall have the meaning assigned to them in
the Credit Agreement. Reference is made to the Credit Agreement for, inter
alia, provisions for the prepayment hereof, the acceleration of the maturity
hereof and to the effect that no provision of the Credit Agreement or this Note
shall require the payment or permit the charging or collection of interest in
an amount in excess of the highest non-usurious or non-criminal amount
permitted by applicable law.
The Prime Rate Loans made by the Bank pursuant to the Credit Agreement
and all payments of the principal thereof shall be endorsed by the holder of
this Prime Rate Note on the schedule annexed hereto (including any additional
pages such holder may add to such schedule), which endorsement shall constitute
prima facie evidence of the accuracy of the information so endorsed; provided,
however, that the failure of the holder of this Prime Rate Note to insert any
date or amount or other information on such schedule shall not in any manner
affect the obligation
<PAGE> 9
of the Borrower to repay any Prime Rate Loans in accordance with the terms of
the Credit Agreement.
The Borrower and any and all sureties, guarantors and endorsers of
this Prime Rate Note and all other parties now or hereafter liable hereon,
severally waive, except as otherwise provided in the Credit Agreement or in any
other of the Loan Documents, grace, demand, presentment for payment, protest,
notice of any kind (including, but not limited to, notice of dishonor, notice
of protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto, and agree
(i) to all extensions and partial payments, with or without notice, before or
after maturity, (ii) to any substitution, exchange or release of any security
now or hereafter given for this Prime Rate Note, (iii) to the release of any
party primarily or secondarily liable hereon, and (iv) that it will not be
necessary for the Bank, in order to enforce payment of this Prime Rate Note, to
first institute or exhaust the Bank's remedies against the Borrower or any
other party liable therefor or against any security for this Prime Rate Note.
This Prime Rate Note may not be changed, modified or terminated
orally, but only by an agreement in writing signed by the party charged. If
any term or provision of this Prime Rate Note shall be held invalid, illegal or
unenforceable, the validity of all other terms and provisions herein shall in
no way be affected thereby.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS PRIME RATE NOTE,
THE BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY, AND THE DEFENSES OF FORUM NON
CONVENIENS AND IMPROPER VENUE. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND SHALL BE BINDING UPON THE
SUCCESSORS AND ASSIGNS OF BORROWER AND INURE TO THE BENEFIT OF THE BANK AND ITS
SUCCESSORS AND ASSIGNS (INCLUDING PARTICIPANTS IN ACCORDANCE WITH THE TERMS OF
THE CREDIT AGREEMENT).
IN WITNESS WHEREOF, the Borrower has executed and delivered this Prime
Rate Note on the date first above written.
NOWSCO WELL SERVICE LTD.
By
-------------------------------------
Name:
Title:
-2-
<PAGE> 10
GRID SCHEDULE
Attached to and made part of the Prime Rate Note, dated August 7,
1996, issued pursuant to that certain Amended and Restated Credit Agreement,
dated as of August 7, 1996, among BJ SERVICES COMPANY, a Delaware corporation,,
BJ SERVICES COMPANY, U.S.A., a Delaware corporation, BJ SERVICE INTERNATIONAL,
INC., a Delaware corporation, BJ SERVICES COMPANY MIDDLE EAST, a Delaware
corporation, NOWSCO WELL SERVICE LTD., an Alberta, Canada corporation, and the
other Subsidiary Borrowers (as defined in the Credit Agreement), the several
financial institutions from time to time party thereto, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as U.S. Agent, Issuing Bank and Swing
Loan Bank, BANK OF AMERICA CANADA, as Canadian Agent, THE CHASE MANHATTAN BANK,
as Senior Co-Agent, and the Co-Agents therein named.
<TABLE>
<CAPTION>
===========================================================================================================================
Amount of Unpaid
Principal Principal Name of
Principal Paid or Balance Person
Date of Amount Type of Interest Interest Maturity Prepaid or (Balance Making
Loan of Loan Loan Rate Period Date Converted continued) Notation
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
- - ---------------------------------------------------------------------------------------------------------------------------
===========================================================================================================================
</TABLE>
-3-
<PAGE> 11
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
SWING LOAN NOTE
$20,000,000.00 __________, 1996
FOR VALUE RECEIVED, the undersigned, ____________________, a
__________ corporation (the "Borrower"), promises to pay to the order of BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank"), for the account
of its Lending Office, on or before the Revolving Termination Date the lesser
of (i) the principal amount of TWENTY MILLION DOLLARS ($20,000,000.00) or (ii)
the aggregate unpaid principal amount of all Swing Loans made by the Bank to
the Borrower pursuant to Section 2.01(c) of the Credit Agreement (hereinafter
defined), whichever is less, in immediately available funds at BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, AGENCY MANAGEMENT SERVICES #5506, 1455
Market Street, Twelfth Floor, San Francisco, California 94103, at the times and
in the amounts as set forth in the Credit Agreement. The Borrower promises to
pay interest on the unpaid principal balance of the Swing Loans, from time to
time outstanding, at the rates and on the dates set forth in the Credit
Agreement. The aggregate unpaid principal amount of all Swing Loans shall be
due and payable on the Revolving Termination Date.
This note is one of the notes issued pursuant to, and is entitled to
the benefits of, that certain Amended and Restated Credit Agreement, dated as
of August 7, 1996 (as the same may be amended, modified or restated from time
to time, the "Credit Agreement"), among BJ SERVICES COMPANY, a Delaware
corporation ("Company"), BJ SERVICES COMPANY, U.S.A., a Delaware corporation,
BJ SERVICE INTERNATIONAL, INC., a Delaware corporation, BJ SERVICES COMPANY
MIDDLE EAST, a Delaware corporation, NOWSCO WELL SERVICE LTD., an Alberta,
Canada corporation, and the other Subsidiary Borrowers (as defined in the
Credit Agreement) (Company and Subsidiary Borrowers collectively, "Borrowers"),
the several financial institutions from time to time party thereto (the
"Banks"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as U.S. Agent
(the "U.S. Agent"), Issuing Bank and Swing Loan Bank, BANK OF AMERICA CANADA,
as Canadian Agent (the "Canadian Agent"), THE CHASE MANHATTAN BANK, as Senior
Co-Agent, and the Co-Agents therein named. All capitalized terms used but not
defined herein shall have the meaning assigned to them in the Credit Agreement.
Reference is made to the Credit Agreement for, inter alia, provisions for the
prepayment hereof, the acceleration of the maturity hereof and to the effect
that no provision of the Credit Agreement or this Note shall require the
payment or permit the charging or collection of interest in an amount in excess
of the highest non-usurious or non-criminal amount permitted by applicable law.
All Swing Loans made by the Bank pursuant to the Credit Agreement and
all payments of the principal thereof shall be endorsed by the holder of this
Swing Loan Note on the schedule annexed hereto (including any additional pages
such holder may add to such schedule), which endorsement shall constitute prima
facie evidence of the accuracy of the information so endorsed;
<PAGE> 12
provided, however, that the failure of the holder of this Swing Loan Note to
insert any date or amount or other information on such schedule shall not in
any manner affect the obligation of the Borrower or any other Borrowers to
repay any Swing Loans in accordance with the terms of the Credit Agreement.
The Borrower and any and all sureties, guarantors and endorsers of
this Swing Loan Note and all other parties now or hereafter liable hereon,
severally waive, except as otherwise provided in the Credit Agreement or in any
other of the Loan Documents, grace, demand, presentment for payment, protest,
notice of any kind (including, but not limited to, notice of dishonor, notice
of protest, notice of intention to accelerate and notice of acceleration) and
diligence in collecting and bringing suit against any party hereto, and agree
(i) to all extensions and partial payments, with or without notice, before or
after maturity, (ii) to any substitution, exchange or release of any security
now or hereafter given for this Swing Loan Note, (iii) to the release of any
party primarily or secondarily liable hereon and (iv) that it will not be
necessary for the Bank, in order to enforce payment of this Swing Loan Note, to
first institute or exhaust the Bank's remedies against the Borrower or any
other party liable therefor or against any security for this Swing Loan Note.
This Swing Loan Note may not be changed, modified, or terminated
orally, but only by an agreement in writing signed by the party to be charged.
If any term or provision of this Swing Loan Note shall be held invalid, illegal
or unenforceable, the validity of all other terms and provisions herein shall
in no way be affected thereby.
IN THE EVENT OF ANY LITIGATION WITH RESPECT TO THIS SWING LOAN NOTE,
THE BORROWER WAIVES THE RIGHT TO A TRIAL BY JURY AND THE DEFENSES OF FORUM NON
CONVENIENS AND IMPROPER VENUE. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND SHALL BE BINDING UPON THE
SUCCESSORS AND ASSIGNS OF BORROWERS AND INURE TO THE BENEFIT OF THE BANK AND
ITS SUCCESSORS AND ASSIGNS (INCLUDING PARTICIPANTS IN ACCORDANCE WITH THE TERMS
OF THE CREDIT AGREEMENT).
IN WITNESS WHEREOF, the Borrower has executed and delivered this Swing
Loan Note on the date first above written.
---------------------------------------
By
-------------------------------------
Name:
Title:
-2-
<PAGE> 13
GRID SCHEDULE
Attached to and made part of the Swing Loan Note, dated August 7,
1996, issued pursuant to that certain Amended and Restated Credit Agreement,
dated as of August 7, 1996, among BJ SERVICES COMPANY, a Delaware corporation,,
BJ SERVICES COMPANY, U.S.A., a Delaware corporation, BJ SERVICE INTERNATIONAL,
INC., a Delaware corporation, BJ SERVICES COMPANY MIDDLE EAST, a Delaware
corporation, NOWSCO WELL SERVICE LTD., an Alberta, Canada corporation, and the
other Subsidiary Borrowers (as defined in the Credit Agreement), the several
financial institutions from time to time party thereto, BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, as U.S. Agent, Issuing Bank and Swing
Loan Bank, BANK OF AMERICA CANADA, as Canadian Agent, THE CHASE MANHATTAN BANK,
as Senior Co-Agent, and the Co-Agents therein named.
<TABLE>
<CAPTION>
==========================================================================================================
Unpaid Principal
Principal Amount Amount of Principal Balance Name of Person
Date of Loan of Loan Paid or Prepaid (Balance continued) Making Notation
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------
==========================================================================================================
</TABLE>
-3-
<PAGE> 1
Exhibit 10.16
PARENT GUARANTY AGREEMENT
[BJ SERVICES]
THIS PARENT GUARANTY AGREEMENT (this "Guaranty") by BJ SERVICES
COMPANY, a Delaware corporation (the "Guarantor"), is in favor of each of the
Banks (herein defined) from time to time parties to the Credit Agreement
(herein defined), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Issuing Bank and Swing Loan Bank, and BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, (together with its successors and assigns herein called
the "U.S. Agent") and BANK OF AMERICA CANADA (together with its successors and
assigns herein called the "Canadian Agent"), as the U.S. Agent and Canadian
Agent, respectively, for and on behalf of the financial institutions (the
"Banks") now or hereafter party to that certain Amended and Restated Credit
Agreement, dated as of August 7, 1996 (as the same may be amended, modified or
restated from time to time and at any time, the "Credit Agreement") among the
Guarantor, BJ SERVICES COMPANY, U.S.A., a Delaware corporation ("BJ-USA), BJ
SERVICE INTERNATIONAL, INC., a Delaware corporation ("BJ- International"), BJ
SERVICES COMPANY MIDDLE EAST, a Delaware corporation ("BJ-Middle East"), NOWSCO
WELL SERVICE LTD., an Alberta, Canada corporation ("BJ-Canada"), the other
Subsidiary Borrowers (as defined in the Credit Agreement) (the Guarantor,
BJ-USA, BJ-International, BJ-Middle East, BJ-Canada and the other Subsidiary
Borrowers who are from time to time parties to the Credit Agreement are herein
referred to individually, as a "Borrower", and collectively, as "Borrowers"),
the Banks, BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Issuing
Bank and Swing Loan Bank, the U.S. Agent, the Canadian Agent and the Senior
Co-Agent and the Co-Agents therein named. All capitalized terms used but not
defined herein shall have the meaning assigned to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, certain of the
Banks have agreed to make, continue and convert certain Loans and to issue or
participate in Letters of Credit to or for the benefit of the Borrowers;
WHEREAS, the obligation of the Banks to make, continue and convert the
Loans and to issue or participate in Letters of Credit is conditioned upon,
among other things, the execution and delivery by the Guarantor of this
Guaranty;
WHEREAS, the Guarantor and the other Borrowers are members of the same
consolidated group of companies and are engaged in related businesses and the
Guarantor will derive substantial direct and indirect economic benefit from the
Loans and the issuance of Letters of Credit;
NOW, THEREFORE, (i) in consideration of the premises and to induce the
Banks to enter into the Credit Agreement and to make, continue and convert the
Loans and to issue or participate in the Letters of Credit and accept Bankers'
Acceptances, (ii) at the special insistence and request of the U.S. Agent, the
Canadian Agent, the Issuing Bank and the Banks, and (iii) for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Guarantor,
<PAGE> 2
for the benefit of the U.S. Agent, the Canadian Agent, the Issuing Bank, the
Swing Loan Bank and the Banks, hereby agrees as follows:
Section 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined.
Section 2. Guaranty. The Guarantor hereby, unconditionally and
irrevocably, guarantees the prompt performance and payment in full in Dollars
(or in the case of the Canadian Borrower, in Canadian Dollars) by each of the
Borrowers when due (whether at stated maturity, by acceleration or otherwise)
of the Obligations of each of the Borrowers, and the Guarantor further agrees
to pay all reasonable costs, fees and expenses (including, without limitation,
reasonable counsel fees, and the allocated cost of in-house counsel) incurred
by any Agent or any Bank in enforcing any rights under this Guaranty.
Section 3. Guaranty Absolute. (a) The obligations of the Guarantor
hereunder are those of a primary obligor, and not merely a surety, and are
independent of the Obligations. A separate action or actions may be brought
against the Guarantor whether or not an action is brought against the
Borrowers, any other guarantor or other obligor in respect of the Obligations
or whether the Borrowers, any other guarantor or any other obligor in respect
of the Obligations are joined in any such action or actions.
(b) The Guarantor guarantees that the Obligations will be paid and
performed strictly in accordance with the terms of the Credit Agreement and the
other Loan Documents regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agents or the Banks with respect thereto. Guarantor agrees that
its guarantee constitutes a guarantee of payment when due and not of collection
and that to the maximum extent permitted by applicable law, the liability of
the Guarantor under this Guaranty shall be absolute and unconditional
irrespective of:
(i) any lack of genuineness, validity, legality or
enforceability of the Credit Agreement, any other Loan Document or any
other document, agreement or instrument relating thereto or any
assignment or transfer of any thereof;
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations (including,
without limitation, the possible extension of the Revolving
Termination Date, Term Loan Maturity Date and increase of the amount
of the Commitments all on the terms and conditions set forth in the
Credit Agreement), or any waiver, indulgence, compromise, renewal,
extension, amendment, modification of, or addition, consent,
supplement to, or consent to departure from, or any other action or
inaction under or in respect of, the Credit Agreement or any other
Loan Document or any document, instrument or agreement relating to the
Obligations or any other instrument or agreement referred to therein
or any assignment or transfer of any thereof;
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(iii) any release or partial release of any other guarantor
or other obligor in respect of the Obligations;
(iv) any exchange, release or non-perfection of any
collateral for all or any of the Obligations, or any release, or
amendment or waiver of, or consent to departure from, any guaranty or
security, for all or any of the Obligations;
(v) any furnishing of any additional security for any of
the Obligations;
(vi) the liquidation, bankruptcy, insolvency or
reorganization of any Borrower, any other guarantor or other obligor
in respect of the Obligations or any action taken with respect to this
Guaranty by any trustee or receiver, or by any court, in any such
proceeding;
(vii) any modification or termination of any intercreditor
or subordination agreement pursuant to which the claims of other
creditors of the Borrowers or the Guarantor are subordinated to those
of the Banks; or
(viii) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge
of, the Borrower or the Guarantor.
(c) This Guaranty shall continue to be effective or be reinstated,
as the case may be, if at any time payment or performance of the Obligations,
or any part thereof, is, upon the insolvency, bankruptcy or reorganization of
one or more of the Borrowers or the Guarantor or otherwise pursuant to
applicable law, rescinded or reduced in amount or must otherwise be restored or
returned by any Agent or any Bank, all as though such payment or performance
had not been made.
(d) If an event permitting the acceleration of any of the
Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency against
one or more of the Borrowers of a case or proceeding under any bankruptcy or
insolvency law or other creditor law, the Guarantor agrees that, for purposes
of this Guaranty and its obligations hereunder, the Obligations shall be deemed
to have been accelerated and the Guarantor shall forthwith pay such Obligations
(including, without limitation, interest which but for the filing of a petition
in bankruptcy with respect to the Borrowers, would accrue on such Obligations),
and the other obligations hereunder, without any further notice or demand.
Section 4. Waivers. Except as set forth in the Credit Agreement and
the other Loan Documents and to the extent permitted by applicable law, the
Guarantor hereby waives promptness, diligence, notice of intention to
accelerate, notice of acceleration, notice of acceptance and any and all other
notices with respect to any of the Obligations and this Guaranty and any
requirement that any Agent or any Bank protect, secure, perfect or insure any
security interest in or any Lien on any property subject thereto or exhaust any
right or take any action against the Borrowers, any other guarantor or any
other Person or any collateral or security or to any balance of any deposit
accounts or credit on the books of any Bank in favor of the Borrowers or the
Guarantor.
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Section 5. Subrogation. (a) The Guarantor will not exercise any
rights of subrogation, reimbursement and contribution, contractual, statutory
or otherwise which it may acquire by way of subrogation under this Guaranty, by
any payment hereunder or otherwise, until all of the Obligations, including
Bankers' Acceptances, of all of the Borrowers have been paid, all Commitments
have terminated and all Letters of Credit have expired.
(b) To the maximum extent permitted by applicable law (i) if, in
the exercise of any of its rights and remedies, any Agent or any Bank shall
forfeit any of its rights or remedies, including its right to enter a
deficiency judgment against the Borrowers or any other Person, whether because
of any applicable laws pertaining to "election of remedies" or the like, the
Guarantor hereby consents to such action by such Agent or such Bank and waives
any claim based upon such action, even if such action by such Agent or such
Bank shall result in a full or partial loss of any rights of subrogation which
the Guarantor might otherwise have had but for such action by such Agent or
such Bank; (ii) any election of remedies which results in the denial or
impairment of the right of such Agent or such Bank to seek a deficiency
judgment against the Borrowers shall not impair the Guarantor's obligation to
pay the full amount of the Obligations; (iii) in the event any Agent or any
Bank shall bid at any foreclosure or trustee's sale or at any private sale
permitted by law or under the Loan Documents, such Agent or such Bank may bid
all or less than the amount of the Obligations and the amount of such bid need
not be paid by such Agent or such Bank but shall be credited against the
Obligations; and (iv) the amount of the successful bid at any such sale,
whether such Agent or such Bank or any other party is the successful bidder,
shall be conclusively deemed to be the fair market value of the Collateral and
the difference between such bid amount and the remaining balance of the
Obligations shall be conclusively deemed to be the amount of the Obligations
guaranteed under this Guaranty, notwithstanding that any present or future law
or court decision or ruling may have the effect of reducing the amount of any
deficiency claim to which any Agent or any Bank might otherwise be entitled but
for such bidding at any such sale.
Section 6. Further Assurances. (a) The Guarantor agrees that at any
time and from time to time, at the expense of the Guarantor, the Guarantor will
promptly execute and deliver all further instruments and documents, and take
all further action, that may be necessary or desirable, or that either Agent
may reasonably request, to enable such Agent to protect and to exercise and
enforce its rights and remedies hereunder.
(b) All representations and warranties, including, but not limited
to, as to due authorization and enforceability of the Guaranty, set forth in
the Credit Agreement are incorporated herein by reference and shall have the
same effect as if fully stated herein.
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Section 7. Application of Payments. Any payment received by an Agent
from the Guarantor (or from any Bank pursuant to Section 12 below), shall be
applied by such Agent as follows:
First, to the payment of reasonable costs and expenses of
collection and all reasonable expenses (including, without limitation,
any reasonable legal fees and disbursements and the reasonable
allocated cost of in-house counsel), liabilities and advances made or
incurred by the Agent in connection therewith;
Next, to the Banks pro rata, based on the then outstanding
amount of the Obligations owed to each in payment in full of the
Obligations; and
Finally, after payment in full of all Obligations and the
termination of the Commitments and expiration of all outstanding
Letters of Credit and Bankers' Acceptances, the payment to the
Guarantor, or its successors and assigns, or to whomsoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds.
Section 8. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Guaranty to the contrary, any Agent may
exercise, and at the request of the Majority Banks shall exercise or refrain
from exercising, all rights and remedies provided for herein and provided by
law.
Section 9. No Waiver. No failure on the part of any Agent or any
Bank to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
Section 10. Amendments, Etc. No amendment or waiver of any provision
of this Guaranty, nor consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed, in
the case of amendments, by the Guarantor and by the Agents and the Majority
Banks and, in the case of consent or waivers, by the Agents and the Majority
Banks and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which made or given.
Section 11. Notices. All notices, requests and other communications
provided for hereunder shall be in writing and given as provided in Section
11.03 of the Credit Agreement.
Section 12. Right to Set-off. (a) Upon the occurrence and during the
continuance of any Event of Default under the Credit Agreement, each Bank is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set-off and apply any and all deposits (general
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<PAGE> 6
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of the Guarantor against any and all of the Obligations, irrespective of
whether or not such Bank shall have made any demand under this Guaranty and
although such Obligations may be contingent and unmatured. Each Bank which
sets-off pursuant to this Section 12(a) shall give prompt notice to the
Guarantor following the occurrence thereof; provided that the failure to give
such notice shall not affect the validity of the set-off.
(b) Any payment obtained pursuant to Section 12(a) above (or in
any other manner directly from the Guarantor) by any Bank shall be remitted to
the relevant Agent and distributed among the Banks in accordance with the
provisions of Section 7 above.
Section 13. Continuing Guaranty. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until payment in full
(after the termination of the Commitments and expiration of all outstanding
Letters of Credit and maturity of the Bankers' Acceptances) of the Obligations
and all other amounts payable under this Guaranty; (b) be binding upon the
Guarantor, its successors and assigns; and (c) inure to the benefit of the
Agents, the Banks and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Bank may
assign or otherwise transfer its rights and obligations under the Credit
Agreement to any other Person or entity, and such other Person or entity shall
thereupon become vested with all the benefits in respect thereof granted to the
Bank herein or otherwise, all as provided in, and to the extent set forth in,
Sections 11.08 and 11.09 of the Credit Agreement.
Section 14. Subordination of the Credit Parties' Obligations to the
Guarantor. The Guarantor hereby expressly covenants and agrees for the benefit
of the Agents and the Banks that all obligations and liabilities of the
Borrowers and their Subsidiaries to the Guarantor of whatsoever description
(including, without limitation, all intercompany receivables of the Guarantor
from the Borrowers) shall be subordinated and junior in right of payment to the
Obligations. Following the occurrence of an Event of Default, any indebtedness
of the Borrowers to the Guarantor shall, if either Agent shall so request, be
collected and received by the Guarantor as trustee for the Agents and the Banks
and paid over to the Agents and the Banks on account of the Obligations.
Section 15. Other Guarantors. The Guarantor acknowledges that
certain Subsidiaries of Guarantor (collectively, the "Other Guarantors") have
guaranteed the payment and performance of the Obligations pursuant to other
guaranty agreements executed in connection with the Credit Agreement (the
"Other Guaranty Agreements"). The Guarantor agrees that in the event a payment
shall be made by any Other Guarantor under any Other Guaranty Agreement, the
Other Guarantor (the "Claiming Guarantor") shall have and be entitled to rights
of contribution against the Guarantor pursuant to and in accordance with
applicable law. In the event the Guarantor makes any such payment to a Claiming
Guarantor, the Guarantor shall be subrogated to the rights of such Claiming
Guarantor to the extent of such payment. Notwithstanding any provision of this
Agreement to the
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contrary, all rights of the Other Guarantors under this Section and all other
rights of indemnity, contribution or subrogation under applicable law or
otherwise shall be fully subordinated to the indefeasible payment in full of
the Obligations. No failure on the part of the Guarantor or any Other
Guarantor to make the payments required by this Section (or any other payments
required under applicable law or otherwise) shall in any respect limit the
obligations and liabilities of the Guarantor or any Other Guarantor with
respect to any Guaranty, and the Guarantor and each Other Guarantor shall
remain liable for the full amount of the obligations under the guaranty
agreement executed by it. This Section 15 is intended only to confirm the
relative rights of the Guarantor and all Other Guarantors, and nothing set
forth in this sentence is intended to or shall impair the obligations of the
Guarantor and Other Guarantors, jointly and severally, to pay to the Agents and
the Banks, or any one or more of them, as the case may be, the Obligations as
and when the same shall become due and payable in accordance with the terms of
this Guaranty.
Section 16. Severability. If for any reason any provision or
provisions hereof are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
portions of this Guaranty which are valid.
Section 17. Taxes. (a) Any and all payments by the Guarantor to any
Bank or any Agent under this Guaranty shall be made free and clear of, and
without deduction or withholding for, any Taxes. In addition, the Guarantor
shall pay all Other Taxes. The foregoing sentences of this subsection 17(a)
shall not impair the obligation of any Bank or Agent pursuant to subsection
17(f).
(b) The Guarantor agrees to indemnify and hold harmless each Bank and
each Agent for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section)
paid by the Bank or the Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
Payment under this indemnification shall be made within 30 days after the date
the Bank or the Agent makes written demand therefor. In the event an Agent or
a Bank is required to pay Taxes or Other Taxes for which such Agent or such
Bank seeks indemnity hereunder, such Agent or such Bank, as applicable, shall
make written request to the Guarantor, together with evidence to substantiate
the same, no later than 60 days after paying such Taxes or Other Taxes;
provided, however, that a Bank's or Agent's failure to timely give notice of
such Taxes or Other Taxes shall not impair the Guarantor's obligations to
indemnify such Bank or such Agent against such Taxes or such Other Taxes. The
foregoing sentences of this subsection 17(b) shall not impair the obligation of
any Bank or Agent pursuant to subsection 17(f).
(c) If Guarantor shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or any Agent, then: (i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings
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(including deductions and withholdings applicable to additional sums payable
under this Section) such Bank or such Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made; (ii) the Guarantor shall make such deductions and
withholdings; (iii) the Guarantor shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law; and (iv) the Guarantor shall also pay to each Bank or either
Agent for the account of such Bank, at the time interest is paid, all
additional reasonable amounts which the respective Bank specifies as necessary
to preserve the after-tax yield the Bank would have received if such Taxes or
Other Taxes had not been imposed. The foregoing sentence of this subsection
17(c) shall not impair the obligation of any Bank or Agent pursuant to
subsection 17(f).
(d) Within 30 days after the date of any payment by the Guarantor
of Taxes or Other Taxes, the Guarantor shall furnish the U.S. Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the U.S. Agent.
(e) Notwithstanding anything contained herein or elsewhere to the
contrary, the foregoing subsections (a)- (d) shall in no event be applicable
to, or otherwise in respect of Taxes or Other Taxes arising or imposed as a
result of any assignment to a Person who is not an Eligible Assignee of, as the
case may be, any U.S. Borrowing or any part of the U.S. Commitment or any
Canadian Term Borrowing or any part of the Canadian Term Commitment. Without
limiting the generality of the foregoing, Guarantor shall not be liable for, or
be required to indemnify any Person for, any such taxes so arising as a result
of any such assignment to a Person who is not an Eligible Assignee.
(f) If the Guarantor at any time pays any amount under Sections
17(a), (b) or (c) to any Bank or any Agent, and such payee receives a refund of
or credit for any part of any Taxes or Other Taxes with respect to which such
amount was paid by the Guarantor, such Bank or Agent, as the case may be, shall
pay to the Guarantor the amount of such refund or credit promptly, and in any
event within 60 days, following the receipt of such refund or credit by such
payee. Additionally such payee shall, within 60 days following the receipt of
such refund or credit, furnish to the Guarantor a calculation of such refund or
credit.
(g) The agreements and obligations of the Guarantor in this
Section shall survive the payment of all other Obligations.
SECTION 18. Currency Conversion and Indemnity. (a) The Guarantor
shall make any payments in the currency (the "Agreed Currency") in which the
Obligation was effected. If any payment is received on account of any
Obligation in any currency (the "Other Currency") other than the Agreed
Currency (whether voluntarily or pursuant to an order or judgment or the
enforcement thereof or the realization of any security or the liquidation of
the Guarantor or otherwise howsoever), such payment shall constitute a
discharge of the liability of the Guarantor hereunder and under the
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<PAGE> 9
other Loan Documents in respect of such obligation only to the extent of the
amount of the Agreed Currency which the relevant Bank or Agent, as the case may
be, is able to purchase with the amount of the Other Currency received by it on
the Business Day next following such receipt in accordance with its normal
procedures and after deducting any premium and costs of exchange.
(b) If, for the purpose of obtaining or enforcing judgment in any
court in any jurisdiction, it becomes necessary to convert into a particular
currency (the "Judgment Currency") any amount due in the Agreed Currency then
the conversion shall be made on the basis of the rate of exchange prevailing on
the Business Day next preceding the day on which judgment is given and in any
event the Guarantor shall be obligated to pay the Agents and the Banks any
deficiency in accordance with this Section. For the foregoing purposes "rate
of exchange" means the rate at which the relevant Bank or Agent, as applicable,
in accordance with its normal banking procedures is able on the relevant date
to purchase the Agreed Currency with the Judgment Currency after deducting any
premium and costs of exchange.
(c) If (i) any Bank or Agent receives any payment or payments on
account of the liability of the Guarantor hereunder pursuant to any judgment or
order in any Other Currency, and (ii) the amount of the Agreed Currency which
the relevant Bank or Agent, as applicable, is able to purchase on the Business
Day next following such receipt with the proceeds of such payment or payments
in accordance with its normal procedures and after deducting any premiums and
costs of exchange is less than the amount of the Agreed Currency due in respect
of such obligations immediately prior to such judgment or order, then the
Guarantor on demand shall, and the Guarantor hereby agrees to, pay to the Banks
and the Agents amounts equal to the deficiency and any loss, cost or expense
arising out of or in connection with such deficiency.
(d) The agreements and obligations of the Guarantor in this
Section shall survive the payment of all other Obligations.
SECTION 19. GOVERNING LAW AND JURISDICTION. (a) THIS GUARANTY SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK; PROVIDED THAT THE AGENTS AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION, WITH
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OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS ITS
DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS
BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS,
SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE
TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO DESIGNATE A NEW
DESIGNEE, APPOINTEE AND AGENT IN NEW YORK ON THE TERMS AND FOR THE PURPOSES OF
THIS PROVISION SATISFACTORY TO THE AGENT. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SCHEDULE 11.03 OF THE CREDIT
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT OR ANY BANK TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. THE
GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
(c) THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT
RELATED HERETO.
SECTION 20. WAIVER OF JURY TRIAL. THE GUARANTOR WAIVES ITS RIGHTS TO
A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GUARANTOR AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE GUARANTOR FURTHER AGREES THAT ITS RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
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CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY
AND THE OTHER LOAN DOCUMENTS.
Section 21. ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AND THE
INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
BJ SERVICES COMPANY
By:
------------------------------------
Name:
Title:
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Exhibit 10.17
GUARANTY AGREEMENT
[DOMESTIC SUBSIDIARIES]
THIS GUARANTY AGREEMENT (this "Guaranty") by _______________________,
a _____________ corporation (the "Guarantor"), is effective as of
____________________ , and is in favor of each of the Banks (herein defined)
from time to time parties to the Credit Agreement (herein defined), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Issuing Bank and Swing Loan
Bank, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, (together
with its successors and assigns herein called the "U.S. Agent") and BANK OF
AMERICA CANADA (together with its successors and assigns herein called the
"Canadian Agent"), as the U.S. Agent and the Canadian Agent, respectively, for
and on behalf of the financial institutions (the "Banks") now or hereafter
party to that certain Amended and Restated Credit Agreement, dated as of August
7, 1996 (as the same may be amended, modified or restated from time to time and
at any time, the "Credit Agreement"), among BJ SERVICES COMPANY, a Delaware
corporation (the "Company"), BJ SERVICES COMPANY, U.S.A., a Delaware
corporation ("BJ-USA), BJ SERVICE INTERNATIONAL, INC., a Delaware corporation
("BJ-International"), BJ SERVICES COMPANY MIDDLE EAST, a Delaware corporation
("BJ-Middle East"), NOWSCO WELL SERVICE LTD., an Alberta, Canada corporation
("BJ-Canada"), the other Subsidiary Borrowers (as defined in the Credit
Agreement) (the Company, BJ-USA, BJ- International, BJ-Middle East, BJ-Canada
and the other Subsidiary Borrowers who are from time to time parties to the
Credit Agreement are herein referred to individually, as a "Borrower", and
collectively, as "Borrowers"), the Banks, BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing Bank and Swing Loan Bank, the U.S. Agent, the
Canadian Agent and the Senior Co-Agent and the Co-Agents therein named. All
capitalized terms used but not defined herein shall have the meaning assigned
to them in the Credit Agreement.
W I T N E S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, certain of the
Banks have agreed to make, continue and convert certain Loans and to issue or
participate in Letters of Credit to or for the benefit of the Borrowers;
WHEREAS, the obligation of the Banks to make, continue and convert the
Loans and to issue or participate in Letters of Credit is conditioned upon,
among other things, the execution and delivery by the Guarantor of this
Guaranty;
WHEREAS, the Guarantor is a wholly-owned subsidiary of the Company and
the Borrowers are members of the same consolidated group of companies and are
engaged in related businesses and the Guarantor may receive a portion of the
Loans or the benefit of the issuances of the Letters of Credit and will derive
other substantial direct and indirect economic benefit therefrom;
<PAGE> 2
NOW, THEREFORE, (i) in consideration of the premises and to induce the
Banks to enter into the Credit Agreement and to make, continue and convert the
Loans and to issue or participate in the Letters of Credit and accept Bankers'
Acceptances, (ii) at the special insistence and request of the Agents and the
Banks, and (iii) for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Guarantor, for the benefit of the
Agents, the Issuing Bank, the Swing Loan Bank and the Banks, hereby agrees as
follows:
Section 1. Defined Terms. Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined.
Section 2. Guaranty. The Guarantor hereby, unconditionally and
irrevocably, guarantees the prompt performance and payment in full in Dollars
(or in the case of the Canadian Borrower, in Canadian Dollars) by each of the
Borrowers when due (whether at stated maturity, by acceleration or otherwise)
of the Obligations of each of the Borrowers, and the Guarantor further agrees
to pay all reasonable costs, fees and expenses (including, without limitation,
reasonable counsel fees, and the allocated cost of in-house counsel) incurred
by any Agent or any Bank in enforcing any rights under this Guaranty.
Section 3. Guaranty Absolute.
(a) The obligations of the Guarantor hereunder are those
of a primary obligor, and not merely a surety, and are independent of the
Obligations. A separate action or actions may be brought against the Guarantor
whether or not an action is brought against the Borrowers, any other guarantor
or other obligor in respect of the Obligations or whether the Borrowers, any
other guarantor or any other obligor in respect of the Obligations are joined
in any such action or actions.
(b) The Guarantor guarantees that the Obligations will be
paid and performed strictly in accordance with the terms of the Credit
Agreement and the other Loan Documents regardless of any law, regulation or
order now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Agents or the Banks with respect thereto. Guarantor
agrees that its guarantee constitutes a guarantee of payment when due and not
of collection, and that to the maximum extent permitted by applicable law, the
liability of the Guarantor under this Guaranty shall be absolute and
unconditional irrespective of:
(i) any lack of genuineness, validity, legality
or enforceability of the Credit Agreement, any other Loan Document or
any other document, agreement or instrument relating thereto or any
assignment or transfer of any thereof;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Obligations
(including, without limitation, the possible extension of the
Revolving Termination Date, Term Loan Maturity Date and increase of
the amount of the Commitments all on the terms and conditions set
forth in the Credit Agreement), or any waiver, indulgence, compromise,
renewal,
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extension, amendment, modification of, or addition, consent,
supplement to, or consent to departure from, or any other action or
inaction under or in respect of, the Credit Agreement or any other
Loan Document or any document, instrument or agreement relating to the
Obligations or any other instrument or agreement referred to therein
or any assignment or transfer of any thereof;
(iii) any release or partial release of any other
guarantor or other obligor in respect of the Obligations;
(iv) any exchange, release or non-perfection of
any collateral for all or any of the Obligations, or any release, or
amendment or waiver of, or consent to departure from, any guaranty or
security, for all or any of the Obligations;
(v) any furnishing of any additional security for
any of the Obligations;
(vi) the liquidation, bankruptcy, insolvency or
reorganization of any Borrower, any other guarantor or other obligor
in respect of the Obligations or any action taken with respect to this
Guaranty by any trustee or receiver, or by any court, in any such
proceeding;
(vii) any modification or termination of any
intercreditor or subordination agreement pursuant to which the claims
of other creditors of the Borrowers or the Guarantor are subordinated
to those of the Banks; or
(viii) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable discharge
of, the Borrower or the Guarantor.
(c) This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment or performance of the
Obligations, or any part thereof, is, upon the insolvency, bankruptcy or
reorganization of one or more of the Borrowers or the Guarantor or otherwise
pursuant to applicable law, rescinded or reduced in amount or must otherwise be
restored or returned by any Agent or any Bank, all as though such payment or
performance had not been made.
(d) If an event permitting the acceleration of any of the
Obligations shall at any time have occurred and be continuing and such
acceleration shall at such time be prevented by reason of the pendency against
one or more of the Borrowers of a case or proceeding under any bankruptcy or
insolvency law or other creditor law, the Guarantor agrees that, for purposes
of this Guaranty and its obligations hereunder, the Obligations shall be deemed
to have been accelerated and the Guarantor shall forthwith pay such Obligations
(including, without limitation, interest which
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but for the filing of a petition in bankruptcy with respect to the Borrowers,
would accrue on such Obligations), and the other obligations hereunder, without
any further notice or demand.
Section 4. Waivers. Except as set forth in the Credit Agreement and
the other Loan Documents and to the extent permitted by applicable law, the
Guarantor hereby waives promptness, diligence, notice of intention to
accelerate, notice of acceleration, notice of acceptance and any and all other
notices with respect to any of the Obligations and this Guaranty and any
requirement that any Agent or any Bank protect, secure, perfect or insure any
security interest in or any Lien on any property subject thereto or exhaust any
right or take any action against the Borrowers, any other guarantor or any
other Person or any collateral or security or to any balance of any deposit
accounts or credit on the books of any Bank in favor of the Borrowers or the
Guarantor.
Section 5. Subrogation.
(a) The Guarantor will not exercise any rights of
subrogation, reimbursement and contribution, contractual, statutory or
otherwise, which it may acquire by way of subrogation under this Guaranty, by
any payment hereunder or otherwise, until all of the Obligations, including
Bankers' Acceptances, of all of the Borrowers have been paid, all Commitments
have terminated and all Letters of Credit have expired.
(b) To the maximum extent permitted by applicable law,
(i) if, in the exercise of any of its rights and remedies, any Agent or any
Bank shall forfeit any of its rights or remedies, including its right to enter
a deficiency judgment against the Borrowers or any other Person, whether
because of any applicable laws pertaining to "election of remedies" or the
like, the Guarantor hereby consents to such action by such Agent or such Bank
and waives any claim based upon such action, even if such action by such Agent
or such Bank shall result in a full or partial loss of any rights of
subrogation which the Guarantor might otherwise have had but for such action by
such Agent or such Bank; (ii) any election of remedies which results in the
denial or impairment of the right of such Agent or such Bank to seek a
deficiency judgment against the Borrowers shall not impair the Guarantor's
obligation to pay the full amount of the Obligations; (iii) in the event any
Agent or any Bank shall bid at any foreclosure or trustee's sale or at any
private sale permitted by law or under the Loan Documents, any Agent or such
Bank may bid all or less than the amount of the Obligations and the amount of
such bid need not be paid by such Agent or such Bank but shall be credited
against the Obligations; and (iv) the amount of the successful bid at any such
sale, whether such Agent or such Bank or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining balance
of the Obligations shall be conclusively deemed to be the amount of the
Obligations guaranteed under this Guaranty, notwithstanding that any present or
future law or court decision or ruling may have the effect of reducing the
amount of any deficiency claim to which any Agent or any Bank might otherwise
be entitled but for such bidding at any such sale.
Section 6. Representations and Warranties. The Guarantor represents
and warrants to the Agents and the Banks as of the date hereof as follows:
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(a) Corporate Existence and Power. The Guarantor (i) is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; (ii) has the power and authority
and all material governmental licenses, authorizations, consents and approvals
to own its assets, carry on its business and to execute, deliver, and perform
its obligations under the Loan Documents; (iii) is duly qualified as a foreign
corporation and is licensed and in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification or license; and (iv) is in
compliance in all material respects with all Requirements of Law; except, in
each case referred to in clause (iii), to the extent that the failure to do so
would not reasonably be expected to have a Material Adverse Effect.
(b) Corporate Authorization; No Contravention. The
execution, delivery and performance by the Guarantor of this Guaranty and every
other Loan Document to which the Guarantor is party, has been duly authorized
by all necessary corporate action, and do not and will not: (i) contravene the
terms of any of the Guarantor's Organization Documents; (ii) conflict with or
result in any breach or contravention of, in any material respect, or the
creation of any Lien (except Permitted Liens) under, any document evidencing
any material Contractual Obligation to which the Guarantor is a party or any
material order, injunction, writ or decree of any Governmental Authority to
which the Guarantor or its property is subject; or (iii) violate any material
Requirement of Law.
(c) Governmental Authorization. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Guarantor of
this Guaranty or any other Loan Document to which the Guarantor is a party.
(d) Binding Effect. This Guaranty and the other Loan
Documents to which the Guarantor is a party constitute the legal, valid and
binding obligations of the Guarantor to the extent it is a party thereto,
enforceable against the Guarantor in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
or similar laws affecting the enforcement of creditors' rights generally or by
equitable principles.
(e) Litigation.
(i) To the best knowledge of the Guarantor, there
are no actions, suits, proceedings, claims or disputes pending,
threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against the Guarantor or any of its
respective properties: (A) which purport to affect or pertain to this
Guaranty or any other Loan Document, or any of the transactions
contemplated hereby or thereby; or (B) in which there is a reasonable
probability of an adverse decision which if determined adversely to
the Guarantor, would reasonably be expected to have a Material Adverse
Effect.
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(ii) No injunction, writ, temporary restraining
order or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution,
delivery or performance of this Guaranty or any other Loan Document,
or directing that the transactions provided for herein or therein not
be consummated as herein or therein provided.
(f) No Default. No Default or Event of Default exists or
would result from the incurring of any Obligations by the Guarantor.
(g) Use of Proceeds; Margin Regulations. The Guarantor
is not generally engaged in the business of purchasing or selling Margin Stock
or extending credit for the purpose of purchasing or carrying Margin Stock.
(h) Title to Properties. The Guarantor has good record
and indefeasible title in fee simple to, or valid leasehold interests in, all
real property necessary or used in the ordinary conduct of its respective
businesses, except for such defects in title as would not, individually or in
the aggregate, have a Material Adverse Effect. The property of the Guarantor
is subject to no Liens, other than Permitted Liens.
(i) Taxes. The Guarantor has filed all Federal and other
material tax returns and reports required to be filed, and has paid all Federal
and other material taxes, assessments, fees and other governmental charges
levied or imposed upon it or its properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP. To Guarantor's knowledge, there is no proposed tax assessment
against the Guarantor that would, if made, have a Material Adverse Effect.
(j) Environmental Matters. The Guarantor conducts in the
ordinary course of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on their businesses, operations and
properties, and as a result thereof the Guarantor has reasonably concluded
that, except as specifically disclosed in [Schedule 6.13 of the Credit
Agreement] [Schedule "___" annexed hereto and incorporated herein by
reference], such Environmental Laws and Environmental Claims could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(k) Regulated Entities. Neither the Guarantor, any
Person controlling the Guarantor or any of its Subsidiaries is an "Investment
Company" within the meaning of the Investment Company Act of 1940. The
Guarantor is not subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state
public utilities code or any other Federal or state statute or regulation
limiting its ability to incur Indebtedness.
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(l) No Burdensome Restrictions. Neither the Guarantor
nor any of its Subsidiaries is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization Document, or any
Requirement of Law, which could reasonably be expected to have a Material
Adverse Effect.
(m) Solvency. The Guarantor is, and after giving effect
to this Guaranty will be, Solvent, on a going concern basis and taking into
account its rights of contribution and subrogation.
(n) Copyrights, Patents, Trademarks and Licenses, etc.
The Guarantor and its Subsidiaries own or are licensed or otherwise have the
right to use all of the material patents, trademarks, service marks, trade
names, copyrights, contractual franchises, authorizations and other rights that
are reasonably necessary for the operation of their respective businesses,
without conflict in any material respect with the rights of any other Person.
To the best knowledge of the Guarantor, no material slogan or other advertising
device, product, process, method, substance, part or other material now
employed, or now contemplated to be employed, by the Guarantor or any of its
Subsidiaries infringes in any material respect upon any material rights held by
any other Person. Except as disclosed in [Schedule 6.17 to the Credit
Agreement, which Schedule 6.17 is incorporated herein by this reference]
[Schedule "__" annexed hereto and incorporated herein by this reference], no
claim or litigation regarding any of the foregoing is pending or threatened in
which there is a reasonable probability of an adverse decision which would
reasonably be expected to have a Material Adverse Effect.
(o) Subsidiaries. The Guarantor has no Subsidiaries, and
has no equity investments in any other corporation or entity, other than those
specifically disclosed in [Schedule 6.18 of the Credit Agreement, which
Schedule 6.18 is incorporated herein by this reference] [Schedule "___" annexed
hereto and incorporated herein by this reference]. Each of the Guarantor and
its Subsidiaries is the owner, free and clear of all liens and encumbrances, of
all of the issued and outstanding voting stock of each of its Subsidiaries
(except where ownership of less than 100% is indicated on [Schedule 6.18 of the
Credit Agreement] [Schedule "__" hereto] and except for directors' qualifying
shares). All shares of such stock have been validly issued and are fully paid
and nonassessable, and no rights to subscribe to additional shares have been
granted to exist.
(p) Insurance. Except as disclosed in [Schedule 6.19 to
the Credit Agreement, which Schedule 6.19 is incorporated herein by this
reference] [Schedule "__" annexed hereto and incorporated herein by this
reference], the properties of the Guarantor and its Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of the
Guarantor, in such amounts, with such deductibles and self-insured retention
levels and covering such risks as are customarily carried by companies engaged
in similar businesses and owning similar properties in localities where the
Guarantor or such Subsidiary operates.
(q) Full Disclosure. None of the representations or
warranties made by the Guarantor or any of its Subsidiaries in the Loan
Documents as of the date such representations and
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warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Guarantor or any of its Subsidiaries in connection with the Loan Documents
(including the offering and disclosure materials delivered by or on behalf of
the Guarantor to the Banks prior to the Closing Date), taken as a whole,
contains any untrue statement of a material fact or omits any material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.
(r) Benefit to Guarantor. The Guarantor has determined
that its liability and obligation under this Guaranty will substantially
benefit it directly, and its board of directors has made that determination.
The Borrower, the Guarantor and the other Subsidiaries of the Company are
mutually dependent on each other in the conduct of their respective businesses
and do business together as an integrated business enterprise. The maintenance
and improvement of the Company's financial condition is vital to sustaining the
Guarantor's business and the transactions contemplated in the Credit Agreement
produce distinct and identifiable financial and economic direct and indirect
benefits to the Guarantor.
The representations and warranties set forth in this Section 6 shall survive
the execution and delivery of this Guaranty.
Section 7. Further Assurances.
(a) As long as any of the Obligations remain outstanding,
the Commitments have not expired and there are Letters of Credit or Bankers'
Acceptances outstanding, the Guarantor shall, unless the Majority Banks waive
compliance in writing, comply with all the covenants related to the Guarantor
contained in the Credit Agreement.
(b) The Guarantor agrees that at any time and from time
to time, at the expense of the Guarantor, the Guarantor will promptly execute
and deliver all further instruments and documents, and take all further action,
that may be necessary or desirable, or that any Agent may reasonably request,
to enable such Agent to protect and to exercise and enforce its rights and
remedies hereunder.
Section 8. Application of Payments. Any payment received by any
Agent from the Guarantor (or from any Bank pursuant to Section 13 below), shall
be applied by such Agent as follows:
First, to the payment of reasonable costs and expenses of
collection and all reasonable expenses (including, without limitation,
any legal fees and disbursements and the reasonable allocated cost of
in-house counsel), liabilities and advances made or incurred by such
Agent in connection therewith;
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Next, to the Banks pro rata, based on the then outstanding
amount of the Obligations owed to each in payment in full of the
Obligations; and
Finally, after payment in full of all Obligations and the
termination of the Commitments and expiration of all outstanding
Letters of Credit and Bankers' Acceptances, the payment to the
Guarantor, or its successors and assigns, or to whomsoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
proceeds.
Section 9. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Guaranty to the contrary, any Agent may
exercise, and at the request of the Majority Banks shall exercise or refrain
from exercising, all rights and remedies provided for herein and provided by
law.
Section 10. No Waiver. No failure on the part of any Agent or any
Bank to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
Section 11. Amendments, Etc. No amendment or waiver of any provision
of this Guaranty, nor consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed, in
the case of amendments, by the Guarantor and by the Agents and the Majority
Banks and, in the case of consent or waivers, by the Agents and the Majority
Banks and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which made or given.
Section 12. Notices. All notices, requests and other communications
provided for hereunder shall be in writing and given to an Agent as provided in
Section 11.03 of the Credit Agreement. All communications and notices
hereunder to Guarantor shall be given to ______________________________________
_______________________________________________________________________________
___________________________________; or, at such other address as shall be
designated by Guarantor in a written notice to the Agents.
Section 13. Right to Set-off.
(a) Upon the occurrence and during the continuance of any
Event of Default under the Credit Agreement, each Bank is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Bank to or for the credit or the account of the Guarantor against any
and all of the Obligations, irrespective of whether or not such Bank shall have
made any demand under this Guaranty and although such Obligations may be
contingent and unmatured. Each Bank which sets-off pursuant
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to this Section 13(a) shall give prompt notice to the Guarantor following the
occurrence thereof; provided that the failure to give such notice shall not
affect the validity of the set-off.
(b) Any payment obtained pursuant to Section 13(a) above
(or in any other manner directly from the Guarantor) by any Bank shall be
remitted to an Agent and distributed among the Banks in accordance with the
provisions of Section 8 above.
Section 14. Continuing Guaranty. This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until payment in full
(after the termination of the Commitments and expiration of all outstanding
Letters of Credit and maturity of the Bankers' Acceptances) of the Obligations
and all other amounts payable under this Guaranty; (b) be binding upon the
Guarantor, its successors and assigns; and (c) inure to the benefit of the
Agents, the Banks and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Bank may
assign or otherwise transfer its rights and obligations under the Credit
Agreement to any other Person or entity, and such other Person or entity shall
thereupon become vested with all the benefits in respect thereof granted to the
Bank herein or otherwise, all as provided in, and to the extent set forth in,
Sections 11.08 and 11.09 of the Credit Agreement.
Section 15. Subordination of the Credit Parties' Obligations to the
Guarantor. The Guarantor hereby expressly covenants and agrees for the benefit
of the Agents and the Banks that all obligations and liabilities of each of the
Borrowers, the Other Guarantors (as defined in Section 17 of this Guaranty) and
each of their respective Subsidiaries to the Guarantor of whatsoever
description (including, without limitation, all intercompany receivables of the
Guarantor from the Borrowers, other Guarantors and Subsidiaries) shall be
subordinated and junior in right of payment to the Obligations. Following the
occurrence of an Event of Default, any indebtedness of the Borrowers, Other
Guarantors and their Subsidiaries to the Guarantor shall, if either Agent shall
so request, be collected and received by the Guarantor as trustee for the
Agents and the Banks and paid over to the Agents and the Banks on account of
the Obligations.
Section 16. Financial Reporting. Guarantor shall furnish to the
Agents all such financial statements and other information relating to the
financial condition, properties and affairs of Guarantor as any Bank, acting
through an Agent, may from time to time reasonably request.
Section 17. Other Guarantors. Guarantor acknowledges that certain
other Subsidiaries of the Company (collectively, the "Other Guarantors") have
guaranteed the payment and performance of the Obligations pursuant to other
guaranty agreements executed in connection with the Credit Agreement (the
"Other Guaranty Agreements"), and to the extent Guarantor is required to
satisfy all or any part of the Obligations pursuant to the terms of this
Guaranty, Guarantor shall have and be entitled to rights of contribution
against the Other Guarantors. The Guarantor agrees that in the event a
payment shall be made by any Other Guarantor under any Other Guaranty
Agreement, the Other Guarantor (the "Claiming Guarantor") shall have and be
entitled to rights of contribution against the Guarantor pursuant to and in
accordance with applicable law. In the event the Guarantor makes any such
payment to a Claiming Guarantor, the Guarantor shall be subrogated to the
rights
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of such Claiming Guarantor to the extent of such payment. Notwithstanding any
provision of this Agreement to the contrary, all rights of the Other Guarantors
under this Section and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to
the indefeasible payment in full of the Obligations. No failure on the part of
the Guarantor or any Other Guarantor to make the payments required by this
Section (or any other payments required under applicable law or otherwise)
shall in any respect limit the obligations and liabilities of the Guarantor or
any Other Guarantor with respect to any Guaranty, and the Guarantor and each
Other Guarantor shall remain liable for the full amount of the obligations
under the guaranty agreement executed by it. This Section 17 is intended only
to confirm the relative rights of the Guarantor and all Other Guarantors, and
nothing set forth in this sentence is intended to or shall impair the
obligations of the Guarantor and Other Guarantors, jointly and severally, to
pay to the Agents and the Banks, or any one or more of them, as the case may
be, the Obligations as and when the same shall become due and payable in
accordance with the terms of this Guaranty.
Section 18. Severability. If for any reason any provision or
provisions hereof are determined to be invalid and contrary to any existing or
future law, such invalidity shall not impair the operation of or affect those
portions of this Guaranty which are valid.
Section 19. Taxes.
(a) Any and all payments by the Guarantor to any Bank or
any Agent under this Guaranty shall be made free and clear of, and without
deduction or withholding for, any Taxes. In addition, the Guarantor shall pay
all Other Taxes. The foregoing sentences of this subsection 19(a) shall not
impair the obligation of any Bank or Agent pursuant to subsection 19(f).
(b) The Guarantor agrees to indemnify and hold harmless
each Bank and each Agent for the full amount of Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by the Bank or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within 30
days after the date the Bank or the Agent makes written demand therefor. In
the event an Agent or a Bank is required to pay Taxes or Other Taxes for which
such Agent or such Bank seeks indemnity hereunder, such Agent or such Bank, as
applicable, shall make written request to the Guarantor, together with evidence
to substantiate the same, no later than 60 days after paying such Taxes or
Other Taxes; provided, however, that a Bank's or Agent's failure to timely give
notice of such Taxes or Other Taxes shall not impair the Guarantor's
obligations to indemnify such Bank or Agent against such Taxes or such Other
Taxes. The foregoing sentences of this subsection 19(b) shall not impair the
obligation of any Bank or Agent pursuant to subsection 19(f).
(c) If the Guarantor shall be required by law to deduct
or withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Bank or the Agent, then: (i) the sum payable shall be
increased as necessary so that after making all required deductions and
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withholdings (including deductions and withholdings applicable to additional
sums payable under this Section) such Bank or such Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made; (ii) the Guarantor shall make such
deductions and withholdings; (iii) the Guarantor shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and (iv) the Guarantor shall also pay to each
Bank or an Agent for the account of such Bank, at the time interest is paid,
all additional reasonable amounts which the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes or Other Taxes had not been imposed. The foregoing sentence of this
subsection 19(c) shall not impair the obligation of any Bank or Agent pursuant
to subsection 19(f).
(d) Within 30 days after the date of any payment by the
Guarantor of Taxes or Other Taxes, the Guarantor shall furnish the U.S. Agent
the original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to the U.S. Agent.
(e) Notwithstanding anything contained herein or
elsewhere to the contrary, the foregoing subsections (a)-(d) shall in no event
be applicable to, or otherwise in respect of Taxes or Other Taxes arising or
imposed as a result of any assignment to a Person who is not an Eligible
Assignee of, as the case may be, any U.S. Borrowing or any part of the U.S.
Commitment or any Canadian Term Borrowing or any part of the Canadian Term
Commitment. Without limiting the generality of the foregoing, Guarantor shall
not be liable for, or be required to indemnify any Person for, any such taxes
so arising as a result of any such assignment to a Person who is not an
Eligible Assignee.
(f) If the Guarantor at any time pays any amount under
Sections 19(a), (b) or (c) to any Bank or any Agent, and such payee receives a
refund of or credit for any part of any Taxes or Other Taxes with respect to
which such amount was paid by the Guarantor, such Bank or Agent, as the case
may be, shall pay to the Guarantor the amount of such refund or credit
promptly, and in any event within 60 days, following the receipt of such refund
or credit by such payee. Additionally such payee shall, within 60 days
following the receipt of such refund or credit, furnish to the Guarantor a
calculation of such refund or credit.
(g) The agreements and obligations of the Guarantor in
this Section shall survive the payment of all other Obligations.
SECTION 20. Currency Conversion and Indemnity.
(a) The Guarantor shall make any payments in the currency
(the "Agreed Currency") in which the Obligation was effected. If any payment
is received on account of any Obligation in any currency (the "Other Currency")
other than the Agreed Currency (whether voluntarily or pursuant to an order or
judgment or the enforcement thereof or the realization of any security or the
liquidation of the Guarantor or otherwise howsoever), such payment shall
constitute a discharge of the liability of the Guarantor hereunder and under
the other Loan Documents in
-12-
<PAGE> 13
respect of such obligation only to the extent of the amount of the Agreed
Currency which the relevant Bank or Agent, as the case may be, is able to
purchase with the amount of the Other Currency received by it on the Business
Day next following such receipt in accordance with its normal procedures and
after deducting any premium and costs of exchange.
(b) If, for the purpose of obtaining or enforcing
judgment in any court in any jurisdiction, it becomes necessary to convert into
a particular currency (the "Judgment Currency") any amount due in the Agreed
Currency then the conversion shall be made on the basis of the rate of exchange
prevailing on the Business Day next preceding the day on which judgment is
given and in any event the Guarantor shall be obligated to pay the Agents and
the Banks any deficiency in accordance with this Section. For the foregoing
purposes "rate of exchange" means the rate at which the relevant Bank or Agent,
as applicable, in accordance with its normal banking procedures is able on the
relevant date to purchase the Agreed Currency with the Judgment Currency after
deducting any premium and costs of exchange.
(c) If (i) any Bank or Agent receives any payment or
payments on account of the liability of the Guarantor hereunder pursuant to any
judgment or order in any Other Currency, and (ii) the amount of the Agreed
Currency which the relevant Bank or Agent, as applicable, is able to purchase
on the Business Day next following such receipt with the proceeds of such
payment or payments in accordance with its normal procedures and after
deducting any premiums and costs of exchange is less than the amount of the
Agreed Currency due in respect of such obligations immediately prior to such
judgment or order, then the Guarantor on demand shall, and the Guarantor hereby
agrees to, pay to the Banks and the Agents amounts equal to the deficiency and
any loss, cost or expense arising out of or in connection with such deficiency.
(d) The agreements and obligations of the Guarantor in
this Section shall survive the payment of all other Obligations.
SECTION 21. GOVERNING LAW AND JURISDICTION.
(a) THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENTS
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON- EXCLUSIVE JURISDICTION OF THOSE
COURTS. THE GUARANTOR HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT
CORPORATION, WITH OFFICES ON THE DATE HEREOF AT 1633 BROADWAY NEW YORK, NEW
YORK 10019,
-13-
<PAGE> 14
AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND
ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL
PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION
OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL
CEASE TO BE AVAILABLE TO ACT AS SUCH, THE GUARANTOR AGREES TO DESIGNATE A NEW
DESIGNEE, APPOINTEE AND AGENT IN NEW YORK ON THE TERMS AND FOR THE PURPOSES OF
THIS PROVISION SATISFACTORY TO THE AGENT. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN SCHEDULE 11.03 OF THE CREDIT
AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY AGENT OR ANY BANK TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE GUARANTOR IN ANY OTHER JURISDICTION. THE
GUARANTOR WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS,
WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
(c) THE GUARANTOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY
DOCUMENT RELATED HERETO.
SECTION 22. WAIVER OF JURY TRIAL. THE GUARANTOR WAIVES ITS RIGHTS TO
A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GUARANTOR AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE GUARANTOR FURTHER AGREES THAT ITS RIGHT TO A TRIAL
BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM
OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS GUARANTY OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN
DOCUMENTS.
-14-
<PAGE> 15
SECTION 23. ENTIRE AGREEMENT. THIS WRITTEN GUARANTY AND THE
INSTRUMENTS AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH, REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
---------------------------------------
By:
------------------------------------
Name:
Title:
-15-
<PAGE> 1
EXHIBIT 10.18
FORM OF AMENDMENT
TO
EXECUTIVE SEVERANCE AGREEMENT
AND TO
STOCK PLAN AGREEMENTS
THIS AMENDMENT TO EXECUTIVE SEVERANCE AGREEMENT AND TO STOCK PLAN
AGREEMENTS, made and entered into effective as of March 9, 1995 (the
"Agreement"), is by and between BJ SERVICES COMPANY, a Delaware corporation
(the "Company"), and (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company and the Employee have previously entered into an
Executive Severance Agreement dated effective as of
(the "Severance Agreement"); and
WHEREAS, the Employee has outstanding certain stock options and
Performance Unit awards granted under the Company's 1990 Stock Incentive Plan
(the "Stock Plan"); and
WHEREAS, the Company and the Employee desire to amend the Severance
Agreement and the Employee's outstanding agreements under the Stock Plan
("Stock Plan Agreements") to reflect the parties' mutual agreements as to the
consequences of the consummation of the acquisition of The Western Company of
North America by the Company pursuant to the Agreement and Plan of Merger dated
as of November 17, 1994, as amended (the "Western Acquisition") with respect to
the same;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements herein contained, the Company and the Employee
hereby agree that the Severance Agreement and Stock Plan Agreements are amended
as follows:
A. Severance Agreement
1. Paragraphs (A), (C) and (D) of Section 2(iii) are
amended to read as follows:
"(A) The Employee is assigned any duties materially
inconsistent with the Employee's positions, duties, responsibilities
and status with the Company immediately prior to a Change in Control,
or the Employee's reporting responsibilities, titles or offices are
materially changed from those in effect immediately prior to such
Change in Control, or the Employee is removed from or is not
re-elected or appointed to any of such material responsibilities,
titles, offices or positions, except in each case other than (i) in
connection with the termination of the Employee's employment for Cause
or Disability, (ii) as a result of the Employee's death, (iii) by the
Employee for other than Good Reason, (iv) an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by
the Company promptly after receipt of notice thereof given by the
Employee, or (v) any change, made following the Western Acquisition
and prior to any other Change in Control of the
<PAGE> 2
Company, that involves a reallocation or reassignment of the
Employee's responsibility with no material reduction in the overall
degree of the Employee's responsibility and no reduction in the
Employee's compensation or level of title (e.g., Vice President); or
* * * *
(C) the Company fails to continue the Company's
annual cash bonus plan for executives as the same may be modified from
time to time, but substantially in the form in effect prior to the
date of the Change in Control (the "Bonus Plan"), or fails to continue
the Employee as a participant in the Bonus Plan, or reduces the
Employee's "Expected Value" guideline percentage under the Bonus Plan
from that in effect immediately prior to a Change in Control or as
increased thereafter with respect to the Employee (the product of such
Expected Value percentage, as so increased, if applicable, but prior
to such reduction, and the Employee's Base Salary is referred to
hereinafter as the "Bonus Amount"), but excluding a modification or
termination of the Bonus Plan or a general change in the Expected
Value guidelines thereunder for a class or classes of participants
that (i) is made following the Western Acquisition and prior to any
other Change in Control of the Company, (ii) affects participants in
such plan in general and (iii) when combined with other Company plans,
does not result in any reduction in the overall possible incentive
compensation to the Employee; or
(D) the Company fails to continue in effect any
material benefit or compensation plan, including, but not limited to,
the Company's 1990 Stock Incentive Plan, 1995 Incentive Plan (after
its approval by the stockholders) (the "1995 Plan"), qualified
retirement plan, executive life insurance plan, and/or health and
accident plan, in which the Employee is participating immediately
prior to a Change in Control, or plans providing the Employee with
substantially similar benefits, or the Company takes any action that
would materially adversely affect the Employee's participation in or
reduce the Employee's benefits under any of such plans, excluding any
such action by the Company that (i) is required by law or (ii) is made
following the Western Acquisition and prior to any other Change in
Control of the Company, and affects participants in such plan in
general; or"
2. Subparagraph (D) of Section 3(iii) is amended as
follows:
"(D) if the Date of Termination occurs on or
following the Western Acquisition and prior to the date of any other
Change in Control, (1) an amount, with respect to all outstanding
unvested and unexercisable awards that have been granted the Employee
after January 1, 1995, under the Company's 1990 Stock Inventive Plan,
the 1995 Plan (excluding the stock options granted to the Employee on
February 15, 1995, under the 1995 Plan), or any successor or similar
stock compensation plan, equal to the sum of (a) the value of all such
unvested or unearned shares of Performance Stock, Performance Units
and any other performance awards thereunder, determined as if all
restrictions had lapsed and all performance goals had been achieved to
the fullest extent, and (b) the excess of the closing
-2-
<PAGE> 3
price of the common shares of the Company stock on the Date of
Termination as reported on the national exchange on which the trading
volume for such stock is highest over the exercise price of each such
unexercisable option and appreciation right; and (2) if the Date of
Termination occurs on or after the date of any Change in Control that
occurs before or after the Western Acquisition, an amount, with
respect to all outstanding unvested and unexercisable awards that have
been granted Employee after such Change in Control under the Company's
1990 Stock Incentive Plan, the 1995 Plan or any successor or similar
stock compensation plan, equal to the sum of (a) the value of all such
unvested (or unearned) shares of Performance Stock, Performance Units
and any other performance awards thereunder (determined as if all
restrictions had lapsed and all performance goals had been achieved
to the fullest extent) and (b) the excess of the closing price of the
common shares of the Company stock on the Date of Termination as
reported on the national exchange on which the trading volume for such
stock is highest over the exercise price of each such unexercisable
option and appreciation right; and"
3. Subparagraph (E) of Section 3(iii) is amended by
adding thereto a new sentence to read as follows:
"Notwithstanding anything in this subparagraph (E) to
the contrary, the continued welfare plan coverages provided hereunder,
including any COBRA coverage, shall be provided to the Employee (and
the Employee's dependents) by the Company without any cost (whether a
premium or otherwise)."
4. Section 8 is amended by adding thereto the following:
"Notwithstanding anything in this Agreement to the
contrary, the consummation of the acquisition of The Western Company
of North America by the Company pursuant to the Agreement and Plan of
Merger dated as of November 17, 1994, as amended, shall constitute a
Change in Control of the Company for all purposes under this
Agreement."
B. Stock Plan Agreements
Notwithstanding anything to the contrary in the Stock Plan or in any
Award Agreement of the Employee thereunder, the Western Acquisition shall not
constitute a Change in Control of the Company and effective with the Western
Acquisition:
(1) of the Employee's Performance
Units that are outstanding on the date of the Western
Acquisition shall be vested on that date and paid in shares as
soon as reasonably practicable thereafter and the remainder of
all such Performance Units of the Employee that are not vested
on the date of the Western Acquisition shall be immediately
canceled unpaid on that date; and
-3-
<PAGE> 4
(2) the tandem contingent income tax cash bonus granted to
Employee under the Company's Tax Reimbursement Plan with
respect to the above-vested Performance Units (the "Tax
Bonus") shall be paid at the time that withholding is required
with respect to the payment of the above- vested Performance
Units, to the extent payment is necessary to satisfy the
withholding obligation thereon and on the portion of the Tax
Bonus then paid, and the remainder of the Tax Bonus shall be
paid at such time or times as the Company determines to be
appropriate, but not later than the April 15th following the
calendar year in which the above-vested Performance Units
become taxable to the Employee; and
(3) all unexercisable stock options granted to the Employee
pursuant to the Stock Plan that are outstanding on the date of
the Western Acquisition shall continue to remain outstanding
thereafter in accordance with their terms unaffected by the
Western Acquisition; provided, however, in the event the
Employee's employment with the Company and its affiliates (or
any successor) is terminated for any reason, other than for
Cause, within twenty-four (24) months following the date of
the Western Acquisition, all stock options of the Employee
that were granted prior to January 1, 1995, under the Stock
Plan and which remain outstanding on the date of such
termination of employment shall be fully exercisable as of the
date of the employee's termination (to the extent not already
fully exercisable) and shall remain fully exercisable for the
one-year period following the date of the Employee's
termination, unless any other provision of the Stock Plan
provides a longer period for the exercise of such options (but
in no event later than the Nonqualified Option Expiration Date
or the Incentive Stock Option Expiration Date, as such terms
are defined in the Stock Plan, whichever is applicable).
IN WITNESS WHEREOF, the Company and the Employee have entered into
this Amendment, effective for all purposes as of the day and year first above
written.
BJ SERVICES COMPANY
By:
------------------------------------
EMPLOYEE
By:
------------------------------------
-4-
<PAGE> 1
EXHIBIT 21.1
BJ SERVICES COMPANY
SUBSIDIARIES
AS OF DECEMBER 20, 1996
<TABLE>
<CAPTION>
PERCENTAGE OWNED BY
----------------------
NAME OF ENTITY/JURISDICTION OF ORGANIZATION COMPANY SUBSIDIARY
- - ------------------------------------------------------------------------ ------- ----------
<S> <C> <C>
BJ Services Company Middle East (Delaware).............................. 100%
Gulf Well Services Company (Kuwait) (Joint Venture)................... 40%
BJ Services Company Overseas (Delaware) (Inactive)...................... 100%
BJ Services Company, U.S.A. (Delaware).................................. 100%
Western Petroleum Services International Company (Delaware)........... 100%
Western Petroleum Services International Nigeria Ltd. (Nigeria)
(Joint Venture)................................................... 60%
P.T. Western Petroleum Servindo (Indonesia)........................ 100%
Western Rotary Petroleum Services Ltd. KFT (Hungary) (Joint
Venture).......................................................... 64%
Western Oceanic (Nigeria) Limited (Nigeria) (Joint Venture)........... 60%
Colony Drilling Company Limited (Scotland)............................ 100%
Western Oceanic, Inc. (Delaware)...................................... 100%
Western Oceanic International, Inc. (Panama)....................... 100%
BJ Process and Pipeline Services Company (Texas)...................... 100%
Pipeline Cleaners Inc. (Iowa)...................................... 100%
Mercury Fracturing Service, Inc. (Texas) (being liquidated)........... 100%
Service Fracturing Company (Oklahoma) (being liquidated).............. 100%
Enerex Supply Company, Inc. (Texas) (being liquidated)................ 100%
BJ Service International, Inc. (Delaware)............................... 100%
BJ-Hughes C.I., Ltd. (Cayman Islands) (Inactive)...................... 100%
BJ Oilwell Services (Malaysia) Sdn.Bhd. (Joint Venture)............... 65%
BJ Oilwell Service International (Thailand) Ltd....................... 100%
BJ Service Arabia Ltd. (Saudi Arabia) (Joint Venture)................. 70%
BJ Services C.I., Ltd. (Cayman Islands)............................... 100%
Nowsco U.K. Limited (UK).............................................. 100%
Nowsco Well Service Limited (UK)................................... 100%
McKenna J. Sullivan Limited (UK)................................. 100%
Nowsco (UK) Group Limited (Scotland)............................... 100%
Nowsco Well Service GmBH (Germany).................................... 100%
Nowsco Norge AS (Norway).............................................. 100%
Nowsco Well Service (S.E. Asia) Pte. Ltd. (Singapore)................. 100%
Nowsco Well Service SRL (Italy) (being liquidated).................... 100%
Nowsco Well Service Ltd. (Alberta).................................... 100%
Nowsco Well Service (Ireland) Limited.............................. 100%
International NOWSCO Well Service, Inc. (Texas)(being merged)...... 100%
Nowsco Well Service Company Limited (Barbados)..................... 100%
Nowsco Well Service International (Bermuda)........................ 100%
Barritz Overseas Limited (Cyprus).................................. 100%
Nowsco International Limited (Barbados)............................ 100%
Nowsco Well Service (Cyprus) Limited............................... 100%
Nowsco Well Service (Vostok) Limited (Russia).................... 100%
NMS Oil Field Limited (Cyprus)..................................... 100%
Nowsco America S.A. (Argentina).................................... 100%
Nowsco Well Service (Europe) BV (Netherlands)...................... 100%
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
PERCENTAGE OWNED BY
----------------------
NAME OF ENTITY/JURISDICTION OF ORGANIZATION COMPANY SUBSIDIARY
- - ------------------------------------------------------------------------ ------- ----------
<S> <C> <C>
Nowsco (Netherlands) Group BV...................................... 100%
BJ Tubular Services B.V. (Netherlands)............................. 100%
Nowsco (UAE) LLC (being liquidated) (Joint Venture)................ 49%
PT Nowsco Well Service (Indonesia) (Joint Venture).................... 70%
Nowsco (B) SDN BHD (Brunei) (Joint Venture)........................... 60%
Sarku Nowsco Well Services SDN BHD (Malaysia) (Joint Venture)......... 40%
BJ Services Company B.V. (Netherlands).................................. 100%
BJ Services Company GmbH (Germany).................................... 100%
BJ Services AS (Norway)............................................... 100%
BJ Services Company Italia S.r.1. (Italy)............................. 100%
BJ Services Company Mexicana S.A. de C.V. (Mexico)...................... 100%
BJ Services Company (Nigeria) Limited (Joint Venture)................... 60%
BJ Services Company S.A. (Panama)....................................... 100%
BJ Services Company Limited (Scotland).................................. 100%
BJ Petroleum Services Company (UK) Limited (England).................. 100%
BJ Services Company (UK) Limited (Scotland)........................... 100%
BJ Services International Limited (Scotland)....................... 100%
BJ Leasing Company Limited (Scotland)................................. 100%
BJS Oilfield Technology Limited (Scotland)............................ 100%
BJ COMTEC AS (Norway).............................................. 100%
BJS Oilfield Technology A/S (Denmark).............................. 100%
BJ Services Company (Australia) Pty. Ltd. (Australia)................. 100%
BJ Services Company (Singapore) Pte. Ltd. (Singapore)................... 100%
BJ Services De Venezuela IV, C.A. (Venezuela)........................... 100%
BJ Services de Venezuela, C.A. (Venezuela).............................. 100%
BJ Services De Venezuela II, C.A. (Venezuela)......................... 100%
BJ Services De Venezuela III, C.A. (Venezuela)..................... 100%
BJ Services International S.A. (Panama)................................. 100%
BJ Pumping Services Company S.A. (Panama) (Joint Venture)............. 65%
International Chemical Specialties FZE (Jebel Ali).................... 100%
SEBEP (Servicios Brasileiros Especializados em Petroleo S.A.)
(Brazil)........................................................... 100%
SEBEP Quimica Industria e Comercio Ltda. (Brazil).................. 100%
SEBEX Oil Well Services, S.A. (Brazil)............................. 100%
BJ Services S.A. (Argentina).......................................... 100%
Compania de Servicios Petroleros BJ Boliviana S.A. (BJ Boliviana
S.A.) (Bolivia) (Joint Venture)................................... 49%
Hughes Services Eastern Hemisphere S.A.R.L. (France).................. 100%
International Specialty Chemicals Ltd. (Cayman Islands) (Joint
Venture)........................................................... 75%
P.T. BJ-Hughes Services Indonesia (Indonesia) (Joint Venture)......... 75%
Societe Algerienne de Puits Producteurs d'Hydrocarbures (BJSP)
(Algeria).......................................................... 49%
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-36754 of BJ Services Company on Form S-8, Registration Statement No. 33-52506
of BJ Services Company on Form S-8, Registration Statement No. 33-62098 of BJ
Services Company on Form S-8, Registration Statement No. 33-58637 of BJ Services
Company on Form S-8, Registration Statement No. 33-58639 of BJ Services Company
on Form S-8 and Registration Statement No. 33-58017 of BJ Services Company on
Form S-3 of our report dated November 26, 1996 appearing in this Annual Report
on Form 10-K of BJ Services Company for the year ended September 30, 1996.
DELOITTE & TOUCHE LLP
Houston, Texas
December 20, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000864328
<NAME> BJ SERVICES COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<CASH> 2,897
<SECURITIES> 0
<RECEIVABLES> 271,583
<ALLOWANCES> 6,223
<INVENTORY> 87,101
<CURRENT-ASSETS> 418,147
<PP&E> 949,262
<DEPRECIATION> 391,106
<TOTAL-ASSETS> 1,709,160
<CURRENT-LIABILITIES> 292,025
<BONDS> 0
<COMMON> 3,809
0
0
<OTHER-SE> 837,894
<TOTAL-LIABILITY-AND-EQUITY> 1,709,160
<SALES> 0
<TOTAL-REVENUES> 965,261
<CGS> 0
<TOTAL-COSTS> 780,046
<OTHER-EXPENSES> 110,311
<LOSS-PROVISION> 358
<INTEREST-EXPENSE> 26,948
<INCOME-PRETAX> 52,591
<INCOME-TAX> 12,105
<INCOME-CONTINUING> 40,486
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,486
<EPS-PRIMARY> 1.29
<EPS-DILUTED> 1.26
</TABLE>
